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Mark Mobius' ‘Book of Wealth’ will not set you on a path to riches
Summary
The stock guru's book blends history and investing but may leave readers and early investors with little real guidance to wealth creation
If you are approaching this book with the intention of leveraging legendary fund manager Mark Mobius’ stock picking insights, you will be wildly disappointed. Mobius is well known as an emerging markets’ stock guru and was executive chairperson of the Templeton Emerging Markets Group.
The Book Of Wealth: A Young Investor’s Guide To Wealth And Happiness, despite the title, doesn’t provide an analytical view of stocks and their selection. Instead, it attempts to provide a holistic approach to wealth and its creation.
In its pages is a fair amount of history, a dose of philosophy, and plenty of real life examples. As a result, it's neither a book on history or philosophy nor a straightforward investment guide. In trying to be everything, there is no one single solid selling point. Mobius, for instance, writes about cash as one of many investment opportunities, explaining that many people don’t view cash as investment despite the interest that it can earn in a bank account. It’s a paragraph that holds promise of great insight but as Mobius doesn’t unpack it further, we’re left to do the work ourselves. Cash provides conservative investors with a lot of comfort knowing that their money is “safe" and not subject to stock market gyrations, and easily accessible.
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On the flip side, the interest rate you earn never beats inflation. And inflation ensures you buy less with the same amount as the years go by. This means that building your cash stash puts you at a significant risk of not meeting your financial goals. However, you do need some amount in cash when it comes to your “Emergency Fund". Such insights were conspicuous in their absence in this book. Instead, it abruptly switches to a history lesson: The Tang dynasty’s use of bills of exchange printed on pieces of textile, Marco Polo’s amazement at the Yuan dynasty’s use of banknotes, and a walk through history that ends with a pondering on whether cryptocurrency can replace currencies that are susceptible to the whims of a central bank. After 13 such pages of historical meandering we come back to cash and compounding.
This approach continues throughout the book. The section on stock market crashes could have made for a fascinating read, after all nothing shows up erratic human behaviour as a building up and bursting of a bubble. Instead of showing the different stages of greed that culminate in panic, all he gives is a brief note on the crash of 1929 that preceded the Great Depression. Mobius goes on to rightly point out that it is essential to consider real estate or property in wealth creation, but his advice is completely devoid of nuance.
On the contrary, I would say, your first investment need not be in real estate, but could be in a mutual fund. For numerous reasons, a young individual may defer investing in real estate but consistently buy units of an equity fund every month. To wait till your entire mortgage has been cleared, which means you are debt free, and to then start investing in equity is not optimal at best, and foolhardy at worst.
The book does name three billionaires who made money in real estate, but every asset class does throw up its success stories, and this is not unique to real estate. Interspersed in the narration are brief write-ups on investing legends—Jesse Livermore, Ray Dalio, Timothy Kim, John Templeton, Warren Buffett, Paul Getty, Jaimie Dimon, John Paulson and Carl Icahn. But the commentary is so generic that one doesn’t come away with an understanding of their strategy.
The true let down would be the chapter on investment strategy, which says nothing about strategies such as value investing, growth, factor investing, and so on. Instead, it speaks of controlling your emotions, herd behaviour, copy trading and meme stock trading.
What works for this book is that it looks at the various facets of wealth, which is refreshing, as it is not all about money. It is about your health, peace of mind, network, happiness. It is about what you want from life. Assets are not just property, stocks, bonds, art and jewellery. Your skills are an asset. A pertinent point the book makes is to invest in yourself, keep learning, and be patient. This is so crucial for young investors who are seeking a quick way to get rich by investing in the markets, fuelled by a crazy bull run.
To become wealthy, you must invest. To invest, you must save. To save, you need to practice frugality. But these are just the first two chapters. Beyond that, it does not guide one on portfolio construction or dig deep into explaining each investment option and the investing strategies of seasoned investors. In an attempt to offer a lot, the book disappoints. The explanations on derivatives are more detailed but this is not a how-to-invest guide for young investors. At best, it would would give a reader a superficial understanding of wealth and happiness and what you can read further to build your portfolio.
Larissa Fernand is a Mumbai-based writer.
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