Robert G. Hagstrom | Robert G. Hagstrom
In the investment world, the term
latticework represents the highly diversified but intimately related body of knowledge that Berkshire Hathaway vice chairman Charlie Munger has called upon to build the phenomenally successful holding company he runs with the legendary Warren Buffett. In
Latticework, investment professional Robert G. Hagstrom--who previously authored
The Warren Buffett Way--elaborates on this broad-based approach and presents some essential theories of physics, biology, social science, psychology, philosophy, and literature that can help readers achieve a similar grounding. "Investment decisions are more likely to be correct when ideas from other disciplines lead to the same conclusion," Hagstrom writes. "Those who strive to understand (these) connections are well on the way to worldly wisdom. This makes us not only better investors but better leaders, better citizens, better parents, spouses and friends." Once absorbed, he contends, the fundamentals of these six subjects allow finance and investing to be considered as they should: "as a unified whole." He explains how the rule of supply and demand is like the point of equilibrium in physics, for instance, and the law of economic selection is akin to a biologist's view of evolution. These and other provocative theses are presented throughout in a consistently clear, thoroughly convincing, and wholly captivating manner.
--Howard Rothman
1 pretentious and superficial
After writing several books about Warren Buffet, Mr. Hagstrom must have decided that the market for books about the Sage has been saturated and moved on to his next venture: to write a book about a half-baked success theory of Mr. Charlie Munger, the intellectual snob who sits quietly next to Warren Buffet during the annual shareholders' meeting of Berkshire Hathaway. The result is a self-help book for Berkshire Cult members.
Mr. Munger may be on the right track when he says that a businessman should have a very broad knowledge about the World in order to make competent decisions. However I doubt that he was ever able to come up with a coherent theory of how to get rich through getting bookish. It doesn't matter. Every half-baked idea that comes out of the prophet's mouth is being turned into a gospel by the devotees.
Believe it or not but this book is all about teaching you how to get rich by reading Shakespeare, Charles Dickens, and the autobiography of Richard Feynman. Don't laugh! It is true.
There may be some way to apply knowledge from various branches of learning such as Physics, Biology, and Literature to Investing. Eliyahu Goldratt for example used his background in Physics to solve practical problems in supply chain management. But Hagstrom is certainly not the man to do it. His discussions of Physics, Biology, Psychology, and Literature are superficial at best and I suspect that many professionals in those fields will find them laughable. Who does he thing he is? John Stuart Mill?
One star is all I can give. Hagstrom's other books about investing are much better than this one. Go buy "The Warren Buffet Way" or the "The Warren Buffet Portfolio". Hagstrom did a much better job in those two books than in this one.
2 An Outstanding Book
In Latticework, Mr. Hagstrom has written a very powerful book arguing for the importance of a multidisciplinary approach to investing. If you are looking for a "magic bullet" to make your stock picking infallible, you will need to look elsewhere. Instead Mr. Hagstrom argues that all of the major branches of learning have something to offer. As a professional investor, I couldn't agree more. In particular Mr. Hagstrom draws on the work of the Santa Fe Institute in complex adaptive systems. His argument that too often people view the market in Newtonian terms which are ultimately inappropriate rings very true.
This book does not pretend to offer a lot of answers, but rather is a starting part for future work. The bibliography alone is worth the price of admission. Ultimately, perhaps the highest praise I can give is that this book might not only make you a better investor, but also a better person.
3 Not your Typical investing book.
This book aims to show how other areas of knowledge can potentially apply to investing. Easy to read although repetitive at times. Also a bit simplistic (by necessity?). A good New Year's book for reflection on how we think about things.
4 Multidisciplinary Mental Models
Latticework is a good book. I liked the premise and approach more than the writing, but the writing was still good. The term latticework is attributed to Charlie Munger, the inimitable vice chairman of Berkshire Hathaway. Charlie views a latticework of mental models as an interlocking structure of ideas that is clearly multidisciplinary in nature. Drawing from this transdisciplinary focus, Hagstrom takes us through some key principles or laws from a number of disciplines such as psychology, physics, biology, and philosophy, among others. He then applies these theories to investing and the marketplace.
Bottom line, this book is not about financial models or equity premiums. It is more a book about how to apply theoretical precepts in one discipline in helping you to understand another discipline, principally investing. As anyone who has studied widely, it is quite apparent that most disciplines are artificially delineated and socially constructed. The undergirding currents of knowledge seem one and the same (cf. the 'g' idea of intelligence). In general, people that have crisp and disciplined thinking and problem solving skills can tackle any subject with authority.
I would read this book if you are tired of reading all the material that everyone else is reading and that seems to say the same thing a hundred different ways. At the end of the day, if you read what everyone else is reading, you are going to have difficulty thinking "outside the box" or differentiating your ideas in the marketplace. The smartest people I have read or talked with seem to be quite adept at applying knowledge from one area to add insight to another area. This book will at least start you on the right path to a new way of looking at the shifting market landscape.
5 Blatant Plagiarism
Gee, let's compare the market to an array of other disciplines like biology and music. Anyone who read Victor Niederhoffer's The Education of a Speculator published almost four years ago will be intimately familiar with these topics. Victor's book was published before the tech-boom caused everyone and their uncle to even care about the market, and was backed up by the stupendous performance of its author who at the time was a top-performing fund manager. Mr. Hagstrom's coverage of these topics is brief, specious and uninspiring. Anyone who would like the real lowdown on such topics should read the original.
6 Fascinating Content
A good book always makes you think about its particular subject in a new way. Robert Hagstrom's new book, Latticework: The New Investing will definitely have the reader thinking about investing differently. The book develops the notion of combining insights from many different disciplines (biology, physics, and literature to name a few) to develop worldly wisdom. If the investor develops their own mental models (and understand how the interact with one another) they can develop a competitive advantage over most investors. Mr. Munger, Vice Chairman of Berkshire Hathaway, has endorsed this mental models concept in two separate speeches he has given.
7 From dividends to Darwin in under 200 pages.
When was the last time a Wall Street whiz suggested that you pick up a biology text?
The finance MBA programs would have us believe that investing is simply a matter of math. Robert Hagstrom, someone who has clearly mastered the numbers in his field, quite poetically tells us otherwise. It presents a way in which to view the field of investing that relies on an understanding of many other disciplines.
In fact, one of the greatest outcomes of this marvelous book may just be the resurgence of the liberal arts education.
8 A liberal arts education really does pay!
In Robert Hagstrom's new book, Latticework, it becomes clear that success in the market is directly related to a broad based understanding of the world around us.
The book clearly demonstrates that there are intersections between how markets and the economy work, and our understanding of the core principles of physics, biology, the social sciences, psychology, philosophy and literature.
As an entrepreneur, I have to pay careful attention to the market, for the health of my business, to forecast its impact on our revenue streams, and for my own personal financial well being. I am not, however, schooled in the fine points of economic theory or investing.
I picked this book up with fear and trepidation, knowing I needed to expand my knowledge of financial matters and the market, but wondering if I could really make it through a finance book. I am happy to report that I not only made it through the book - but, found it fascinating.
The book is written simply, elegantly and with a personal tone. In each chapter, I learned something new -- from equilibrium to evolution, from Newton to Darwin. I was able to gain a greater understanding of market trends and economic indicators by taking an intellectual journey, really a brief field trip, through the subject matter that defines a solid liberal arts education.
Avid investors, professional financiers, and the intellectually curious will be inspired by Latticework.
