Tuesday, February 5, 2019

The Rebel Allocator

I can't think of a single novel on the topic of value investing...until now. A Google search for "value investing novels" provides a comprehensive list of value investing books that are decidedly *not* novels. The closest thing I can think of is an obscure book a publisher once sent me about buying low and selling high in the shipping industry (creatively named "The Shipping Man"). So in The Rebel Allocator, Jacob Taylor is breaking new ground.

It's easy to feel for the main character because if you are a value investor, you will see yourself in him. We have likely all struggled with what they teach us in school (e.g. precise cost of capital calculations, go with the highest NPV investments, and trust the projections of the market) versus an "AHA!" moment where we are liberated by the superior ideas of the Graham/Buffett school (e.g. simple over complex, worry about the downside, use Mr. Market rather than trust him). So it goes for our protagonist as he navigates the real world while learning how to be a more rational being.

None of the ideas articulated are particularly new. The author just appears to be an extremely well-read guy who has amalgamated a whole bunch of powerful ideas about business and life into one terrific work. I think the target reader is a novice investor, perhaps even a student. This book reminded me a lot of the terrific book The Goal: A Process of Ongoing Improvement, which I first read as part of a class in business operations. I could see The Rebel Allocator used in a similar way as part of a course.

if you're a veteran reader of value investing and/or business books, you might not have as much to gain from this book. However, because the author has drawn on so many concepts in various fields, I think it likely there will be something new and interesting in the book for everyone. My favourite line was about how a flower is just a weed with a marketing budget!

But don't take my word for it; take Charlie Munger's! After reading the book, Munger reached out to the author and suggested the book be turned into a movie.


1 comment:

Thomas said...

Thanks for this recommendation Saj! I in fact do teach in a business school and I'm seriously considering how to use this book. We have a new audience of recent grads from non-business majors in our MMgmt, so the liberal-arts Socratic approach in this book might be just the thing. I once used a mathematical novel at the U of Alberta for a combinatorics course, so there's that. To me this also feels like a chat about strategy with Mauboussin, who of course leans on Porter and others. I agree that Taylor has done a fine job. (I'm only 1/3 done the book)