Behold the turtle. He makes progress only when he sticks his neck out.
— James Bryant Conant
I didn’t have high expectations when I requested a review copy of this book by Curtis Faith because I hadn’t heard about the author or the reportedly famous group of traders called the Turtles. However, I was intrigued by the subtitle — How the World’s Best Traders Master Risk. Even though I’m not a trader and probably never will be, understanding risk is critical for long-term investors as well. In fact, investing is all about managing risk — returns are not under the control of investors but managing risk is.
The book starts off promisingly enough by breaking down the definition of risk into its components — Uncertainty, Consequences and Exposure and doing an admirable job of explaining each with examples and anecdotes. The author then lays out the seven rules for mastering risk and uncertainty:
- Overcome fear
- Remain flexible
- Take reasoned risks
- Prepare to be wrong
- Actively seek reality
- Respond quickly to change quickly
- Focus on decisions, not outcomes
The focus in the book is on how each rule applies to trading but it isn’t a stretch to see that these rules apply to investors as well.
Unfortunately, after the first few chapters, the author strays far from the script and takes a lengthy detour into how entrepreneurs and emergency room doctors handle risk, Mr. Faith’s opinions on education etc., liberally sprinkled with anecdotes from his experience as a trader and entrepreneur. Some may find the diversions pleasant but I found it hard to stay focused on the topic at hand.
Bottom line: This book is like the proverbial curate’s egg — very good in some parts and, though never bad, quite tedious at others. Published by McGraw-Hill, it is listed at $27.95 US and is available from Amazon.ca (non-affiliate link).
Other reviews: Michael James on Money liked parts of the book. Canadian Financial DIY gave it 3.5 stars out of 5 and is conducting a giveaway.
PS: This and That will return next week. Have a great weekend everyone!