Book Review: Free Capital
Summary Guy Thomas profiles twelve private investors. The interviewees remain anonymous and speak frankly about their successes and failures. Free Capital is an inspirational and educational read. The Market Wizards of U.K. amateur investors. Actuary, private investor and honorary lecturer Guy Thomas put together a terrific read called Free Capital: How 12 Private Investors Made Millions in the Stock Market after a thorough process of selecting and interviewing over 20+ private investors. The book consists of interviews with twelve private investors. It could have been part of the Market Wizards series by Jack. D. Schwager and an appropriate subtitle would have been: Interviews with the U.K. best amateur investors . If you enjoyed the Market Wizard series you are almost certain to like this book. The final selection of interviewees is made up of investors employing a variety of styles. The author segments the styles as follows: Geographers: top-down investors. Start from a macro perspective and search companies that will benefit from that trend. Surveyors: bottom-up investors who look at individual company financials. Activists: Investors taking an active approach to their investments. Putting a large percentage of their portfolio in a name and developing a conversation with management. Eclectics: Go back and forth between styles or don’t fit the other styles. It even includes one day trader and varies from activists to buy and hold dividend investors. Every investor interviewed had been highly successful with many racking up the balance of their U.K. tax-free, limited contribution accounts, up to well over a million. A feat than can only be accomplished by highly skillful investors. Thomas was also careful to monitor results of the interviewees over a market cycle to ensure their strategies could withstand a bear market. What is the book about? First and foremost the book in an inspirational read. Although a few of the investors in the book are exceptionally intelligent, many appear to be just above average in intelligence and some had to deal with severe setbacks in life or very tough starting conditions. Most of the people profiled struggled to keep their pre-investment career on track. Yet, they were able to achieve tremendous success through investing. They accomplished this through a variety of strategies. An important takeaway is that when you study investing, stick to a strategy that suits you and keep at it ultimately you should be able to achieve financial freedom. For many in this book, becoming a private investor enabled them to get away from company politics. Why you shouldn’t read Free Capital First of all to enjoy this book it is required you are interested in the practice of active investing. If you a convinced passive investor you will not like this book very much. The interviewees are all U.K. based private investors. The author guards their real identity which allowed them to speak frankly. The book really stands out in its genre because the people profiled do not try to talk up their strategies, try to look smart or otherwise try to boost their own ego. However, if you are looking for sophisticated literature, you should read the papers authored by Thomas (highly recommended as well). Who should read Free Capital? Read Free Capital if you are looking for an inspirational read. Quite a bit of actionable advice is dished out by the various interviewees but there are no stock tips. Of course stock tips wouldn’t have a very long shelf life any way. The book is especially valuable if you are developing your style as a private investor. You may not yet realize that it is also possible to be an activist investor from your home office. Even though most people day trading end up broke, some prosper. Perhaps you are considering to become a full time investor because you hate your career but do not dare to take the plunge yet. These people did it but all took precautions. You may think you are handicapped because you don’t have a finance or business background but neither did these people and they destroyed their benchmarks. Free Capital is certainly one of the best investment books I read in 2015 and I highly recommended it.