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Recommended Reading

I always try to carve out time for reading books. I probably go through one a week. Below, I share a couple of things I’ve read recently that I recommend you read too. And they don’t have anything to do with the virus (at least not directly). You need a break!

Keynes the Investor, During the Great Depression

John Maynard Keynes, though more widely known as an economist, was also a great investor. I like reading about Keynes’ investing experiences during the Great Depression. I figure the Great Depression is as bad as it gets. And Keynes was exceptionally witty. He wrote some great stuff during this time. I love his defiant tone as he addresses fellow investors and critics.

One book I’d recommend as an excellent entry point into his world is Keynes and the Market by Justyn Walsh. I re-read parts of this book over the weekend. It is full of pithy quotes and excerpts from Keynes’ letters and memos. Though he started out as a speculator, Keynes became more of a Buffett-style, buy and hold investor. There is a lot of wisdom here for the long-term holder of common stocks.

It’s good to read this now, when you’re tempted to cut and run. Keynes advocates for “steadfast holding” of fairly large positions “through think and thin.”

After the big early drawdowns of the 1930s, Keynes wrote:

“I do not draw from this the conclusion that a responsible investing body should every week cast panic glances over its list of securities to find one more victim to fling to the bears.”

On another occasion he wrote:

“It seems to me to be most important not to be upset out of one’s permanent holdings by being too attentive to market movements. Of course, it would be silly to ignore such things, but one’s whole tendency is to be too much influenced by them.”

For his concentrated approach, he often faced criticism from advocates of a more diversified approach. Keynes answered one of these critics with the following:

“Sorry to have gone too large in Elder Dempster. I was suffering from my delusion that one good share is safer than ten bad ones.”

If you have unpopular positions where you may be feeling a little dumb sticking with, you will find tonic in Keynes. I own InterContinental Hotel Group, for example. It’s an easy sell, right? I mean, who wants to own a hotel stock now? I have several unpopular positions like this.

But Keynes often wrote about keeping unpopular positions as important for long-term success. As he wrote to a fellow investor in 1937:

“When you find anyone agreeing with you, change your mind. When I can persuade the Board of my Insurance Company to buy a share, that, I am learning from experience, is the right moment for selling it.”

Anyway, that’s a taste of what’s in the book. I recommend it as I am sure reading Keynes will buck you up during these troubled times.

Junk to Gold, By the Founder of Copart


"Folks come up to me after speaking engagements and ask where they can hear more about my life and business philosophies. They want to know how I turned one auto scrapyard into a multi billion dollar, global auto auction company. They are looking for a magic formula, maybe. I wish I had one to give. I don't think there's a formula, and it's not magic at all."


- Willis Johnson


I also read Junk to Gold by Willis Johnson, who founded Copart. We have a very small position in Copart as I write, picked up recently when it was near lows.

Copart runs online car auctions for the resale and remarketing of totaled vehicles. Reading this book will give you great historical context as to how it came to be.

Johnson has a great story to tell. He came from very humble beginnings in Oklahoma. His father couldn’t read. And Johnson himself had little formal education. He wound up serving in Vietnam, saws a lot of action and suffered numerous injuries. Only half his unit survived.

When he gets into business, you get an inside look at an entrepreneur in action. It gets particularly interesting when he finally gets his own dismantling yard. Here he takes junk cars that were un-drivable, or near the end of their useful life, and strips them for parts, etc.

“I would buy cars… pay $35 to $50 dollars and then tow them to the yard. There, I’d pull all the parts off that I thought I could resell, drain the fluids out of the car (which is called “depolluting”), and then haul the shell to the smelter, where I’d get paid for the iron by the ton.”

Later he built up a good parts business and figured a way to make more money by selling engines in pieces. Competitors at the time forced their customers to buy the whole package, but as Johnson explains:

“I would sell them just the motor, undressed, for $275 – a deal if that's all they needed. Then I'd sell the other parts separately – the distributor for $50, the alternator for $25, the carburetor for $100. By the time I was done, I could get $700 for the same parts sold separately that were sold together by my competitor for $400. And the customer was happier.”

His margins and cash flow were also better than his early competitors, which gave him numerous edges. He starts to buy up other yards and improve their performance dramatically. And he kept innovating and pushing the industry in new directions.

He gives you the blow-by-blow on many of these deals as Copart grows and eventually pursues an IPO. I like his voice, too. He’s plain spoken and just lays it out there. And sometimes he’s funny.

I liked how he didn’t really understand the stock market all that well when Copart was doing its roadshows. He still had the mindset of a private company looking for partners. If he met an investor he didn’t like, he would tell his investment bankers he didn’t want their money. He didn’t see, at the time, that investors in public securities are a jittery bunch that don’t sit still.

As Johnson tells his tale, he fills his book with lots of lessons he learned building his business. Some of these include:

“Be your customer’s most valuable partner”

“Be careful who you go into business with”

“Don’t let the naysayers get you down”

“Embrace new ideas”

“Good ideas transcend borders”

“Don’t lose what makes you special”

"Don't feel sorry for yourself"

And many, many more…

One I like is: “Take care of the business and the business will take care of you.” Here’s Johnson explaining it:

“It’s a little like raising a kid, when you think about it. When a baby is born, that little guy can't do much for himself. He's depending on you to take care of him. But you tend to him, feed him, keep him safe. And a few years later, he standing up on his own and making his way in the world. Down the road, that little guy is grown and taking care of you.”

I think the above gives you the flavor of the book. It’s an easy read and not long. You could read it in a couple of sittings. But it will make you feel good and inspire you in your own business.

Thank you for reading.

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Published March 20, 2020

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