Review of Investing against the Tide by Anthony Bolton

Anthony Bolton is a highly rated former fund manager who spent much of his career at Fidelity, managing multiple funds but most notably the Special Situations Fund. He retired from full time money management just before the 2008/9 financial crash. His book Investing Against the Tide is an engaging read, providing plenty of lessons for investors.

Bolton is first and foremost a contrarian investor, therefore he likes cheap recovery stocks. This isn’t everyone’s cup of tea, especially given the long disconnect we’ve had between the performance of growth shares versus value shares.

The foreword to the book comes from another published money manager: Peter Lynch. He notes in his foreword that “To succeed in investment you have to work at it. Watch for the importance of hard work as you turn these pages….That edge, plus stead nerves, flexibility, good judgment and a complete lack of bias or pre-judgement is what enabled Anthony Bolton to deliver record-setting compound returns for decades.”

The book itself is split into two parts. Part one covers the Principles and practices from a life running money. It covers a lot of ground from what to look for in management, to portfolio construction to valuations, technical analysis and what to do when you’re not doing so well.

The second part is more reflective and personal and covers memorable company meetings and some mistakes as well as highlights.

When it comes to memorable company meetings Bolton eloquently retells stories such as travelling to Denmark to see a finance director only to be told they don’t talk to investors, or visiting a Swiss company only to find out he couldn’t buy shares as he wasn’t a resident.

The good and the not so good

An easy read: the book is not a highly mathematical book full of formulas. It’s more an easy read of examples and thoughts from Anthony’s long investing career. The tone isn’t patronising, but at the same time isn’t colloquial. Overall, it’s just a nice investing book to read.

On the opposite side of that coin, the book could give investors a little bit more practical advice. The section on valuations is quite brief, just flickering over some metrics he likes and some he doesn’t really rate, such as metrics more commonly associated with growth investors, such as the PEG ratio.

While not being too long or difficult a book it does cover a lot of ground and gives most of the focus to the first part of the book which has mostly relatable and useful advice.

Notable advice for investors from the book

At the back of the book are very helpful bullet points broken down into sections such as ‘what to look for in management’, ‘constructing a portfolio’, ‘looking at valuations’ and interestingly ‘technical analysis’.

These are some of the standout pieces of advice from the 80 or so bullet points at the back of the book, which acts as a summary.

  • Remember, people rarely change; invest in managers you trust
  • Every stock you own should have an investment thesis
  • Look at the share the same way as if you were buying the whole business at that price
  • Successful investing is a blend of standing your own ground while listening to the market
  • Never become emotionally attached to a holding
  • My biggest mistakes have nearly always been companies with poor balance sheets
  • One loses the most money on highly geared companies when business conditions deteriorate
  • Valuation anomalies are more likely in medium-sized and small companies
  • Use technical analysis as a cross check to your fundamental views

Summary

This isn’t a book for beginners. For that, Shares Made Simple or books by The Naked Trader or just reading online is probably better. It probably isn’t that informative for growth or momentum investors either, or for short term traders.

For long-term investors, with an interest in value, it’s a good read. Overall, it’s quite enjoyable, with occasional nuggets. Once read, the lessons at the end prove to be useful ongoing reminders. The fact Bolton had sustained success gives the reader confidence that he’s worth listening to and that’s probably one of the great strengths of the book.

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