As a reader, two questions may have come on top of your mind right now.
One, “Why is a site that should tell me ‘how to invest’ telling me ‘how to read’?”
And two, “Who needs to learn how to read?”
The answer to your first question is – Before you invest, you must read. What to read? First, read my outline of a 2-year course in investing.
The answer to your second question is – Before you read, you must learn how to read.
But then, as you rightly asked, who needs to learn how to read?
After all, we all learned how to read fairly early in life, usually in elementary school, right?
But do you know how to really read?
More importantly, are you really reading?
If I were to go by my interactions with several tribesmen through emails and during my Art of Investing workshops, I find many struggling with reading.
Some of the common issues outlined are…
- I don’t have time to read.
- I don’t know what to read.
- How can someone read so much stuff out there?
- Is it necessary to read?
- I have seen people making money in stocks without reading much, so why should I?
Overall, the underlying issue is…
You should not read good books for the sake of talking about them. Mentioning them by name may give you the appearance of literacy, but you do not have to read them to outshine someone else at a dinner party.
Reading is a means toward living a good human life. It’s a means toward living the life of a free man.
You see, the most remarkable thing about us humans is that we can sharply differentiate our minds from our bodies.
The body is limited in ways that the mind is not. In fact, by the time most people are thirty years old, their bodies have begun to deteriorate. But there is no limit to the amount of growth and development that the mind can sustain.
The mind stops growing only when the brain itself loses its powers, and not before that.
But most of us are turning this great advantage to a great disadvantage. Like our muscles, if not exercised (used), our minds can atrophy.
This is dangerous given that atrophy of the mind is a deadly disease. What else explains that so many busy people die so soon after retirement?
So, reading well is thus not only a good in itself, nor is it merely a means to advancement in your career.
Most importantly, reading well helps keep your mind alive and growing. And that’s why you must read.
Just look at Buffett and Munger. The biggest reason they ascribe to their current state of being is that they kept getting smarter.
How? By reading a lot.
Being a writer, I know for sure that reading has made me better at my art. Being an investor, I know for sure that I won’t have a bright and profitable future without a lot of reading.
I know that in this world of information overload, it’s a tough ask to concentrate and read everything’s that’s nice out there (including Safal Niveshak’s posts :-))
And thus, if you are facing the problem of ‘what to read and what to avoid’, I am with you.
I have realized over my years of reading that while seeking out new information and ideas from a wide variety of sources is admirable, it doesn’t necessarily give you an advantage.
The ancient Greeks called a person who was widely read but not well read as “sophomore” (sophos or wise + moros or foolish).
I will count myself in this category, at least as of now. 🙂
Anyways, coming back to my original question of “How to read”, I will answer it with due help from a great book I read a few years back.
The name of the book is, well, How to Read a Book, and it was written by Mortimer J. Adler in 1940 (revised in 1972). This book attempts to inculcate skills that are useful for reading anything.
I know you are cursing me for recommending another book to you! But if you have been a reader of Safal Niveshak for long, you know this sadistic side of mine. 🙂
Anyways, in this book, Adler wonderfully describes the process of reading and how anyone can learn the art of effective and efficient reading. He does it through…
Four Levels of Reading
How to Read a Book identifies four levels of reading:
Adler explains that each of these reading levels is cumulative. This means that you can’t progress to a higher level without mastering the levels that come before.
Here is how he describes each of these levels.
1. Elementary Reading
As the name suggests, this is what we learn in elementary school – when we move from illiteracy to literacy, or when we learn to differentiate between a collection of black marks and words.
At this level, the question that is asked of the reader is – “What does the sentence say?” So it’s like learning to read, “The cat sat on the hat.”
For an investor, it’s like reading and understanding the meaning of words like ‘investing’, ‘gambling’, ‘speculation’, ‘annual report’…and even ‘Ben Graham’ and ‘Warren Buffett’.
2. Inspectional Reading
This is the other name of “scanning” and “superficial reading”.
Inspectional reading means giving a piece of writing a quick yet meaningful advance review in order to evaluate the merits of a deeper reading experience.
Here is how Adler describes this type of reading…
Inspectional reading’s aim is to get the most out of a book within a given time – usually a relatively short time, and always (by definition) too short a time to get out of the book everything that can be gotten.
Still another name for this level might be skimming or pre-reading. However, we do not mean the kind of skimming that is characterized by casual or random browsing through a book. Inspectional reading is the art of skimming systematically.
When reading at this level, your aim is to examine the surface of the book, to learn everything that the surface alone can teach you. That is often a good deal.
Whereas the question that is asked at the first level (elementary reading) is “What does the sentence say?” the question typically asked at this level is “What is the book about?”
Stopping at inspectional reading is only appropriate if you find no use for the material (like you do sometimes with my posts :-)).
Unfortunately, this is all the reading most of us do, and that’s why we have unread books piling up in our wardrobes.
3. Analytical Reading
This level of reading is more complex and a more systematic activity than either of the first two levels of reading.
This is where a book raises its demand on your time and concentration. Adler explains…
Analytical reading is thorough reading, complete reading, or good reading – the best reading you can do.
If inspectional reading is the best and most complete reading that is possible given a limited time, then analytical reading is the best and most complete reading that is possible given unlimited time. The analytical reader must ask many, and organized, questions of what he is reading.
On this level of reading, the reader grasps a book and works at it until the book becomes his own. Francis Bacon once remarked that “some books are to be tasted, others to be swallowed, and some few to be chewed and digested.”
Reading a book analytically is chewing and digesting it.
You’ll note that the inspectional reading you did perfectly sets the stage for an analytical reading.
For an investor, this is what you must do with books like…
- The Intelligent Investor by Benjamin Graham
- The Richest Man in Babylon by George Clason
- Poor Charlie’s Almanack by Peter Kaufman
- The Most Important Thing by Howard Marks
- Margin of Safety by Seth Klarman
- Warren Buffett’s Letters
So far so good. But till now, we are talking about how to read “a” book.
The highest level of reading, as Adler explains, allows you to synthesize knowledge from a comparative reading of several books about the same subject. And it’s called…
4. Syntopical Reading
This is where the real fun of reading starts. Adler explains…
When reading syntopically, the reader reads many books, not just one, and places them in relation to one another and to a subject about which they all revolve.
But mere comparison of texts is not enough. Syntopical reading involves more. With the help of the books read, the syntopical reader is able to construct an analysis of the subject that may not be in any of the books.
Isn’t this similar to Munger’s idea of creating a “latticework of mental models”?
It is, I believe.
Anyone can read five books on a topic and be an expert. In fact, I often consider myself an ‘expert’ after finishing just one book!
Well, that may be true i.e., you can be an expert on a subject after analytically reading five books. But what makes the real difference is how you read those five books.
If you read those five books analytically, you will become an expert on what five authors have said.
But if you can read those five books syntopically, you will develop your own unique perspective and expertise in the field.
In simpler words, syntopical reading is all about you and the problems you are trying to solve by reading books. It’s not anymore about the authors of those books.
So, in the ‘syntopical’ sense of reading, the books you read are simply tools that allow you to form an understanding that’s never quite existed before.
Here, you create a latticework of the information in those books with your own life experience and other knowledge to create mental models and new insights.
This is how you become an expert in your own right.
How to Read Syntopically
Here is Adler’s suggestion of five steps to syntopical reading:
- Identify the five (or ten) relevant books you need to read from a sea of irrelevant ones – like the ones on investing and human behaviour I mentioned above. Read those books ‘analytically’ and make your notes.
- Assimilate the language of each author into the terms of key words that you choose. Like, bring together all ideas on “margin of safety” as suggested by Buffett, Klarman, Graham, and Marks. Don’t just search for the exact terms (“margin of safety” here) but for all relevant ideas that describe the idea. I realized this while reading Buffett’s letters. There’s no point in reading all letters year-by-year. Instead, it’s better to choose a focused topic (like “float” or “compounding”) and then understand how Buffett has used that over the past 45 years.
- Frame clear questions that will shed light on the problems you are trying to solve by reading those books – like “How do smart managers allocate cash?” or “How do smart investors assess management quality?” In case any author fails to address any of your questions, know that you had messed up at the inspection stage.
- When you ask a good question, you’ve identified an issue. At this step, you identify the pros and cons of a specific topic that helps you flesh out all sides of an issue, based on what you are reading. When you understand multiple perspectives within an issue, you can come to your own conclusion (which may be different that what a single author has suggested, and thus adds unique perspectives).
- The first four steps of syntopical reading help you answer the questions “What do the authors say about an issue?” and “How do they say it?” Now, at the final stage, we create the latticework upon which you hang the answers you have arrived at by assimilating what you have read and your own experience and intelligence. This is the step that, as Adler writes, can clear away the deadwood and prepare the way for an original thinker to make a breakthrough.
In all, and as you must have realized by now, syntopical reading is probably the most rewarding of all reading activities.
The benefits are so great that it is well worth the trouble of learning how to do it.
Make a Book Your Own
The four levels of reading we discussed above can help you frame the best ideas out of the books you read. But how do you remember those ideas long after you’ve read them?
The answer is – by making a book your own.
And how do you make a book your own?
The answer is – by asking questions to the book, and seeking answers within it.
In fact, if you have the habit of asking a book questions as you read, you are a better reader than if you do not. But then, just asking questions won’t take you far. You also need to answer them, and this is much easier done with a pencil in your hand.
As Adler writes…
The pencil becomes the sign of your alertness while you read. It is an old saying that you have to “read between the lines” to get the most out of anything. The rules of reading are a formal way of saying this.
But we want to persuade you to “write between the lines,” too. Unless you do, you are not likely to do the most efficient kind of reading. When you buy a book, you establish a property right in it, just as you do in clothes or furniture when you buy and pay for them.
But the act of purchase is actually only the prelude to possession in the case of a book. Full ownership of a book only comes when you have made it a part of yourself, and the best way to make yourself a part of it—which comes to the same thing—is by writing in it.
Here are some devices Adler suggested that you can use to make your book your own…
- Underlining or circling of major points
- Vertical lines at the margin to emphasize a statement already underlined or to point to a passage too long to be underlined
- Star, asterisk, or other such symbol at the margin for emphasis
- Numbers in the margin to indicate a sequence of points made by the author in developing an argument
- Writing in the margin, or at the top or bottom of the page to record questions (and perhaps answers) which a passage raises in your mind
Do any of these, or anything you are comfortable with to make the book your own.
Like, as a true investor, you don’t just hold a stock but own a part of a business, don’t just hold a book but make it your own.
Read, My Friend
I recently came across this wonderful article on Farnam Street, titled “The Buffett Formula – How to Get Smarter“.
The answer that the author suggests, and as Buffett has stressed upon for long, is – Read a lot.
Warren Buffett says, “I just sit in my office and read all day.”
Here’s Charlie Munger’s edition…
We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them.
What Munger says about people “not grabbing the right ideas”, Adler wrote in a different way in his book…
The person who says he knows what he thinks but cannot express it usually does not know what he thinks.
So read, my friend.
Read a lot.
Don’t just read to absorb information. That’s what everyone else is doing.
Instead, read to ask questions. Read to look for answers. Read to understand the various answers. And read to decide for yourself the best answer for the question you asked.
Now, if you think what I just suggested sounds like a lot of work, well you’re right!
I am sure most people won’t do it, just like most people will never sit quietly to understand why they are investing in the first place.
But you do it…for your own sake.
Remember what Munger says, “The game of life is the game of everlasting learning. At least it is if you want to win.”
I’m sure you’re here to win.
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