On the first floor of the Artemis office is a small library where you may find the managers quietly reading. We asked four of them to name the books they enjoyed most this year – not the beach page turner, but the ones that gave them a greater understanding of the economy, people and planet.
For those needing to spend that Waterstones gift card they received for Christmas, below is some inspiration.
A Thousand Brains by Jeff Hawkins
Andy Gray, co-manager of the Artemis UK Special Situations fund
“The cells in your head are reading these words. Think of how remarkable that is.” The opening page of Jeff Hawkins’ A Thousand Brains begins with a simple observation that becomes more unnerving the longer you think about it – single cells on their own can’t do an awful lot, but working together, there is seemingly no limit to their abilities. Just as unnerving is that for all the advances in neuroscience, we still have remarkably little understanding of the connection between the brain and human intelligence.
I’ve read a few books on this subject over the years. For example, Daniel Kahneman’s Thinking, Fast and Slow and Steve Peters’ The Chimp Paradox both examined the primitive parts of our brain and the implications for decision making. A Thousand Brains builds on these foundations. Hawkins was a co-inventor of the Palm Pilot but has since moved into the field of neuroscience, where he is exploring how the more sophisticated part of the brain, the neocortex, actually works. While his theory of reference frames and voting mechanisms may sound daunting, by using clear explanations and accessible examples, he makes a complex field digestible. In the years ahead, Hawkins hopes to apply these principles to the field of artificial intelligence to try to understand what is and isn’t possible. A fascinating read.
1929: The Inside Story of the Greatest Crash in Wall Street History by Andrew Ross Sorkin
James Dudgeon, co-manager of the Artemis US Extended Alpha fund
Speculative retail trading, abundant leverage and outsized personalities across the financial and political landscape make it impossible to turn the pages of Andrew Ross Sorkin’s 1929 without sensing the uncanny echoes of today.
There was a go-go stock (RCA) that mimics some of today's high flyers, bankers with near-celebrity status, huge pressure to influence the Fed and businessmen with inside access to the president.
Sorkin himself avoids the analogies. Instead, the book animates the period through the vivid personalities who shaped it. For example, Charles Mitchell, the formidable chief executive of National City Bank, began his day with mandatory calisthenics before the morning papers – proof that some things never change.
This year’s divergence within consumer markets – between households buoyed by rising asset prices and those squeezed by inflation and job insecurity – provides additional resonance. The technological disruption of the 1920s, which hit the farming and rural labour markets while the stock market rose inexorably, serves as a reminder of how detached financial markets can become from large swathes of society. While the detachment continues to grow wider in today’s market, in 1929 it snapped in a way that still resonates almost a century later.
Made in America by Sam Walton
Nick Shenton, co-manager of the Artemis Income fund
I have been re-reading a timeless classic: Sam Walton’s Made in America, which tells the story of how he turned “a single dime store in a hardscrabble cotton town” into Wal-Mart, the largest retailer in the world.
The prompt to revisit this book came from the recent pullback in 3i, the majority owner of pan-European discount retailer Action. Consumers love what Action is offering, with queues stretching round the block for new openings, and investment is earned back within the first year – a remarkable return on capital.
Made in America is not just a classic for retailing; it offers a treasure trove of advice for businesspeople, investors and everyone else, for that matter. One of my favourite tips is to be less afraid of being wrong than everyone else: take risks, learn from them, but cut failures fast. It carries weight, coming from a man who started a business that now generates more than $700bn of revenue a year. What seemed to others eccentric behaviour was to him just logical, such as popping his dogs in a plane and flying over small towns to observe traffic flows and determine the best location for new Wal-Mart stores.
Breakneck: China's Quest to Engineer the Future by Dan Wang
Jacob de Tusch-Lec, manager of the Artemis Global Income fund
Sitting somewhere between academic analysis and laid-back commentary, Breakneck considers the industrial and military path that China is carving out for itself. One of author Dan Wang’s central themes relates to the 10 male members of the Politburo who effectively run the country and, more importantly, their profession: all of them are engineers.
This dominates their mindset, leading to the belief that everything can be designed like a machine – not just city planning, the economy and the stock market, but demographic patterns, human behaviour and society in general.
There is a striking contrast with the US, where politicians do not come from an engineering background, but overwhelmingly from law school. The outcome is entirely predictable: one system defaults to litigation, procedure and negotiation; the other to design, execution and problem-solving. As a result, while objectives set by the Chinese government are quickly translated into new roads, railways and factories, even relatively straightforward infrastructure projects in the West are quickly swallowed by politics, lawfare and a thicket of competing ‘soft’ objectives that are individually defensible but collectively paralysing – and ‘stuff’ doesn’t get done.
Pax Americana is over, and while Europe and the US try to figure out what comes next, as investors, we need to remind ourselves that we have to adapt. As it becomes ever more apparent that we are in the midst of a second Cold War, Breakneck is not a pleasant book, but it is a fascinating and genuinely valuable one.
The views expressed above should not be taken as investment advice.