Mark Mobius' new book offers a concise primer for beginner investors

The book of wealth: A young investor’s guide to wealth and happiness

Author: Mark Mobius

Publisher: Penguin Random House India

Pages:156

Price: Rs 299

Watching interviews or looking at pictures of the legendary money manager Mark Mobius invariably attired in a suit suggests a patrician of long standing. It, therefore, came as a surprise to this reviewer, and provoked admiration in equal measure, that Mr Mobius was not born with the proverbial silver spoon. As he tells us on the very first page of this book, his father, a baker, died when Mr Mobius was still in high school. To keep his college dreams alive, he played piano in clubs, ultimately obtaining a PhD in economics from MIT.

Another astonishing fact about Mr Mobius is that he became a fund manager only in his fifties. His story certainly exemplifies his recent tweet on his 88th birthday: “Life is what you make of it.”

In 1987, Sir John Templeton asked Mr Mobius to run the Templeton Emerging Markets Fund. When he started, the Templeton Emerging Markets group had $100 million invested in six markets. By the time he quit a good 30 years later, the corpus had swelled to over $40 billion across 70 countries. In 2018, he founded Mobius Capital Partners. According to his website, this peripatetic fund manager has travelled over a million miles and visited 112 countries in his quest to find undervalued companies before others do.

The book’s introduction strikes a distinctly non-materialistic note. Mr Mobius says real wealth is not just about accumulating money and possessions. A person can be deemed truly rich only if she has also gathered knowledge, emotional strength, social connections, and spiritual well-being. Life’s true richness, he adds, comes from experiences, lessons, and values.

Next, the author extols the merits of frugality. He cites the example of Warren Buffett, currently the world’s sixth richest person according to Forbes, who continues to live in the same house he bought in 1958. Besides helping to preserve wealth, a frugal and minimalist lifestyle ensures that the practitioner wastes less time and energy on non-essential aspects and channels it all into matters of consequence.

In support of his view that wealth does not always translate into happiness, Mr Mobius discusses the Easterlin paradox. It refers to the phenomenon that initially, as one’s wealth grows, one experiences more happiness. But this linear relationship breaks down after a point. As expectations outpace gains, stagnation, and sometimes even a decline in happiness, sets in.

From the third chapter, titled “Investment opportunities”, Mr Mobius turns to the book’s main theme—various asset classes one can invest in to earn wealth. He begins with cash, which allows one to earn an interest income when deposited, but is vulnerable to devaluation.

Mr Mobius next delves deep into history, recounting developments during the Roman Empire and various Chinese and English dynasties. Throughout history, rulers have devalued currencies — usually to fund military expeditions and also to satiate their own greed. They would gather old coins and issue new ones with reduced precious-metal content, or print vast quantities of paper currency notes. Such actions inevitably stoked inflation.

Next, the author moves to the history of equities, starting with the joint-stock companies of England and the Netherlands, which had exclusive rights from their governments to trade with Russia, India, and southeast Asia. To buttress the case for equity investing, Mr Mobius cites figures from Jeremy Siegel’s book Stocks for the Long Run. A dollar invested in stocks in 1801 would have grown to $8.8 million by 2001, far outpacing the returns from bonds and gold. 

While bonds offer stability and lower volatility, Mr Mobius warns of the inflation risk investors could suffer by investing too heavily in them. In contrast, volatility becomes less of an issue in stocks as the holding period increases. An investor with a 10-12-year holding period is likely to enjoy sound returns from equities.

Mr Mobius covers a lot of ground in this slim volume of 156 pages: Mutual funds, gold, other precious metals, cryptocurrencies, collectables, derivatives, and so on. He combines a bit of history with the pros and cons of each asset class. The write-ups are brief but insightful. In the case of some asset classes, notably real estate, one is left yearning for more.

On reading a book written by a famous money manager, the reader inevitably expects to receive some wisdom on investing. Books by Benjamin Graham, Philip Fisher, Peter Lynch, and many others fulfilled this mandate. From Mr Mobius, the reader would expect insights on investing in emerging markets. On that count, she is likely to be disappointed.

This book is essentially a primer on various asset classes. While seasoned investors may find it basic, novices are likely to benefit from it. Those who wish to learn about Mr Mobius’s investment techniques should turn to his other books, of which there are a dozen more.