January 5, 2009

Killing Sacred Cows Book Review



Some years ago I was struck by how many false things I had believed, and by how doubtful was the structure of beliefs that I had based on them. I realized that if I wanted to establish anything in the sciences that was stable and likely to last, I needed - just once in my life - to demolish everything completely and start again from the foundations.
P. 1, Rene Descartes, Meditations on First Philosophy


After having read through several heavy investment books over Christmas I was fortunate enough to have Killing Sacred Cows (PP.270, Green Leaf Books, 2008) fall into my hands. This is not your typical investment book please be warned.

In his book Garrett Gunderson asks a fundamental question- why do we hold the beliefs we do about money, or as he puts it:

The purpose [of this book] is to get us to stop and think about the advice we hear instead of quietly internalizing.
P. 233, Garrett Gunderson, Killing Sacred Cows

For Gunderson each chapter is an opportunity to explore an expression, saying or typical belief about money. He makes a compelling case that each of these expressions is itself a money myth.
  • Ch1- There is only so much money to go around (The Finite Pie).
  • Ch 2- Compound interest can backfire (Your in for the long haul).
  • Ch 3- Making money is key (It is all about the numbers).
  • Ch 4- Security comes from others (Financial Security).
  • Ch 5- Money is power.
  • Ch 6- High Risk = High Returns.
  • Ch 7- Insurance is a waste (Self Insurance).
  • Ch 8- Avoid Debt like the plague.
  • Ch 9- A penny saved is a penny earned.
Killing Sacred Cows cannot be considered a classical investment book- in fact Gunderson in many ways is recommending that we do not invest in the traditional senses at all. If one follows his recommendations we should never invest in Mutual Funds or ETFs and instead take our money and invest it directly in our own educations or business as they are the true vehicles for returns.

I resist some of the conclusions Gunderson makes- the idea of purchasing as much insurance as possible still feels wrong. Making a decision based on feel lacks the rigor that any investor should apply to a decision, so Gunderson has certainly achieved his purpose of forcing the reader to question those beliefs we hold so close.

Gunderson has written a wonderful book in Killing Sacred Cows, the organization, visual elements and collection of fabulous quotes that litter the book make it a great read. I would recommend it for any investor. Even if you find you disagree with the opinions it is still a worthwhile exercise to explore your conclusions and look at them from a differing perspective.