San Rafael Investments is a family fund. Mark Morris is the Chief Investment Officer. San Rafael Investments is closed to outside investors.

There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune.
William Shakespeare,
Julius Caesar, Act 4, Scene 3

Disclaimer: I am not a financial advisor and you must take responsibility for your own investment actions. These opinions are for education and entertainment purposes only.

On this page, I explain how I invest for value (not price), Warren Buffett style. To dig in, read my annotated bibliography below. But before going there, here are four ideas for those with no investing experience, are not interested in taking responsibility for your investments, or who need more basic assistance.

1. Learn how to save. Saving habits are more important than investing skills.
2. Take advantage of all financial products to your advantage such as getting all the employer matches possible, maximizing your ROTH contributions, paying off high debts, live frugally. (Read Dave Ramsey or the other books on the last section below.)
3. For US dollar-based lifestyles, open an account at and put and continue to add ALL of the money you won't need for 12 years into VOO. VOO, like its bigger twin sister SPY, holds the 500 largest U.S. companies. VOO charges .03% per year with no transaction costs.
"Rather than listen to the siren songs from investment managers, investors—large and small—should instead read Jack Bogle's The Little Book of Common Sense Investing." ~ Warren Buffett. Mr. Bogle is the founder of Vanguard. Here's a link to his book.
4. If you need more advice than that, you’ll need a financial advisor and that’s an often-expensive can of worms.

Value Investing.
"Price is what you pay. Value is what you get."
Warren Buffett

This quote uses the term "value" differently than the way Wall Street does. Add this: most commonly practiced investing principles are not value investing approaches at all. Let's be clear by rejecting some of these concepts. Here's a list of what value investing is not.

  • not low price investing.
  • not the flip side of Morningstar growth investing.
  • not comparing your success to benchmarks. If you've lost less money than your broker-advisor said you could have lost, you did not win.
  • not actively embracing unevenly weighted, overpriced index and mutual funds which either carry badly managed companies in the basket (passive) or charge high fees (active). See above for the VOO alternative, the only passive strategy recommended.
  • not assuming the market is efficient* and today's prices make more sense than yesterday's prices.
  • not believing excessive diversification* will help your returns
  • not confusing low volatility with safety. Any percentage of bonds* may make some psychological sense but they make no financial sense for the long term as long as you're being paid appropriately for the risk you're taking.
  • not paying excessive fees for active stock picking or advice.
  • not paying too much for any investment no matter how well run or well known is the company.
  • not being impatient when it's time to keep your (cash) powder dry.
  • not playing "buy and forget" by refusing to sell* when a one-time bargain exceeds fair value.
  • not having to show quarterly or annual gains to survive. (Being able to look long term is an advantage you have over the big guys who face "careerism." Your other advantage over institutional investors is that because you have less money, you can trade without effecting the market.)
  • not going with the crowd* like lemmings off the cliff.

It pays to think:

"Two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100 percent of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold … that assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64?"
Scott McNeally, CEO and founder of Sun Microsystems, Business Week 2003
from Vitaliy Katsenelson, The Little Book of Sideways Markets, p.145.

Here are today's numbers. Yeah, I'm looking at value in this dangerous market, and there isn't much….

Thank you to Phil Town, Author, Rule #1.

With Phil at the Bookworm, Omaha, Nebraska.

Stacks Image 129

photo by George Karaminas

To become a good investor requires focused study. Investing for me is like being back in graduate school.

Since I like charts, (doesn't everybody like charts?), I created a fictional university to show what investing is and isn't. Here is the academic org chart.

And also an annotated bibliography:

Each section below is presented in descending order of where to focus your attention.
Suggestion: start with the top few of each category.
Latest update 2-2-20

Phil's and Mark's References
Phil Town, Rule #1 (the classic, take the TIW seminar), Payback Time, Invested (Danielle Town with dad, Phil, easiest to read)
Mohnish Pabrai, Dhando Investor (the "must read" classic), Mosaic: Perspectives in Investing (a rare collection of articles written earlier than Dhando, excellent)
Guy Spier, The Education of a Value Investor (more personal story than value techniques, but important to learn how to stay clear of the Wall Street noise machine)
Daniel Kahneman, Thinking Fast and Slow (not a behavioral economist but a behavioral psychologist, totally different thing except for the Nobel prize)
Nassim Taleb, Fooled by Randomness, Antifragile, The Black Swan, more including Incerto a bundle of these 3 plus 2 more (Challenge your assumptions, seek asymmetry.)
Benjamin Graham, The Intelligent Investor (Chapters 8 and 10; I haven't read Security Analysis)
Ray Dalio, Principles (also a terrific, animated, 30-minute video by Ray if you don't have the time or biceps power to carry this book)
William Poundstone, Fortune's Formula (Ed Thorpe, Kelly, other Bell Labs gamblers' theories)
David Greenblatt, The Little Book that Beats the Market (a system), You Can Be a Stock Market Genius (interesting treatment of analyzing spinoffs from a value investing viewpoint, Contributor to Warren Buffett Shareholder, cited below.)
David Einhorn, Fooling Some of the People All of the Time (in the weeds and personal, like a legal investigation, but there's a lot to learn in there.)
Philip A. Fisher, Common Stocks and Uncommon Profits (Even in the 1940s and 1950s, value lessons are the same as today.)
Aswath Damodaran, The Little Book of Valuation (I can't figure this one out, maybe you can! Phil studies this guy, so it must be valuable.)

Mark's additional References
Fred Schwed, Where Are All the Customer's Yachts (A classic. So simple!)
Michael Lewis, The Big Short (great and they made it into a movie), Undoing Project (About Danny Kahneman and Amos Tversky, see above), Flash Boys (great) Liar's Poker (his first book), Moneyball (made into a movie). (I haven't read Panic yet. It's on my short stack. Michael Lewis is the greatest non-fiction writer alive. Read all his books!) (I just read that he's from New Orleans, Newman School to Princeton. Sorry, Walter Isaacson, I still vote for Michael.)
Peter Lynch, One Up on Wall Street (best, explains his philosophy), Beating the Street (very good, investing war stories), Learn to Earn (basics including lots of history. They're all good because he's clever and is a top-notch story teller. His collaborator is John Rothchild (solo work cited below). The fact that the Lynch books are decades old just makes the insights more amazing.)
Chris Mayer, 100 Baggers (a good one, yes - both price and growth count)
Charlie Tian, Invest Like a Guru (smart, by founder of Contributor to Warren Buffett Shareholder, cited below.)
Vitaliy Katsenelson, The Little Book of Sideways Investing, Active Value Investing (The only difference I can find between the two is that The Little Book came out four years later, is smaller, offers fewer examples, and uses simpler language. Definitely sign up for his emails. Contributor to Warren Buffett Shareholder, cited below.)
William J. Grace, Jr., The Phoenix Approach (published in 1984, lays out value investing clearly and spends the second half of the book on strategies and warnings for value investors to safely play in the world of bankrupt companies. Even if you don't want to invest in zombies, the observations about the companies' financial statements are quite helpful.)
John Rothchild, The Davis Dynasty, (traces three generations of a value investing family and sums up with The Davis Investment Checklist.)
Howard Marks, The Most Important Thing, Mastering the Market Cycle. (A true value investor who emphasizes using the past rather than the unknown future to buy at reasonable prices. They're both dense and full of gems. I prefer the first one written in 2011 to the 2018 one, which goes more into macro issues.)
L.J. Rittenhouse, Investing Between the Lines (fabulous insights about CEO written communications and how ideas such as being clear and candid reflect on strong stock performance; very smart, and I really liked Laura when I met her. A writing teacher like me but with a finance background. Contributor to Warren Buffett Shareholder, cited below.)
Peter Thiel, Zero to One, (the first half being an easy-to-read view from 20,000 feet on business today; the book goes a bit micro with chunks of Ayn (Rand) Paul snuck in but finishes strong.)
Pauline Brown, Aesthetic Intelligence, A must-read for anyone who invests in retail, written by former LVMH, N.A.,Chair, now teaching the "Business of Aesthetics" at Harvard.
Jack Bogle, The Little Book of Common Sense Investing, (overwhelming argument in favor of low cost index investing. Contributor to Warren Buffett Shareholder, cited below), and Enough (which focuses on his battle with the mutual fund industry)
Sam Zell, Am I Being Too Subtle?
Seth Klarman, Margin of Safety, Risk Averse Value Investing Strategies for the Thoughtful Investor (This book is worth its weight in gold, literally. Look at this!

About Buffett/Munger
Charlie Munger (not as an author, but as a subject from other books, if you don't know who he is or how he speaks, you need to find out!)
Carol Loomis, Tap Dancing To Work (Fortune's noted business writer and editor of the annual Buffett shareholder's letters, which are also published but not mentioned here because they are available on the Berkshire Hathaway website for free).
Larry Cunningham, Warren Buffett Shareholder, (40+ short essays by prominent Buffett fans, easy reading)
Robert Hagstrom, The Warren Buffett Way. (Contributor to Warren Buffett Shareholder.)
Roger Lowenstein, Buffett
Daniel Pecault with Corey Wrenn, University of Berkshire Hathaway, (year by year experience of the BRK annual meeting 1986-2015. I love that he contacted me to ask for a "short, honest" AMZN review: five stars, Daniel! Contributor to Warren Buffett Shareholder.)
Janet Lowe, Warren Buffett Speaks

The Big Picture
Gregory Ip, Foolproof (terrible title to an oft-fascinating book with diverse ideas and super clear analogies about how our society manages fear and the complex consequences of having to feel safe at any cost)
Scott Nations, History of the US in Five Crashes: Stock Market Meltdowns That Defined a Nation (Fantastic, history through an investment lens)
Paul Volcker, Keeping At It, Changing Fortunes (The more recent, Keeping At It, is part history, part humility, part central banking; the eloquent and classy public servant Volcker sprinkles in more stories than economic theory.)
Ha-Joon Chang, Economics: The User's Guide (very helpful and straight forward primer on MacroEconomics)

Financial Analysis
John and Tage Tracy, How to Read a Financial Report, (As clear as accounting basics can get: includes the interaction between cash flow statements, income statements and balance sheets. Be sure to read the entire book.)
Bruce Greenwald et al., Value Investing From Graham to Buffett and Beyond (Academics take a shot at explaining Value Investing, and it's great. They integrate theory and practice and analyze 8 value investors in the second half of the book.)
Stig Brodersen and Preston Pysh, Warren Buffett Accounting Book. (The impressive founders of The Investor's Podcast present accounting for value investors from the simple to the sublime.)
Tim Copeland et al, McKinsey & Co, Measuring and Managing the Value of Companies (The book from business school which Nuno gave Danielle in Invested, but she didn't want to read it. It's pretty clear, actually.)
George Christy, Free Cash Flow, Seeing Through the Accounting Fog Machine to Find Greet Stocks
Howard Schilit, Financial Shenanigans, How to Detect Accounting Gimmicks and Fraud in Financial Reports (war stories on the battlefield of accounting: earnings, cash flow, metrics, acquisitions)
Mary Buffett and David Clark, Warren Buffet and the Interpretation of Financial Statements (pretty simple, the valuation books on this list have more depth)

Emotion and Money
Mark Morris, Living Yes, a Handbook For Being Human, (you'll need these tools to make rational choices). Visit
Dave Ramsey, The Total Money Makeover (If your financial house is not in order enough to invest, clean it up with these steps. We thought we had it under control until we reached "Pay Off the Home Mortgage". After reading the chapter, I, the analytical skeptic who had just refinanced a year earlier at a low rate, was convinced and we paid it off entirely. BTW, I am not against personal debt, but it has to have a financial analysis to support it, and this book convinced me my assumptions were wrong.)
Mihir Desai, The Wisdom of Finance (finance meets humanity)
George Kinder, Seven Stages of Money Maturity (financial planner classic)
Rick Kahler, Conscious Finance (financial planner classic too)
Marsha Sinetar, Do What You Love, The Money Will Follow (now we're getting into self-help, and I am not going to diverge that far, except to say that Shakti Gawain, Creative Visualization is really good and a classic, too. Which brings us back to Get your copy now! (Shameless promotion.) Come on! This bibliography alone is worth $17.95. But don't get the Living Yes book for me, get it for you, or for your spouse, or sister, or father, or grandchild, or boss, or neighbor, or letter carrier, or librarian, or AA sponsor, or doctor, or therapist, or ….

*The inversion test: Efficient Market Theory and Modern Portfolio Theory (Markowitz).

One last thing. There is a fantastic book by highly regarded Princeton economics professor Burton Malkiel called A Random Walk Down Wall Street which asserts that if you time and pick stocks using a dart board, you will obtain equal success as you would by using technical or fundamental investing styles. It's written in clear language and is well worth reading. It challenges everything about value investing. Charlie Munger calls such a challenge an "inversion." Malkiel's book and others that follow such as the slightly misnamed Unconventional Success by Yale endowment wizard David Swensen, is an inversion of the entire premise of value investing for the little guy. Don't avoid Malkiel. It's "fantastic fantasy," a test of your understanding. When you understand in what ways it's wrong, you'll understand what it means to be a value investor.