PERSONAL ACCOUNT

Learn the ancient secret of thinking like a fox to make your investments smarter

What do foxes know about investing? More than hedgehogs, according to Robert G Hagstrom, the author of

Mr Hagstrom spent 14 years at Legg Mason Capital Management, where he managed more than $7bn (£5.2bn) in assets. Now senior portfolio manager at EquityCompass Strategies for Stifel Financial, he denies that investment is a narrow specialism that should be reserved for experts. Instead, he argues that investing is a “liberal art”, a field where the well-fed, widely read mind is at an advantage.

He writes: “In studying the great minds of investing, the one trait that stands out is the broad reach of their interests.”

Charlie Munger, Warren Buffett’s partner, has a similar view, seeing stock picking as a “subdivision of the art of worldly wisdom”.

The extraordinary success of the Berkshire Hathaway conglomerate, of which Mr Munger is vicechairman, is indisputable. Between 1990 and 2017, while the S&P 500 index gained 659pc, Berkshire Hathaway’s share price rose by more than 4,000pc.

Although Mr Buffett’s name is more famous, Mr Munger has a devoted following of his own. His enthusiasts share his belief that to think well we need to draw mental models from different disciplines and understand how they intertwine. The Farnam Street blog, which aims to help people make better decisions in all areas of life, not just investing, takes Mr Munger as a particular hero.

By treating investment as a liberal art, Mr Hagstrom’s book offers his own whistle-stop tour across disciplines from physics and biology to psychology and even literature.

The journey reveals unexpected ways in which these diverse fields can feed into a richer understanding of investment, especially through the lens of complexity theory.

The idea of the liberal arts is less current in Britain than in the United States, where Steve Jobs often spoke of Apple as a firm where technology and the liberal arts met.

But the liberal arts tradition itself reaches back to ancient Athens, where it described the wide-ranging education suitable for a free citizen.

From there, the liberal arts spread to Rome and, later, the cathedral schools and universities of the Middle Ages. The magnificent bell tower of Florence cathedral, a city where finance and high art flourished together, carries a frieze of the liberal arts. The liberal arts also feature in the great west front of Chartres.

These arts were always concerned with educating the full range of human potential. Numeracy was emphasised through geometry and arithmetic, but only alongside other aptitudes including rhetoric and logic. Cicero, the great Roman statesman and lawyer, was famous for his skill as an orator. But he

Foxes see the big picture better than hedgehogs – and investors should emulate them