Wed 6 Aug 2008
New York Times columnists lists the best business books ever.
“The Smartest Guys in the Room,” by Peter Elkind and Bethany McLean. (O.K., O.K., they are former colleagues of mine, and I was deeply involved in editing this book — but I have to say, I think it turned out pretty well!)
Indeed. Below the fold is my list of the best finance books, given to my 3 Williams interns last week. Comments welcome.
1. Where The Money Grows and Anatomy of the Bubble - Garet Garrett
2. Reminiscences of a Stock Operator - Edwin Lefévre
3. Only Yesterday, An Informal History of the 1920’s - Frederick Lewis Allen
4. The Go-Go Years, The Drama and Crashing Finale of Wall Street’s Bullish 60s - John Brooks
5. Extraordinary Popular Delusions and the Madness of Crowds - Charles Mackay & Confusión de Confusiones - Joseph de la Vega
6. Where Are the Customers’ Yachts? or a Good Hard Look at Wall Street - Fred Schwed, Jr.
7. The Money Game - Adam Smith
8. Once in Golconda, A True Dama of Wall Street 1920-1938 - John Brooks
9. Liar’s Poker, Rising Through The Wreckage on Wall Street - Michael Lewis
10. The Great Crash, 1929 - John Kenneth Galbraith
11. The Predators’ Ball - Connie Bruck
12. At Bonus Time, No-one Can Hear You Scream - David Charters
13. Barbarians at the Gate, The fall of RJR Nabisco - Bryan Burrough & John Helyar
Bethany’s book probably belongs in their somewhere, perhaps in place of The Great Crash.
August 6th, 2008 at 7:15 am
I will second Liar’s Poker and Barbarians … but no Den of Thieves???
August 6th, 2008 at 7:18 am
If one is interested in honing oneself for a trade, maybe these lists are relevant. If one is interested in a search for truth, beauty and justice, then there are an infinite number of writings, which ought to have priority over any of those on these lists. Personally I just finished rereading The Short Happy Life of Francis Macomber which I believe beats the hell out of any of the listed items - but of course that short story won’t directly help one with acquiring and maintaining filthy lucre.
August 6th, 2008 at 8:43 am
I have to say that I attempted Reminiscences of a Stock Operator on your recommendation a while back and really wasn’t a fan. Liars Poker is a fun read though.
August 6th, 2008 at 9:11 am
Not bad. My further reactions, at least to the ones I’ve read:
1) Lefevre is a great read, and I’ve talked about bucket shops on the show. Just remember that the “actual” stock operator this fictional work is based on, Jesse Livermore, killed himself in 1940 after going broke, again.
2) Mackay is OK, but that book is really long, and the chapter that most financiers talk about, on the Dutch Tulip Mania, has been debunked by modern authors, http://www.amazon.com/Tulipmania-Money-Honor-Knowledge-Golden/dp/0226301257
3) Liar’s Poker is a great read, but I’ve always wondered what it’s actual benefit is for someone working in finance, apart from beware the greedy assholes and gosh, wasn’t it easy to make money in the 1980’s.
4) Galbraith’s The Great Crash is an awesome book.
Others, at least for finance, that one might consider:
1) Money of the Mind or Minding Mr. Market by James Grant, particularly Money of the Mind.
2) Fooled by Randomness by Nassim Nicholas Taleb
3) The Crowd by Gustave LeBon
And this whole exercise has reminded me of the wonderful Fraser Publishing, which keeps churning out investment and speculation books written from 1890-1930 and they are always a good read.
August 6th, 2008 at 11:41 am
Allow me to plug a business book written by a family friend in London with his brother in New Jersey:
The Puritan Gift: Triumph, Collapse and Revival of an American Dream by Kenneth Hopper and William Hopper
One of the FT’s Top Ten of 2007
http://www.puritangift.com/
This is not your dorkwank’s/wankdork’s business book written in the style of so many of the comments on the dismal science et al that appear all-to-often in this blog. THIS BOOK IS READABLE!
1. The contributions of the Puritans to our American economy are very convincingly presented and documented. While this may smack of blind madness to the PC (indeed, slavery and the three-corner trade and the considerable French contributions are only recognized in one chapter), the Puritan premise is entirely defended and written in a highly personal and readable style.
2. The collapse is laid at the feet of some who might meet the standards of dorkwonkiness mentioned above. This is done again with anecdote and statistic in that same highly readable style. The inherant weakness is laid at the feet of those who believed that any business could be run from the CEO/Business Planner level by some one versed through schooling in ‘general financial principles’ and ignoring the inputs of those lower level managers who for years had actually made things happen. This results in a short term focus on bottom line performance at the expense of long-term success and ignores the lessons of the Puritan Fathers.
While I found some of the latter point hard-going, I certainly didn’t disagree with their positive assessments of Drucker and Demming. I do think they gave Maslow short-shrift.
But, at any rate, a refreshing read, written in a personal style reaching controversial original premises and conclusions!
August 6th, 2008 at 12:32 pm
FT is a good read and resource.
Thanks for the plug, will acquire Hopper’s “The (readable) Puritan Gift”.
August 6th, 2008 at 2:03 pm
I second the sentiment that the Great Crash is wonderful. Agree with putting McLean in there, but not at the expense of Galbraith’s classic.
Perhaps Mackay would be a candidate to drop instead, but as I have not read all of the books on the list, I don’t feel comfortable offering definitive guidance.
August 6th, 2008 at 2:04 pm
One small final point - one benefit of reading Liar’s Poker is that many others have read it and will reference it. Something to be said for just appearing educated and in touch with one’s peer group.
August 6th, 2008 at 2:07 pm
Dorkwank? Wankdork? I expect to see these contributions to the mother tongue in the next OED ;)
On the subject of the Puritans, one of the best books I’ve read this year, and sadly, one of the few non-work books I’ve been able to fit in, is E. Digby Baltzell’s “Puritan Boston and Quaker Philadelphia”. I will have to track down “The Puritan Gift” to see how it jibes with Baltzell’s thesis of aristocracy.
August 6th, 2008 at 3:03 pm
Aaarghh - my apologies to etymologists everywhere!
In my haste to type the near-portmanteau coinages of ‘dorkwonk’ and ‘wonkdork’, I clumsily typed ‘wank’ in each useage (actually, ‘donk’ and ‘work’ would be true portmanteaus, but I thought they were weak).
While dismayed by longish discussions on this blog using (and I dare to borrow my old roommates’ name) language turgidley, I in no way wish to imply the sin of Onan to the
use of the combined ‘wonk’ as a descriptor of the participants.
Please forgive this entirely unintentional and perhaps Freudian slip of the fingers on the keyboard.
August 6th, 2008 at 8:24 pm
From David’s list, I enthusiastically second “Reminiscences of a Stock Operator”, “Where are the Customers’ Yachts”, and Galbraith’s “The Great Crash, 1929″.
I would add Ron Chernow’s “The House of Morgan” and his much briefer “Death of the Banker”, and would replace Mackay’s book with Edward Chancellor’s “Devil Take the Hindmost” - a far more reliable history of speculative manias. All three make for quite enjoyable reading.
And you can’t really have any finance reading list without including Ben Graham’s “Intelligent Investor” and Burton Malkiel’s “Random Walk Down Wall Street”.
@Gondo - I personally found Taleb almost unreadable. He has good ideas. He may even be right. But does he have to be such a dick about it?
August 6th, 2008 at 9:20 pm
The investment books I recommend to friends who invest are (1) Peter Bernstein, CAPITAL IDEAS: THE IMPROBABLE ORIGINS OF MODERN WALL STREET (1992) (2) John Bogle, THE LITTLE BOOK OF COMMONSENSE INVESTING (3) Daniel Solin, THE SMARTEST 401 K BOOK YOU WILL EVER READ. There is a new Peter Bernstein book just out, CAPITAL IDEAS EVOLVING in which Bernstein reinterviews the guys like Samuelson, Merton, and Swenson discussed in the first book who are still alive. The new book is a lot more difficult than the first one, since we have learned a lot since the early 90’s. I hesitate to recommend it to the amateur. My nomination for the greatest work of fiction of the past century is Louis-Ferdinand Celine’s, JOURNEY TO THE END OF NIGHT. My sentimental favorite neglected work of fiction (since I love Spain) is Jose Maria Gironella, THE CYPRESSES BELIEVE IN GOD. A griping book about the Civil War and how his home town (Gerona) was divided. When Gironella died a couple of years ago only the GUARDIAN had a decent obit. Written by an old red who nevertheless understands Gironella’s greatness. Gironella saw the unsavory aspects of all the various sides. Tho in the end found the Republican side worse than Franco.
August 6th, 2008 at 9:40 pm
Forgot about Peter Bernstein… his “Against the Gods: The remarkable story of risk” is also tremendous.
August 6th, 2008 at 10:28 pm
“When Genius Failed” by Roger Lowenstein deserves an honorable mention. It is about the Long Term Capital Management collapse. (Lowenstein is a great financial writer. He recently wrote a great article on the subprime crisis and its intersection with Moody’s and S&P for the New York Times Magazine.)
I think When Genius Failed is a good book on its merits; Lowenstein engages some of the financial nuts and bolts of what happened in a way that educates those distant from the financial world without dumbing it down too much for the taste of a Wall Street professional.
But I have to confess my enjoyment of the book was in no small measure due to Lowenstein’s detailed reporting of events inside Merrill Lynch and the cameo appearances of a number of indiviudals I got to meet during my time at the company. I wonder who his source at Merrill was.
August 6th, 2008 at 11:03 pm
Ronit,
I can’t deny there is a great bit “See how clever I am” tone to both of Taleb’s books that can make them a little off-putting. Still, the ideas are interesting and dude actually made some serious money on the crash of 87, so he has some license to crow. I also really liked Chernow’s The House of Morgan.
I really tried to get Bernstein on the show to discuss “Capital Ideas Evolving”, but he really didn’t do much publicity for it. It worked out well, though, since I got Charles Morris instead, who is the cat’s pajamas as far as I’m concerned.
So, Ephbloggers, I just got my copy of Robert Shiller’s “The Subprime Solution”, which is Princeton’s big book for the fall. I’m trying to decide whether to do a show on it. Comments? Opinions?
August 7th, 2008 at 11:01 am
Ronit, Gondo,
I also much like Bernstein’s AGAINST THE GODS. For anyone seriously interested in the academic research, the Noble prize economists, on securities markets both CAPITAL IDEAS are essential. But CAPITAL IDEAS EVOLVING is written for his buddies that sit around and discuss these things. My friends who majored in math, physics, etc have no trouble with Bernstein. But, the new book is just too hard for the average college grad. The main point I took away from CAPITAL IDEAS EVOLVING is that with lots of academically trained professionals quickly gobbling up like sharks the fruits of market imperfections,the effecient market hypothesis is even more true for the idividual investor than it was 20 years ago. As Swensen warns his readers the average guy is going to screw up badly if he tries to do what Swensen does. Bernstein can sit down and talk with Samuelson and other Nobel economists. Most investment writers cant’t. But Bernstein has difficulty writing for folks less bright than he is.