Christmas Reading for Finance Geeks — 12th Edition
“You are, by far, the dumbest smart guy I’ve ever met.” — my college football coach after I jumped off-sides on 3 consecutive snaps.
Disclaimer: Nothing you are about to read merits more than a momentary consideration. I am not Dr. Tyler Cowen, Shane Parrish, nor any of the other sophisticated booklist curators out there. My opinions should not be held as noteworthy beyond the fact that I operate in the competitive field of finance following years of abuse as a football player in the NFL, which is not a confidence-inspiring combination for most.
Then why do I produce a Christmas reading list?
Nah. I was an offensive lineman. Vanity escaped our subset of personality traits a hundred buffets ago.
Perhaps, but not in the manner you’d expect. My guess is that many athletes feel a bit of a chip on their shoulder regarding perceptions of their intellect, and given that I most resemble a bleached out Shrek stunt double, I get how most people assume they must speak slowly to me. Many football players want to be respected for our intellect even when we fail to max out our 401ks in favor of second-bathroom home theater systems. Truth is, as a former football player, I am inescapably aware of the cognitive issues and mid-life impairment experienced by several of my peers as well as those who preceded me in the sport. I am happy to report that, contrary to the quality of my posts, there are no apparent signs that I am so affected.
Impulse Control issues?
Even closer. I love books, I love reading anything that broadens my capabilities, makes me a better conversationalist, a better presenter, a better investor, a better mentor. I express love through books, as I lack the ability to conceive a considerate holiday gift but can often nail what book a friend or family member might enjoy. Also, knowledge has become a non-rival good - unlike food or smartphones, knowledge isn’t consumed by one at the expense of others gaining from it. If I can promote great books (or even good books) and their insightful ideas, I am excited to do that to the greatest extent of my reach. I can’t help myself.
12 years ago, at the request of some coworkers, I started emailing out a list of my favorite books read the past year that added some professional value across various subjects. Passed around, more people asked to be included on future editions. Today, roughly 500 people at my workplace have found their way on to my distribution list (to my amazement.)
Before I begin this edition in earnest, understand that it doesn’t bother me if we disagree on any of the following books or my super-brief take on them. If you know a better book on a subject I mention, however, I urgently implore you to share those titles with me!
That said, I read 71 books over the past 12 months. There are more than a few that warrant a look.
The Four by Scott Galloway is an extremely readable and edgy perspective on how ubiquitous Amazon, Apple, Facebook and Google have become relative to entire global industries and institutions. He editorializes brutally on the moral and ethical shortcomings of these companies and their founders, and finishes the book with the most explicit and helpful education/career advice for college kids I’ve seen. Only drawback is, the shelf-life of these insights is limited given the dynamism of the companies examined.
The University of Berkshire Hathaway by Pecaut and Wrenn was a delight for me as someone who once attended Berkshire Hathaway shareholder meetings semi-regularly. Much is documented about Buffett and Munger, including every annual letter, interview, etc.¦ but nothing to date captured the otherwise not documented insights and anecdotes exclusively voiced in the shareholder meetings. This book is the transcription of notes from 20 past shareholder meetings, complete with wit and humor of Buffett and Munger.
Active Value Investing by Vitaliy Katsenelson is almost a decade old, but it holds up fairly well. He explores how to combine prudent value investing principles while also acknowledging various market conditions as a guideline for prudent decisions. This is a bit more technical than popular investment books but should be accessible even to liberal arts guys (like me) who favor the abstract insights over the data.
A Man for All Markets and Beat the Market by Ed Thorp were terrific. The latter book is old, dated, but was an invigorating insight into Mr. Thorp’s process and method when he started his wildly successful hedge fund. That said, for most readers I’d recommend the former book, published recently, as a better way to get a sense of the man, evolution of his thought process, and his remarkable accomplishments in a variety of daunting fields.
Why Do Stock Markets Crash? by Didier Sornette was alternately tremendous and brutal. He does a fantastic job conveying how principles of complexity theory apply not merely to weather, earthquakes and other phenomenon, but most importantly how these principles influence and govern the growth of asset bubbles and how they come to their end. I admit, in chapters where the proportion of mathematical expressions started rivaling the quantity of cogent English on various pages, I went into “skim mode” till I could locate the takeaway; I’m not John Urschel, an NFL lineman who easily could re-perform the math in his head!
Fed Up by Danielle Dimartino Booth was the rare insightful book recently released on the global financial crisis of 2008. She offers the typical cautions on the dangers of Fed policy since she embarked on her career, but offers some irresistible speculation on the motives and conflicts at work within the big players in DC and within the Fed. I’m typically “done” with GFC books but found this one worthwhile.
Honorable “Meh”ntion Finance/Investing books:
Black Edge by Sheelah Kolhatkar — Steve Cohen biography up to his insider trading settlement
Entrepreneurial Investor by P Orfalea — we’ve read this value stuff before.
A Zebra in Lion Country by Ralph Waggoner — small cap investing from the 90s, not a total waste of time.
Scale by Geoffrey West is a fascinating overview of how principles of scaling affect biology, engineering, environment and markets. This book is almost several short books, with various volumes being more engaging and insightful than the rest. For someone trying to understand why Godzilla could not exist in real life at his cinematic proportions, or how cities get better (and worse) as they scale up and down in size, this is an engaging overview on how to incorporate nonlinear scaling effects on our thought processes.
Ends of the World by Peter Brannan is the environmental book I’ve been waiting for, superior to most of the others (won’t name names) that don’t even try to dignify opposing views. While readably discussing the contributing factors to the past 5 global extinctions (and how life took shape at every stage) he also diligently discusses the scientific processes involved and how they may apply today. He strenuously defends global warming and ocean acidification while also giving professional consideration to rival explanations and views. Solid writing with an ambitious scope.
Other Minds by Peter Godfrey Smith was a tremendous read on the evolution of intelligence outside our familiar world of vertebrates (humans, primates, dogs, dolphins, elephants, etc.) and explores a genuinely alien and distinct process of intelligence evolution as demonstrated by octopi, squid and cuttlefish. This book is as much a study of what goes into our sentience as it does examining the startling cognition of cephalopods.
I Contain Multitudes by Ed Yong is a compelling examination of all that is good and bad in the microscopic passengers we carry through life, as well as their role (in some applications helpful, in others harmful) in manipulating or supporting the physiology of various lifeforms. This book is highly readable and frequently fascinating.
History of the Ancient World by Susan Bauer is a well-written survey ranging from the extent we can discern about prehistoric human history up through the Roman Empire. If you want to fortify your gaps in history before the time of Christ, this is a good option.
The Renaissance by Will & Ariel Durant — five down, six to go in my progress through Will Durant’s epic “Story of Civilization” collection. While the least fulfilling of his books so far, it is none the less a loving look at the art, philosophy, politics and spirituality of Renaissance Italy.
War! What is it good for? by Ian Morris was provocative to me, as he contests that the human condition is improved mostly by the “Leviathan” of large government lending needed scale and structure to disparate civilizations absorbed into empires. He talks about “caging” other nations (think “hostile merger”) as being in the target country’s best interests. He also highlights the tragic irony of “Pax” Romana, Brittania, Americana is that they work too well in proving peace and trade; the environment of stability they sponsor accelerates the ascent of future rivals that typically end the era.
Fifty Inventions that Shaped the Modern Economy by Tim Harford is a good, short subject collection of the 50 inventions, discoveries and innovations that were critical contributors to our current economy and life.
Albion’s Seed by David Hackett Fischer was recommended to me (some of you will know who!) and it was solid in most every respect as an “origin story” for the American colonies and the “folkways” that once influenced (and continue to influence) our American culture, norms, mores and spirituality. It is a strong work of historical anthropology.
Days of Rage by Bryan Burroughs is an all too timely view on how social unrest in the United States took shape, and who led/inspired acts of domestic protest and terrorism from the 1960s to the early 1980s. Much of the history offers incredibly relevant perspective for cultural/political developments at work today. In some ways a complement to this, Hillbilly Elegy by JD Vance was a worthwhile read and offers direct perspective on the other side of unrest in our country.
Honorable “Meh”ntion for History:
The Hero with a Thousand Faces by Joseph Campbell — global mythology as it explains our art, literature and culture.
Churchill’s Ministry of Ungentlemanly Warfare by Giles Martin — how Churchill and the British raised covert military operations to a fine art during WWII.
Destiny of the Republic — intersects the lives of President James Garfield, Alexander Graham Bell and a lunatic assassin in the days before the Secret Service.
Absent Superpower by Peter Zeihan builds on his excellent “Accidental Superpower” with a deeper dive on the USA’s oil politics and how it potentially upends the current system. While not as fun as his prior book, it is still an engagingly written treatment of energy market realities in a geopolitical context for the next generation of policy makers.
The Fourth Turning by Neil Howe is misunderstood as some kind of social-science astrological prophecy. Instead, it is a marvel of demographic research. What it offers is a well-reasoned study of how our nation cycles from crisis to prosperity with an 80–100 year regularity. Written 20 years ago, it is startling the quantity and quality of cultural and demographic predictions it gets right (and yet there are some currently hilarious misfires in there as well.)
On a similar note, Ages of Discord by Peter Turchin attempts to quantify various measures (such as inequality, immigration, educational availability, density of the “elite” population, etc.) and while the correlation/causation debate can be levelled at many of his conclusions, his ideas are fairly robust and worthy of consideration.
Perhaps even better, Peter Turchin’s Ultrasociety is a more accessibly written book that focuses on the amazing cultural evolution of cooperation and how that has scaled up as civilization has developed. It was fascinating to read how biology and logic drove various and disparate peoples to cooperate to accomplish feats that would defy the imaginations of our ancestors.
World War Z by Max Brooks is technically science fiction, but if you are looking for a narrative case study of global challenge/cooperation with the threat of a disease epidemic as well as a military calamity, this is the geopolitical thought experiment par excellence. Do not watch the movie, it offers little of what is actually useful in the book.
Honorable “Meh”ntion for Geopolitics/Political Science
Age of Uncertainty by Jose Cooper Ramo offers very little that is new or helpful about the deterioration of global conditions, reads like an extended Economist magazine feature.
Destined for War by Graham Allison is a tremendously skewed take on the geopolitical and geoeconomical tension between the United States and China. I understand the author is an “expert” but he never offers facts outside his argument and seems to be saying “I for one welcome our new Chinese overlords.” I’d say he echoes Paul Kennedy’s “Rise and Fall of Great Powers” in his US declinist predictions but Kennedy at least offered some timeless models for assessing geopolitical power.
Fiction is a rarity for me, but I’ve picked up my game. Enough people have persuaded me that I am missing out on value-added enlightenment if I avoid fiction, and the books I read this year proved me right.
Three Body Problem, The Dark Forest, and Death’s End by Cixin Liu is as powerful a saga as I can recall reading since Asimov’s “Foundation.” Besides boldly imagining Earth and our relationship with a hostile galaxy ranging from the 1960s to literally the end-time of the universe, the author tells a fascinating and elegantly uncomplicated story that builds into a master-class of theoretical physics, interstellar scarcity and galactic game theory. Even if you don’t especially like sci-fi, there is enough of an examination of humanity here to upset (in a good way) the reader’s complacency and understanding of our species.
Gates of Fire by Stephen Pressfield is a marvelous piece of historical fiction that blends a gripping story into the history surrounding the Greek defense of Thermopylae against the Persian forces. A favorite recommendation of General Mattis, it is tremendously worthwhile if you like historical fiction.
Dune by Frank Herbert is an old classic that many might have read; I mostly avoided it because the movie disturbed me as a kid. However, the novel is tremendous in a way Game of Thrones cannot approach. Power dynamics, politics, etc. are all terrifically well imagined.
The Road by Cormac McCarthy deserves to be read as dystopian novels go, but it threatened to force me to abandon it on many hopelessly sad interludes. Having a son myself, the story of a father trying to protect his innocent son from the horrors of a dying world is especially poignant to this dad. The ending satisfies without gratifying.
Based on a True Story by Norm McDonald is hilarious. It steadily becomes a more absurd fictionalized autobiography as he tells it; he almost has you believing it as nonfiction at the start. If possible, get the audiobook read by the author.
Where to, Now?
Books I’m reading currently, and hope to include in next year’s edition:
Energy and Civilization: A History by Vaclav Smil is a comprehensive survey of the role and evolution of energy throughout history.
Principles of International Politics by Bruce Bueno de Mesquite — a comprehensive text on geopolitics. After reading his other “popular pol sci” books, his textbook seemed a good next step.
Autocracy by Gordon Tullock — a promising book-length essay on the characteristics of power and dictatorships.
Hall of Mirrors by Barry Eichengreen is a comparative history of the great financial crisis of 2008 with other Fed-influenced situations.
The Day of Atonement by David Liss is historical suspense fiction which, like most of his works, is set in the backdrop of some noteworthy financial crisis of the past. For what it’s worth, The Coffee Trader is one of my favorites of his, and the Whiskey Rebels is a fun read for those who enjoy some Founding Fathers blended into a taut storyline.
Merry Christmas and Happy Holidays — Â and a Prosperous 2018!
Thank you for spending time with this list, and I do hope it inspires some searching and shopping for the books that enrich you most. Also, I gratefully accept any book recommendations (nonfiction, especially) that were books that influenced or changed your thinking the most on a given topic â€“ those are the types of books that fire me up.
That’s it. You have my favorite books of 2017. Now, go make Amazon the first trillion dollar company.