Christmas Reading for Finance Geeks — 14th Edition
“My book fell from above and hit me on my head. All I can do is blame my shelf.”
-joke found on reddit, submitted by Lord_Xp
Recently I learned that “Witzelsucht” is German for a neurological condition characterized by a tendency to make puns, or tell inappropriate jokes or pointless stories in socially inappropriate situations. This is typically due to damage to the right frontal lobe of the brain. Apparently, dad humor on social media may be a pre-existing condition, especially if you had a stint boxing or playing football!
Most of you who have consumed this annual listing of compelling reads (or follow me on twitter) may have suspected something was seriously wrong with me, and “Witzelsucht” may be it. Admittedly, I prefer to frame most everything in irreverent humor… and I have also taken my share of shots to the head. Enough shots, in fact, that much of my rapacious reading is a tactic of mine to resist and deny any cognitive damage from blunting my mental faculties. This year I mounted a robust charge to beat back my Witzelsucht: for the first time ever, I have read 100 books between my Christmas Reading list last year to the one I’m writing today.
I’m never not surprised that, for 14 years now, there has been an audience (if not a limited one) for my annual indulgent retrospective on my eclectic reading addiction… why on earth would someone expect useful or compelling things from such a piece written by one such as me? First off, guys my size typically consume more livestock than paperstock. What on earth could be gleaned from a taller Uncle Fester doppelganger that would confer value to a discerning reader? Second, exactly how many shots to the head did I receive… and how many neurons were forcibly relocated over the years?
Good questions. You don’t know the half of it.
I mean, beyond my unusual appearance being a liability to my professional credibility, my vocation out of college was to literally use my skull to flatten world class athletes. As such, I spent a fair amount of time reveling in the rolling sensation of wooziness as I lined up over and over to become a 330lb battering ram of bone and meat.
Despite the extensive history of willing head trauma, the worst shot to the head I ever withstood happened not on the football field, nor from a falling book… in fact, it happened where most people get clobbered:
At a wedding.
My brother’s destination wedding, to be precise. Over 7 years ago my brother and his wife to be married at an all-inclusive resort in Jamaica. My wife and I came in for the day before and the day of, and almost immediately after landing we went to the rehearsal dinner. The scene was beautiful, the dinner laid out on a large round table set immaculately on the beach. Every detail was perfect — swaying palm trees, bright moonlit night, warm breezes, gentle waves… and ample food and libations! It was close to perfection.
Then I ruined everything.
On reflection, it was bad enough that I was regaling everyone with off-color stories that my brother’s groomsmen found hilarious but had my future in-laws second-guessing all their daughter’s life choices. However, that wasn’t the real spoiler for this elegant occasion.
It was me, in mid-sentence, getting clobbered over the head with a baseball bat!
Except…
…it wasn’t a bat…
…A COCONUT spiraled down 4 stories and hit my head like a Predator drone! It made a resounding xylophone sound as it ricocheted off my melon and flew directly into my wife’s purse. My head fell right into my hands in front of me. Some drunk Canadians we met earlier were walking by at that moment and I heard one scream, “Dude!! The coconut curved to hit him!”
I was surprised to hear that much. Somehow the coconut didn’t knock me out, but my head was a piercing symphony of PAINPAINPAINPAIN and once the tuning-fork vibrations in my gray matter settled a bit, I formed a thought… “Hey… my head… is all wet… OH NO! I’m busted open, I’m gonna be a gory mess for the wedding…” and I pulled my hand away and looked at it. It was slick and wet.
And… the fluid was clear? There liquid wasn’t blood. THE COCONUT CRACKED ON MY HEAD!
Dazed as I was, I took some competitive pride in absorbing the coconut’s best shot. “Yeah, f — — you coconut don’t bring that weak sh — …” and then I passed out.
I was about 290lbs stretched over 6’5”+ so getting me to the “nurses station” (custodial closet with a fold down examination table) was a bit of a challenge for the wedding party. A doctor came from an hour away in Montego Bay, and he looked like he was about 20 years old. “Heet by a coconut huh mon?” he said to me. “Let’s see it!”
I showed him the green coconut, splits radiating from one end, about the size of my fist.
“Oh, ha! That not such a beeg coconut mon!” says Doctor Tokesalot.
He’s implying I got taken down by some weak-sauce coconut! Nope. “Here’s an idea, doc… how ‘bout I climb four stories and chuck it at your head and see how well you turn out!”
One of my brother’s groomsman, a hilarious and successful Chicago lawyer, stumbles in with his own (alcohol-inflicted) impairment and declares “That’s my client! Don’t give him that coconut. That coconut is evidence! If the coconut split, you must not acquit!”
The doctor suggests I go an hour away to Montego Bay for a CAT scan (it’s the developing world, so for all I know he wanted me assessed by an ocelot…) but I decide if I’m dying anywhere overnight, it’s gonna be in this approximation of paradise. I miss dinner and lay down in my room and go to sleep, my wife nervously checking on me every hour.
I wake in the morning to the sounds of resort staff using cherry pickers and other implements to knock the coconuts down. I go to breakfast and EVERYONE knows who I am (the three inch off-center unicorn horn that sprouted from my head probably gave me away) and the wait staff was incredibly attentive:
“How are you feeling Mr. Kohn?”
“Would you care for breakfast Mr. Kohn?”
“Are you feeling especially litigious today Mr. Kohn?”
Despite the courteous service, they wouldn’t even comp me the night I spent in my fugue state. As a consolation they did give me a $100 credit to the gift store which was sufficient to supply my two kids with “Yeah Mon” Jamaica t-shirts and two coconut-topped pencils.
Bottom Line: I did learn something useful to impart to all of you from this particular shot to the head: if in the proximity of palm trees, keep a keen eye on the coconuts.
Actually, I learned that was bad advice. You can keep your eyes to the sky and track all the potential missiles that might drop from above, but in the process you lose sight of the easily avoided obstacles in front of you. We all spend some time with eyes skyward, preoccupied with our own “coconuts” be they in our finances, in markets, in our careers, within our families… and the more time we spend fixated on these low probability catastrophes, we inevitably are undone by tripping over the most benign obstacles right at our feet. Spend more time on the base case than the worst case scenarios by watching your step, not the coconuts.
Or, spend more time reading! …which is the real reason everyone reading this blog would devote even 15 minutes to this bloviating coconut-infused football has-been. The preceding cognitive history is the only disclaimer I offer here. Welcome, and enjoy!
While on the trailing twelve months I’ve read 100 books (that is a record I’m unlikely to repeat…) I’m happy to say there are at least a couple dozen that imparted some great ideas or insights. Starting with finance…
Finance/Investing Favorites:
20 for Twenty by AQR (Cliff Asness, et al…) is a “greatest-hits” compilation of the research performed by Cliff Asness and his crew at AQR, and while I confess to skimming and scanning the math (I take their word for it, not personally inclined nor qualified to reperform their work) the conclusions were illuminating on the varied factors and anomalies that pervade markets and challenge “efficient market” adherents. I also find Cliff’s self-aware tone and personality refreshing in such academic pieces. The book can be downloaded free at https://www.aqr.com/Insights/Research/Book/20-for-Twenty
The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman was a good read on one of the most enigmatic shops in finance. The book provides reasonably intimate profiles of many of the key figures at Renaissance Technologies, and some capsule bios of other hedge fund notaries who had at best a tenuous connection to Jim Simons and his team. The book was short on specifics on methodology, but gave me insights I’d been lacking about Mr. Simons and his Medallion Fund.
The Laws of Wealth: Psychology and the Secret to Investing Success by Daniel Crosby was a better than I expected behavioral finance book, cataloging our various cognitive and emotional biases accessibly. Further, the book concluded with a credible approach to investing that acknowledges and compensates for our inevitable blindspots and delusions. I often resist behavioral finance books because they painfully remind me of all the lamentable shortcomings and flaws in my brain BEFORE considering football related trauma… but this book didn’t antagonize me in that way. Unrelated, Dan is one of the most maddeningly nice people on twitter.
Wealth, Actually: Intelligent Decision-Making for the 1% by Frazier Rice is a worthwhile survey of wealth management principles and considerations that is especially relevant for the aspiring advisor or for the newly affluent. It provides a good narrative on numerous topics framed as client questions. I would be inclined to give a copy to every newly minted pro athlete or celebrity and pray they heed the guidance therein.
Economics/Geoeconomics Favorites:
The New International Money Game by Robert Aliber was the perfect book for me to learn about the history and the evolution of money (currencies, gold and otherwise) as both an economic and as a political technology and a force for policy. Among my favorite concepts is understanding that currencies are “brands” and the prestige attached to currencies (based on production and distribution of currencies) go a long way to explaining relative strength between global varieties of money. There is impressive depth here, it will be one of the few books I intend to re-read as a definitive book on this topic.
Economic Interdependence and War by Dale Copeland challenges the notion that “two countries that both have a McDonalds restaurant will never go to war against one another,” and his efforts yielded interesting ideas on the role substantial trade between two parties can have in contributing to war between partners. The author uses a broad sweep of compelling economic history from the 18th century to our present day, and he uses his findings to frame the trade challenges with which we currently struggle between the US, China and Europe. The history cited suggests that war is not incredibly likely between two countries that trade little, but is extremely likely when two countries trade liberally and dependencies are created.
Allies, Adversaries, and International Trade by Joanne Gowa was a relatively concise treatment of how free trade as a global good was thought to depend on a hegemon assuring the security of global shipping while also extracting a concession from the global system as recompense. She attempts to challenge this “hegemonic stability theory” and examines the trade qualities of a more divided world where trade is mostly free within politically-militarily-economically allied countries and where trade between rival economic blocks is far less so. She also asserts that a bipolar world is a more favorable condition for freer trade than a multipolar one.
Political Science/Geopolitical Favorites:
China consumed my focus for much of the reading of the geopolitical space the last 2 years, and while these books often share overlapping contentions and warnings there were a pair of books that stood out. The Hundred Year Marathon by Michael Pillsbury offered measured warnings and caution with authoritatively delivered context. Asia’s Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century by Richard McGregor did an impressive job deconstructing the complicated dynamics that bedevil US, Japanese and Chinese efforts to work effectively since WW2.
The Raven of Zurich: The Memoirs of Felix Somary by Felix Somary is an astounding account of Mr. Somary’s activities as a Swiss banker deeply involved with economic and political matters in Europe preceding both World War 1 and 2. He helped craft international policies and agreements stave off conflict in 1914, only to have an assassination move history beyond his influence. He was on record with his concerns and predictions around the rise of communism, economic disasters of the 30s and the emergence of the fascists. It is a tragedy that there are few geopolitical thinkers of his caliber alive today.
Principles of International Politics by Bruce Bueno de Mesquita is a text book, but a richly informative text that interweaves game theory into international relations and economics, including why all broad global agreements will be shallow ones. He also goes into the governing principles around power transition theory (or the Thucydides Trap) that dominates much of the discussion regarding the US and Asia. I have enjoyed many of the author’s books, but this textbook delivered more intellectual meat than the others combined.
History Favorites:
I think most are familiar with Dan Carlin’s Hardcore History podcasts (his recent series on “The Supernova in the East” is terrific) but his newly published book The End Is Always Near: Apocalyptic Moments, from the Bronze Age Collapse to Nuclear Near Misses is a great collection of essays on various topics that relate to the many roots (and future catalysts) behind civilizational decline and collapse. I “read” the audiobook, and it has the authors energy and pacing that I appreciate in his podcasts.
The Power Broker by Robert Caro is LOOOOOOOOONNNNNNNNNNGGGGGGG (over 1300 pages) but few words are wasted here in chronicling the amazing, transformative and often villainous impact a single man wielded in 20th Century New York. Robert Moses was a genius and a monster. From an otherwise inauspicious role leading the Parks department, he accumulated such power with such invulnerability that even President Franklin Roosevelt had to concede to him in a number of conflicts.
Walls by David Frye was the most compelling history book I read this year. It provided an engaging account on the development and role of walls and barriers to the growth and collapse of civilizations. Ranging from a comparison of societies like Athens (walled) and Sparta (no walls) to the current discussions on border security, the author offers insights on the tradeoffs accepted in attempting to build walls or do away with them altogether. Neither side of the “walls” debate is likely to feel as good about the correctness of their position after reading.
The British are Coming by Rick Atkinson applies the same storytelling that elevated his trilogy of World War 2 to the Amercian Revolution. He does a uniquely interesting job proving insights into the frame of mind for actors on both sides of the conflict, and paces out the story in much the fashion of a novel. Jim Chanos recommended this book online, and it didn’t disappoint.
And yes, my annual reading of a Will & Ariel Durant tome continued in 2019 with The Age of Reason Beings (the seventh volume of the Story of Civilization historical series.) It is extraordinary writing and research as always, gentle humor throughout, though this one didn’t hold my attention as well as other tomes. Moving on to the Age of Louis XIV in 2020…
Science Favorites:
Jared Diamond is famous for a lot of science/anthropology/historical books, and this year I read his recent book Upheaval ( a worthwhile book of case studies on historical instances where countries had a transformative experience and how they ultimately adapted to the changes) which prompted me to read The World Until Yesterday (a book that helps spotlight how far removed we are from our ancestors by comparing modern society to more primitive societies) and to re-read Guns, Germs and Steel (a compelling theory on how specific accidents of geography and environment had more to do with the rise of the West than anything intrinsic to western cultures or genetics.) I don’t share all of Diamond’s views and conclusions, but it is inescapable that all of his books have something to contribute to those with a curious and evolving worldview.
Deep: Freediving, Renegade Science and What the Ocean Tells Us about Ourselves by James Nestor was a surprisingly engaging book. There is much we don’t understand about our own shared capabilities to our aquatic cousins such as whales, but this book highlights how surprisingly suited we are to deep diving, echo-location and other abilities considerably more developed in other marine mammals. This book is like the Born to Run (by Christopher McDougal) treatment of the sport of diving.
The Body: A Guide for Occupants by Bill Bryson is almost like taking the Asimovian “Fantastic Voyage” through our own bodies with the company of a witty and relatable tour guide. To the extent finance professionals get discouraged about the weaknesses of our mind from a behavioral science standpoint, Bryson revels in the astounding and miraculous nature of our systems and how efficiently they function with little to no guidance.
Miscellaneous Favorites:
Two of my absolute favorite books this year defy my usual categories, so forgive me that “Miscellaneous” is such an unremarkable category for two remarkable books.
Alchemy: The Surprising Power of Ideas That Don’t Make Sense by Rory Sutherland was recommended to me by a number of admired intellectuals on twitter (the one that put me over the top was Daniel Crosby, referenced earlier) and I seldom sit down with a book that shares so many worthwhile insights on virtually every page. While he discusses many of our behavioral blindspots that the advertising industry exploits relentlessly, he goes on to explain why the things that we do that are nonsensical actually conform to a justifiable “psycho-logic” that may serve us in ways we don’t immediately perceive. This book likely makes my Top 10 of all time, and I will be gifting this prolifically to professional colleagues.
Dignity by Chris Arnade is a wrenching, convicting, and somehow encouraging middle America travelogue. The book excels as a treatment of the cross-section of the US that is underrepresented among our leaders and is failed by our institutions. Chris travelled over 100,000 miles by car to spend time in numerous forgotten pockets of the country where at least a church and a McDonalds might provide a stable anchor for people struggling to adapt to a world not of their choosing. He includes numerous pictures that are even more striking and dramatic than his narrative. He makes an impassioned case that our differences between left and right are not as pronounced as the differences between the haves (“Front Row America”) and the have-nots (“Back Row America.”) This book provoked a lot of introspection on my part. This book is one I have been gifting to family and friends.
Total Recall by Arnold Schwarzenegger… okay, you caught me. I did listen to the Audiobook, but it was narrated by Ahnuld!…for the first and last chapter. It was still fascinating to hear Arnold’s first hand account of living in the early Cold War days in Austria, overcoming devastation and a Communist menace mere miles away in Hungary. The rest of his observations and experiences are entertaining and Arnold becomes a fascinating conduit to evaluate US popular culture over the past 5 decades.
Fiction Favorites:
I finally got around to reading the Dune series by Frank Herbert. I had read the original some time ago but never bothered with the rest until this year. While the sequels cannot match the first book in impact, they all offer fascinating visions of political maneuvering and manipulating in a meticulously imagined universe.
In the interest to read more “Classics” I read “The Three Musketeers” by Dumas. It was a good story, which shouldn’t have surprised me given how much I enjoyed “The Count of Monte Cristo” not long ago.
My Top 10 Books read in 2019 (I usually do a Top 5 but the strength of this year’s field required 10…)
1. Alchemy by Rory Sutherland.
2. Dignity by Chris Arnade
3. Walls by David Frye
4. Economic Interdependence and War by Dale Copeland
5. 20 for Twenty by AQR
6. Principles of International Politics by Bruce Bueno de Mesquite
7. The Raven of Zurich by Felix Somary
8. Asia’s Reckoning by Richard McGregor
9. The Power Broker by Richard Caro
10. The New International Money Game by Robert Aliber
Coming Up…
I am not planning on reading 100 books again for 2020. My goals will be more modest due to a couple of happy developments: I will be beginning an exciting role with a new wealth management firm, and I will begin beginning a new Masters in International Relations from American University (online.) That said, there are a number of books I am still chewing through presently, including A History of Interest Rates by Homer & Sylla, More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources — and What Happens Next by Andrew McAfee, The Institutional Revolution: Measurement and the Economic Emergence of the Modern World (Markets and Governments in Economic History) by Douglas W Allen and Currency Statecraft by Benjamin J Cohen.
Abundant thanks for sharing my love of books and indulging me in this annual exercise. I wish everyone a Christmas and Holiday season that includes many amazon gift cards and tons of good cheer!
