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- Highly recommended
- Not highly recommended although possibly entertaining nonetheless
Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein, 1996
A difficult read that took me almost 200 pages to get to the interesting stuff. However, once I got there, I found a rich supply of jewels! Bernstein's discussions about mean reversion, risk aversion, behavioral finance, contrarian investing, corporate dividend policy, portfolio insurance, and predicting the future based on the past are all very entertaining. Some of the related passages provide practical tips when managing investments and others cause the reader to contemplate whether his or her investment approach makes sense in light of historical research and human psychology. If you don't have much time, rather than skip the entire book, try reading from Chapter 10 onwards and you won't be disappointed!
[Review by Robert Jones 9-03]
The Art of Asset Allocation by David M. Darst, 2003
A textbook type of book that lays a solid foundation for anyone wishing to learn the nuts and bolts of asset allocation. Nothing really stands out in terms of knowledge gleaned mainly because an astute investor should try to understand all of the principles described in the book!
[Review by Robert Jones 10-03]
Beyond the J Curve by Thomas Meyer and Pierre-Yves Mathonet, 2005
This book is required reading for private equity investors but unfortunately it is difficult to stay awake while reading it. It provides great coverage of how to build a private equity program from scratch and provides many anecdotes and tips including how to salvage a poor investment before it gets worse.
[Review by Robert Jones 10-06]
Bull! A History of the Boom 1982-1999 by Maggie Mahar, 2003
After reading Valuing Wall Street (see book review below), one may agree that any book that attempts to describe the history of the bull market in the 80's and 90's as not worthy of comparison. Nonetheless, Ms. Mahar does a good job of explaining what happened in simple terms, and of gathering hundreds of sources to support her research. One notable quote that shows how difficult it is to pick good funds appears on page 187: "According to Hulbert's research, after deducting fees, Morningstar's top-ranked equity funds underperformed the broadest market index, the Wilshire 5000, by an annualized average of 5.5 percentage points from the beginning of 1991 through May 31, 2002." She also mentions that three year track records are inadequate when judging fund manager performance.
[Review by Robert Jones 11-04]
Capital by Charles D. Ellis, 2004
At times I thought that I would not stave off slumber long enough to complete this book. To save you the grueling process of reading it, I found a couple of interesting tidbits that will follow. The book is about the amazing success story of the Capital Group, one of the largest mutual fund firms in the U.S. Some of the interesting parts of their corporate culture that I am unsure are directly related to their success but that I wish to share anyway, are: i) they try as much as possible to stay out of the media and press ii) they avoid creating new funds when particular markets are hot (e.g., emerging markets, internet stocks, etc.) and instead wait until euphoria has died down before launching; they believe that this helps reduce investor defections when such funds ultimately disappoint iii) they avoid the "star" system of fund management by employing a multiple counselor system whereby analysts have research and portfolio responsibility for their market sectors as opposed to many fund firms that have a CIO responsible for all portfolio decisions.
[Reviewed by Robert Jones 8-04]
Confessions of a Street Addict by James Cramer, 2002
A wild ride down Wall street as perhaps a high-octane version of Liar’s Poker. Cramer provides insight into how he achieved compounded returns in excess of 20% for a decade while running a long/short hedge fund, the growth and IPO of a firm he co-founded, TheStreet.com, with quite a bit of crazy anecdotes along the way. This book definitely does not leave one with a happy feeling afterwards, but strangely enough, provides quite a bit of entertainment.
[Review by Robert Jones 8-02]
Convertible Arbitrage by Nick P. Calamos, 2003
A must read for anyone interested in the convertible arbitrage markets. It is also a good read for anyone who wishes to have a deeper knowledge of one of the most complex instruments in finance because it covers the many facets of convertibles ranging from equity risk, interest rate risk, credit risk, currency risk, etc. Most of us who ever have a chance to work with convertibles appreciate their complexity and the challenge they present in terms of hedging out risks we don't wish to hold. This book goes a long way in educating even the most sophisticated investment professionals in just about every angle of convertible trading, although some of the complex types of convertibles are not as well covered as the most basic convertible instruments.
[Review by Robert Jones 1-04]
Damodaran on Valuation by Aswath Damodaran, 2006
An academic book on valuation of equities and very difficult to get through – basically a text book. However, there are many good insights helpful for understanding the drivers of valuation including various adjustments that need to be considered. In practice most fund managers that I’ve met over the years do not rely on discounted cash flow valuation methodology “because small changes in the discount rate can have a huge impact on valuations that renders the result meaningless” – in other words most investors that I meet believe that simple metrics like P/E, P/B, etc are more meaningful for purposes of valuing equities. But this book is quite good at explaining the pitfalls of blindly relying on these metrics without adjusting them for various factors including growth, risk and return on equity.
[Review by Robert Jones 2010]
Family Wealth by James Hughes, 2004
Extremely dry reading but a few chapters make it worthy of the effort, especially those dealing with how to get trustees and trust beneficiaries to improve the chances of a successful working relationship, how all family members should have mentors and how this works, and how to craft trusts to maximize the chance of long-term success.
[Review by Robert Jones 4-12]
Financial Statement Analysis by Martin Fridson and Fernando Alvarez, 2002
A textbook type of book that covers the fundamentals of financial analysis and includes many anecdotes of companies that tried various methods to bend the accounting rules to show better results than reality would suggest. This approach gives analysts a deeper understanding of how to interpret financials with a more skeptical eye instead of accepting facts and figures at face value.
[Review by Robert Jones 5-12]
Fooled by Randomness by Nassim Nicholas Taleb, 2001
A successful derivatives trader who was elected to the “Derivatives Strategy Hall of Fame”, Taleb debunks most trading strategies, including his own, as bets with completely random outcomes. Much of the book covers philosophy and will appeal to those who enjoy philosophical debate. At a more practical level, Taleb reinforces some of the ideas presented in Market Wizards such as the importance of stop losses and the importance of changing one’s opinion on a particular strategy if it proves incorrect or ineffective.
[Review by Robert Jones 8-02]
From Wall Street to the Great Wall by Burton Malkiel and Partricia Taylor, 2008
A basic look at the Chinese economy and stock market that provides a nice historical perspective.
[Review by Robert Jones 5-12]
Hot Commodities by Jim Rogers, 2004
A successful commodities trader who co-founded and retired from the Quantum Fund, Rogers gives an overview of each of the major commodities that trade in the financial markets, including how one should assess supply and demand. Not a very technical book but one that opens our eyes to the fact that commodities are an important part of the financial markets and our daily lives. He also makes the case that commodities should be a part of any diversified investment portfolio, especially now that we are in a major commodities bull market with perhaps ten more years to go.
[Review by Robert Jones 10-05]
Inside the Black Box by Rishi Narang, 2009
Narang gives an easy to understand description of the various types of quantitative hedge fund investing strategies and the keys to performing effective due diligence. A good read for investors considering investing in these strategies.
[Review by Robert Jones 2010]
The Intelligent Asset Allocator by William Bernstein, 2001
An outstanding book that every investor should have regardless of portfolio size. It covers the basics of investing from soup to nuts including common mistakes that investors make, the case for exchange traded funds, and the art and science of asset allocation. If I had to select one book on investing this would be it.
[Review by Robert Jones 4-12]
The Intelligent Investor by Benjamin Graham, fourth edition, 1973
After you read this book I wonder if you will have the same thought as me: Unfortunately, I was not as lucky as Warren Buffett in that I did not discover this book when I was nineteen years old! Instead I just finished the book and wished that I had read it when I was much younger. Nonetheless, this book goes a long way towards keeping one's investment "feet" firmly planted on the ground. Sage advice is given throughout the book and the best part is that as Mr. Graham warns investors not to go down various perilous investment "roads", I kept saying to myself "yeah I did that, and yeah I messed up completely by following that road". Whether one went down the internet trail or the Hong Kong real estate road, one can empathize with much of the advice and anecdotes that Mr. Graham provides. I urge everyone to give this book to someone young in their family to make them aware of many of the common investment pitfalls. Even though Mr. Graham wrote the first edition over fifty years ago, most if not all of the advice still applies today. Another important theme throughout the book is that of "value investing" and Mr. Graham's teachings in this area are carefully followed by many fund managers who focus on the value investing space. Pages 54~55 and 277 of the book succinctly summarize the foundation of the value proposition.
[Review by Robert Jones 1-03]
Managing Hedge Fund Risk Edited by Virginia Parker, 2005
An outstanding collection of risk management essays covering risks within and across hedge fund strategies. Chapter 16 by Mr. Robert Jaeger should be on every investor's desk: written in plain simple English, it offers invaluable tips for those who believe that risk is best managed relying on experience and judgment rather than black-box formulae.
[Review by Robert Jones 9-06]
Market Wizards by Jack D. Schwager, 1989
Interviews with top traders in a variety of markets. For those who expect to learn more about financial theory and the mechanics of financial markets and instruments, this book will disappoint. But if you wish to get some insight into what goes through the minds of top traders, this is a nice book to add to your collection. Memorable quotes across some of the traders were the fact that stop loss limits were considered sacrosanct and that one must limit one’s losses w.r.t. any position to 2%~7% of the capital allocated to such position. Furthermore, some traders mention that a common trading mistake is to hold on to losers, and cut winners, which is the exact opposite of the mechanics employed by successful traders.
[Review by Robert Jones 8-02]
Mr. China by Tim Clissold, 2004
Experiences of a small group of foreign investors in China in the early to late 90's. This book will either have you laughing or crying, depending upon whether you also experienced painful losses and an emotional roller coaster ride while investing in China. As for me, I laughed uncontrollably until my wife had to leave the room on several occasions. Rather than give more of the plot away, just note that this is a must read for anyone considering investing in China.
[Review by Robert Jones 10-05]
Pioneering Portfolio Management by David Swensen, 2000
An outstanding book that is destined to become a classic. Written by the CIO of the Yale Endowment, this book covers many different asset classes from a practical standpoint, and discusses many actual cases of successes and failures. Although David clearly has nothing to prove given his enviable track record at Yale, he does not water this book down with conservatism: instead he strongly voices his opinion on a number of issues such as fund manager compensation, securities lending, fixed income investing, etc. A must read for any serious long-term investor.
[Review by Robert Jones 9-02]
Quantum Investing by Stephen R. Waite, 2003
Predictions of how quantum theories in science will revolutionise many industries such as life science, robotics, computer hardware, etc. I found the book to be stating the obvious for the most part (e.g., computers are getting smaller and smarter, biomedicine is benefiting from the explosion in computer technology, the composition of the S&P 500 will look much different in coming years, etc.). However, chapter five was quite good in describing some of the weaknesses in accounting and investment analysis when it comes to measuring intangible assets despite a major shift in corporate balance sheets from hard to soft assets over the recent past.
[Review by Robert Jones 4-03]
Reminiscences of a Stock Operator by Edwin Lefevre, 1923
Anecdotes and experiences supposedly drawn from the life of stock and commodity speculator Jesse Livermore. A great book 80 years on. Fascinating accounts of market psychology, the importance of patience when trading, bull and bear markets, how to handle tips, admitting defeat and quickly moving on, insider trading, etc., mostly from the stand point of a technical trader.
[Review by Robert Jones 9-02]
Take on the Street by Arthur Levitt (former Chairman of the US SEC), 2002
Overall, this book is a good reference for individual, non-professional investors as it covers a wide range of topics to help readers understand how fund managers, brokers, and dealers obtain fee income often in subtle ways. For professionals, there are a few chapters that are worth reading such as chapters on "plumbing" (securities trading infrastructure) and corporate governance, and especially the Appendix which reproduces a series of letters from the US Congress and others warning the US SEC not to try and regulate certain areas of the accounting profession (prior to the blow-up of Enron - one of the letters is even from Mr. Kenneth Lay, former Enron Chairman). The latter topic will give readers a better idea of how regulation and lobbying in the US works. For readers who trade via on-line brokers, pages 30~31 of the book are a must read, and describe how hidden trading costs from market makers can often dwarf cost savings from commissions.
[Review by Robert Jones 1-03]
Triumph of the Optimists by Elroy Dimson, Paul Marsh, and Mike Staunton, 2002
This book summarizes the stock market returns, bond market returns, cash returns, and inflation for sixteen global markets over a 100 year period. Very informative in terms of explaining to investors that stock market returns (before and after inflation) are often much lower than investors actually expect. Furthermore returns are often unrelated to GDP growth despite investors piling into stock markets of countries experiencing high growth. The book also explains and tests long-held investor beliefs relating to value vs growth, seasonality of returns, and small vs large cap.
[Review by Robert Jones 2010]
Unconventional Success: A Fundamental Approach to Personal Investment by David Swensen, 2005
Another destined-to-become classic although it is very similar to Mr. Swensen’s first book (see review of Pioneering Portfolio Management above). While reading this book, especially towards the end, I couldn’t help thinking about the potential damage that Mr. Swensen may have caused to Yale’s student center as it tries to place new graduates in companies, and to Yale’s fund raising department as it tries to convince corporations and alumni to donate money to Yale. Read the book and you’ll see what I mean. Of course, as for me, I found the frank comments about the “failures” of the mutual fund industry in the US to be extremely valuable and insightful.
[Review by Robert Jones 3-06]
Valuing Wall Street by Andrew Smithers and Stephen Wright, 2000
Despite the condescending tone that consistently pervades the book, this selection is outstanding and thoughtful. The main topic is "Tobin's q" which explains that to determine whether the stock market is over or under valued, one should divide aggregate stock market capitalisation by aggregate corporate net worth and if the result is way over or under 0.65 then the market is over or under valued. The authors strongly believe that this ratio provides much higher forecasting accuracy than the widely used P/E ratio or other commonly used metrics. Too bad many of us weren't aware of the book prior to the bubble crash in 2000! There are many areas of the book that I find to be fascinating, such as Chapters 24 and 29 which discuss why it's a fallacy to use inflation, interest rates, and yield ratios (such as bond yields compared to dividend yields) as the basis for calling market valuation levels or to explain relatively high or low P/E ratios.
[Review by Robert Jones 2-04]
Wealth by Stuart Lucas, 2008
A member of a wealthy mid-west family in the US, Mr. Lucas also has deep experience working in the wealth management industry. This helps him articulate the benefits and weaknesses of relying on third parties to manage the wealth of a significant family investment office. I particularly enjoyed Mr. Lucas’s mentioning the word “leakage” throughout his book – this word refers to the reduction in investment returns resulting from commissions, taxes, and other market and government ‘forces’ working against all investors, and investors must constantly battle these forces to achieve satisfactory returns. Furthermore, Mr. Lucas does a great job of explaining the different choices that investment offices face when embarking on an investment program, ranging from insourcing to outsourcing and from low risk to high risk investment strategies. Must reading for family members and management of family investment offices, or those considering setting up such an office.
[Review by Robert Jones 2010]
Wealth Experience by Andrew S. Clarke, 2003
This book targets smaller investors who wish to learn not only about investing, but also about how to develop good habits that will lead to better investment results. I found the book quite interesting and useful as it provides basic advice and anecdotes (including actual mistakes and pitfalls) from many investors that we can all benefit from.
[Review by Robert Jones 12-03]
Where are the Customers’ Yachts by Fred Schwed, 1940
The title says it all! When a visitor to New York looked out on the harbor and his host pointed out all of the yachts owned by the rich Wall Street bankers the visitor asked the obvious question “Where are the Customers’ Yachts?” Although the book clarifies there is some confusion on who to attribute this quote to, readers can easily get the point that where investment is concerned, bankers typically win in any measurement of returns allocated between investors and bankers. The book is filled with many insightful anecdotes from many years ago proving that problems facing investors today are similar and timeless.
[Review by Robert Jones 2010]
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