25 book reviewed


[Review by Robert Jones 5-23]

ACCIDENTIAL CONFLICT BY STEPHEN ROACH, 2022: 
The author describes the background and causes of the current geopolitical stand-off between China and the U.S. and believes that the causes are based mostly on perception rather than factual evidence. The auther provides a potential solution to the stand-off although he is not optimistic that the two sides will resolve their differences amicably anytime soon.

[Review by Robert Jones 6-13]

ACTIVE ALPHA BY ALAN DORSEY, 2007: 
Interesting book emphasizing factor analysis over asset allocation. In other words the author believes that it’s more effective to create a portfolio of factor exposures (e.g., exposure to equity, volatility, interest rates, etc.) rather than asset classes because asset classes often have over-lapping factors exposures that might not be apparent without engaging in factor analysis. The author mentions a number of problems and complexities when building multi-factor models and this makes the task very daunting even for the most sophisticated investor. Separately, table 10.1 provides a nice summary of hedge fund fee discounts and how they impact returns under different return scenarios.

[Review by Robert Jones 10-03]

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 10-06]

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 11-04]

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 7-14]

CODE RED BY JOHN MAULDIN AND JONATHAN TERRER, 2014:
A dire set of predictions for governemtns and economies besieged by debt and money printing that we can only pray don't come to pass. Although the macro economic analysis and predictions are interesting, the advice to diversify your porfolio to avoid making serious blunders is a bit lame. With all of the warnings about over-leveraged governments and the ill effects of quantitative easing their investment recommendations could have been a bit more creative and specific to address how to profit if their forecasts prove accurate. Separately, there were a few nice gems to take away regarding improving economic forecasts by noting the shape of the government bond yield curve and keeping track of particular leading indicators.

[Review by Robert Jones 1-04]


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 8-14]

EQUITY ASSET VALUATION BY JOHN STOWE, THOMAS ROBINSON, JERALD PINTO, AND DENNIS MCLEAVEY, 2007:
A text book covering the basics of valuation including discounting cash flows, comparable ratios, and 'residual income' methods. Extremely dry, and some like Warren Buffett don't believe in using 'cost of capital' to measure valuation. Nonetheless, basic equity valuation methods are useful for understanding how many analysts and investors approach equity valuation.

[Review by Robert Jones 4-12]


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 2010]

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 5-12]

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 10-05]

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 2010]

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 8-02]

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 8-15]

MARKETS OVER MAO BY NICHOLAS R. LARDY, 2014
Difficult to read with lots of facts, figures and footnotes !  However, Mr. Lardy has done a thorough job of busting the myth that China's economy is controlled by state-owned enterprises ("SOE's"). He makes a strong case that only particular sectors are controlled by SOE's such as power, telecommunications, tobacco, and oil and gas exploration and production.  Futhermore, the book nicely summarizes the growth of private enterprise over the past few decades and shows that private enterprises typically have higher profitability than SOE's


[Review by Robert Jones 6-16]

THE CASE FOR GOLD BY JAMES RICKARDS, 2016
This book nicely and simply lays out the case for gold, and covers arguments for and against.  As Warren Buffet's right-hand man Charlie Munger says, when arguing a point, put yourself in the shoes of an opponent and argue against your position, so that you view any issue from both sides and can arrive at a higher level of conviction based on a well thought-out case.   I admire Mr. Rickards for doing that in this book.  I don't agree with all of his points, but I do agree with his conclusion that it makes sense to put about 10% of one's liquid portfolio in physical gold stored outside the financial system.

[Review by Robert Jones 6-13]

SO FAR, SO GOOD BY ROY NEUBERGER, 1997:
This autobiography of Mr. Roy Neuberger (written when he was 94 years old!) is a very entertaining easy read.   There are a few gems inside such as Mr. Neuberger’s Ten Principles of Successful Investing.  And spread throughout the book are numerous life lessons that can apply to just about any form of investing and to life in general.  All in all a fun read and plenty of take-away to help us learn from the wisdom and experience of someone who spent more than 70 years in the financial (and art) markets.


[Review by Robert Jones 6-13]

THE NEXT ASIA BY STEPHEN ROACH, 2009
This is a nice book (although Mr. Roach’s key messages are extremely repetitive) that explains in simple terms a number of important relationships in the area of globalization including imbalances such as US consumption and China’s relative lack thereof.  Although I disagree with Mr. Roach’s conclusions that Chinese individuals save so much because of their lack of ‘safety nets’ in the areas of pensions and health care, I respect his thoughtful analysis and share his hope that U.S. politicians will not bash China’s currency and trade policies for the reasons he mentions.

[Review by Robert Jones 7-14]

THE ROAD TO RECOVERY BY ANDREW SMITHERS, 2013: 
Smithers delivers another economics book albeit a very challenging read after a hard day at the office. His main messages are : i) western corporate profit margins are currently very high because corporate management in the west (especially the US and UK) is incentivised through generous stock option programs to increase earnings volatility via stock buy backs and higher dividends desighed to increase leverage, instead of re-investing profits back into their businesses ii) G7 debtor nations primarily the US, UK and Japan should engage in far less quantitative easing and deficit building as the currecnt global econmoic malaise and huge debt build-up can only be re-balanced if creditor nations (especially China and Germany) stimulate the global economy through monetary and fiscal easing. He fears what may happen as the above trends leave western corporates and governments with little ammunition in the event of another economic downturn.


[Review by Robert Jones 6-12]

THE START-UP GAME BY WILLIAM DRAPER, 2011: 
Descriptions of the experiences of a three generation private equity family (grandfather, son, and grandson) based in Silicon Valley. These experiences include investing, politics and philanthropy and provide a number of insights and wise counsel for those operating in any of these areas.

[Review by Robert Jones 2010]

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 7-19]

THE VENTURE CAPITAL INVESTMENT PROCESS BY DAREK KLONOWSKI, 2010:
Another good reference book to keep in your investment library.  It helps you navigate the myriad deal terms and negotiation considerations from the viewpoints of entrepreneurs and investors.

[Review by Robert Jones 12-03]

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 2010]

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 11-21]

WHERE KEYNES WENT WRONG BY HUNTER LEWIS, 2009:
Although I am not a follower of John Maynard Keynes, I picked up this book to have a better understanding of Keyne's economic philosophy because his name is mentioned so often in the media. As it turns out, many of Mr. Kenes's suggestions for how to run an economy and how to fix it in particular cases are incorrect according to Mr. Lewis. Furthermore, in some cases, Mr. Keynes contradicted himself or was inconsistent in his views. I came away with a better understanding of some Keynesian theories. Unfortunately, despite Mr. Lewis's countless economic examples and critiques, I am still often at a loss to explain what is driving economies and markets!



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