January 19, 2013
Book Bits | 1.19.13
● The Leaderless Economy: Why the World Economic System Fell Apart and How to Fix It
By Peter Temin and David Vines
Summary via publisher, Princeton University Press
The Leaderless Economy reveals why international financial cooperation is the only solution to today's global economic crisis. In this timely and important book, Peter Temin and David Vines argue that our current predicament is a catastrophe rivaled only by the Great Depression. Taking an in-depth look at the history of both, they explain what went wrong and why, and demonstrate why international leadership is needed to restore prosperity and prevent future crises.
● Green Gone Wrong: Dispatches from the Front Lines of Eco-Capitalism
By Heather Rogers
Summary via publisher, Verso
Faced with climate change, many counsel “going green,” encouraging us to buy organic food or a “clean” car, for example. But can we rely on consumerism to provide a solution to the very problems it has helped cause? Heather Rogers travels from Paraguay to Indonesia, via the Hudson Valley, Detroit, and Germany’s Black Forest, to investigate green capitalism, and argues for solutions that are not mere palliatives or distractions, but ways of engaging with how we live and the kind of world we want to live in.
● Following the Trend: Diversified Managed Futures Trading
By Andreas Clenow
Summary via publisher, Wiley
During bull and bear markets, there is a group of hedge funds and professional traders which have been consistently outperforming traditional investment strategies for the past 30 odd years. They have shown remarkable uncorrelated performance and in the great bear market of 2008 they had record gains. These traders are highly secretive about their proprietary trading algorithms and often employ top PhDs in their research teams. Yet, it is possible to replicate their trading performance with relatively simplistic models. These traders are trend following cross asset futures managers, also known as CTAs. Many books are written about them but none explain their strategies in such detail as to enable the reader to emulate their success and create their own trend following trading business, until now.
● Rethinking Expectations: The Way Forward for Macroeconomics
Edited by Roman Frydman and Edmund S. Phelps
Summary via publisher, Princeton University Press
This book originated from a 2010 conference marking the fortieth anniversary of the publication of the landmark "Phelps volume," Microeconomic Foundations of Employment and Inflation Theory, a book that is often credited with pioneering the currently dominant approach to macroeconomic analysis. However, in their provocative introductory essay, Roman Frydman and Edmund Phelps argue that the vast majority of macroeconomic and finance models developed over the last four decades derailed, rather than built on, the Phelps volume's "microfoundations" approach. Whereas the contributors to the 1970 volume recognized the fundamental importance of according market participants' expectations an autonomous role, contemporary models rely on the rational expectations hypothesis (REH), which rules out such a role by design.
● Banking the World: Empirical Foundations of Financial Inclusion
Edited by Robert Cull, Asli Demirgüç-Kunt, and Jonathan Morduch
Review via The Enlightened Economist
“Half the world is unbanked,” is the title of an early chapter of a new book, Banking the World, edited by Robert Cull and others. Counterintuitive as it seems, for those of us living in countries with too much banking, too little banking is a big problem. For a long time the best, indeed one of the only, books on the issue of financial services for the truly poor has been Portfolios of the Poor, edited by Daryl Collins and others (see also the terrific Portfolios of the Poor website for additional material).
● Investing In Municipal Bonds: How to Balance Risk and Reward for Success in Today’s Bond Market
By Philip Fischer
Summary via publisher, McGraw Hill
The bond investor's guide to striking the right balance between risk and reward to maximize profitability in today's market: Provides an overview of the bond market, describes the "personalities" of specific bonds, and offers an insightful look at the 2008 financial crisis as it relates to bonds.
● Plan Your Prosperity: The Only Retirement Guide You'll Ever Need, Starting Now--Whether You're 22, 52 or 82
By Ken Fisher
Review via The New York Times
[Fisher] argues that your investing should be “benchmark” driven.
Here is how this could work — and the example is ours, not his: You decide how much you want to make on your money — say, 8 percent — and what kind of investments you are comfortable with. We will assume that it’s a mix of 60 percent stocks and 40 percent bonds. Then you find an appropriate measuring stick. For this example, you would use a balanced index — 60 percent of which tracked a broad stock market index like the Wilshire 5000, and 40 percent of which mirrored a broad bond index like the Barclays Capital U.S. Aggregate.
Then you would either buy a mutual fund, like the Vanguard Balanced Index fund, designed to match the benchmark, or build a portfolio on your own that mimicked it.
The fact that we had to create an example underscores a flaw with the book: it is very short on specifics. And that is by design. Mr. Fisher says up front that he is not going to offer benchmark or asset-allocation recommendations. His reasoning is that he doesn’t want to make explicit suggestions without knowing your specific hopes and circumstances. One size, he says, does not fit all.
Posted by jp at January 19, 2013 4:55 AM