Book Bits | 1.12.13

Successful Investing Is a Process: Structuring Efficient Portfolios for Outperformance
By Jacques Lussier
Summary via publisher, Wiley
What do you pay for when you hire a portfolio manager? Is it his or her unique experience and expertise, a set of specialized analytical skills possessed by only a few? The truth, according to industry insider Jacques Lussier, is that, despite their often grandiose claims, most successful investment managers, themselves, can’t properly explain their successes. In this book Lussier argues convincingly that most of the gains achieved by professional portfolio managers can be accounted for not by special knowledge or arcane analytical methodologies, but proper portfolio management processes whether they are aware of this or not. More importantly, Lussier lays out a formal process-oriented approach proven to consistently garner most of the excess gains generated by traditional analysis-intensive approaches, but at a fraction of the cost since it could be fully implemented internally.


The Good Rich and What They Cost Us
By Robert Dalzell
Summary via publisher, Yale University Press
This timely book holds up for scrutiny a great paradox at the core of the American Dream: a passionate belief in the principle of democracy combined with an equally passionate celebration of the creation of wealth. Americans treasure an open, equal society, yet we also admire those fortunate few who amass riches on a scale that undermines social equality. In today’s era of “vulture capitalist” hedge-fund managers, internet fortunes, and a growing concern over inequality in American life, should we cling to both parts of the paradox? Can we? To understand the problems that vast individual fortunes pose for democratic values, Robert Dalzell turns to American history. He presents an intriguing cast of wealthy individuals from colonial times to the present, including George Washington, one of the richest Americans of his day, the “robber baron” John D. Rockefeller, and Oprah Winfrey, for whom extreme wealth is inextricably tied to social concerns.
It Didn’t Have to Be This Way: Why Boom and Bust Is Unnecessary-and How the Austrian School of Economics Breaks the Cycle
By Harry C. Veryser
Summary via publisher, ISI Books
Why is the boom-and-bust cycle so persistent? Why did economists fail to predict the economic meltdown that began in 2007—or to pull us out of the crisis more quickly? And how can we prevent future calamities? Mainstream economics has no adequate answers for these pressing questions. To understand how we got here, and how we can ensure prosperity, we must turn to an alternative to the dominant approach: the Austrian School of economics. Unfortunately, few people have even a vague understanding of the Austrian School, despite the prominence of leading figures such as Nobel Prize winner F. A. Hayek, author of The Road to Serfdom. Harry C. Veryser corrects that problem in this powerful and eye-opening book. In presenting the Austrian School’s perspective, he reveals why the boom-and-bust cycle is unnatural and unnecessary.
Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future
By Samuel Gregg
Op-ed by author, via The New York Post
In one sense, to say that America is becoming like Europe seems odd. After all, when it comes to its dominant political ideas, religious culture, institutions and history, America is obviously Europe’s child.
That, however, is not what Europeanization means today. Instead it’s about the spread throughout America of economic expectations and arrangements directly at odds with our republic’s founding. These lead to the prioritizing of economic security over economic liberty; to the state annually consuming close to 50% of GDP; to the ultimate economic resource (i.e., people) aging and declining in numbers; to extensive regulation becoming the norm; and perhaps above all, to a situation in which economic incentives lie not in work, economic creativity and risk-taking, but rather in access to political power.
Contagion: How Commerce Has Spread Disease
By Mark Harrison
Review via The Times Higher Education
Mark Harrison’s medical history books are always big. Contagion is another masterful reach across continents and time, beginning in the 14th century and ending today.
It is a history of disease and a history of commerce in equal measure. The premise is familiar: infectious disease always tracks along commercial routes, deriving from, but also threatening, the more productive versions of exchange represented by trade. Almost everyone who writes about the history of contagion notes this. Few offer the historical substance behind the commonplace observation, however. None has done so with Harrison’s combination of carefully executed detail and grand scope.

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