Best of Book Bits 2016 (Part I)

It’s been another incredible year for new books in finance and economics. Before 2016 slips away, let’s revisit  some of the memorable titles that have appeared in The Capital Spectator’s weekly Book Bits column over the past 12 months. Here are five from the archives that, for one reason or another, inspire a second look. Next week, in Part II, I’ll highlight another five titles that arrived this year.

Before we begin, a quick mea culpa about a new book that Book Bits overlooked: Your Complete Guide to Factor-Based Investing: The Way Smart Money Invests Today, by Andrew L. Berkin and Larry E. Swedroe. Published in October, the book offers a roadmap for navigating this corner of the investment universe. Co-author Swedroe tells The Evidenced Based Investor:

There are now more than 600 factors identified in the literature, but we show in the book that there are only a small number that warrant consideration. Our criteria are persistence, pervasiveness, robustness, implementability and intuitiveness. Only a few factors meet those criteria and are not subsumed by other factors.

Meanwhile, here’s the first installment of this year’s Book Bits recap. Happy reading!

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse
By Mohamed El-Erian
Review via The Economist
Mohamed El-Erian, a former IMF economist and executive at the Pimco fund management group, is the latest to sound the alarm. While central banks “averted tremendous human suffering”, he argues that they have failed to generate what the Western world really needs—“the combination of high, durable and inclusive growth together with genuine financial stability”.

The Rise and Fall of American Growth:
The U.S. Standard of Living since the Civil War

By Robert Gordon
Review via The Wall Street Journal
In his new book, “The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War,” Northwestern University economist Bob Gordon argues that the century between 1870 and 1970 was exceptionally good for U.S. households (particularly 1920 to 1950) but that the years since 1970 have been disappointing and the future looks disappointing too.

The Art of Risk: The New Science of Courage, Caution, and Chance
By Kayt Sukel
Summary via publisher (Penguin Random House)
Are risk-takers born or made? Why are some more willing to go out on a limb (so to speak) than others? How do we weigh the value of opportunities large or small that may have the potential to change the course of our lives? These are just a few of the questions that author Kayt Sukel tackles, applying the latest research in neuroscience and psychology to compelling real-world situations. Building on a portfolio of work that has appeared in such publications as Scientific American, Atlantic Monthly, The Washington Post, and more, Sukel offers an in-depth look at risk-taking and its role in the many facets of life that resonates on a personal level.

The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore
By Michele Wucker
Summary via publisher (St. Martin’s Press/Macmillan)
A “gray rhino” is a highly probable, high impact yet neglected threat: kin to both the elephant in the room and the improbable and unforeseeable black swan. Gray rhinos are not random surprises, but occur after a series of warnings and visible evidence. The bursting of the housing bubble in 2008, the devastating aftermath of Hurricane Katrina and other natural disasters, the new digital technologies that upended the media world, the fall of the Soviet Union…all were evident well in advance. Why do leaders and decision makers keep failing to address obvious dangers before they spiral out of control? Drawing on her extensive background in policy formation and crisis management, as well as in-depth interviews with leaders from around the world, Michele Wucker shows in The Gray Rhino how to recognize and strategically counter looming high impact threats.

Quantitative Momentum: A Practitioner’s Guide to Building a Momentum-Based Stock Selection System
By Wesley R. Gray and Jack R. Vogel
Summary via publisher (Wiley)
Quantitative Momentum brings momentum investing out of Wall Street and into the hands of individual investors. In his last book, Quantitative Value, author Wes Gray brought systematic value strategy from the hedge funds to the masses; in this book, he does the same for momentum investing, the system that has been shown to beat the market and regularly enriches the coffers of Wall Street’s most sophisticated investors. First, you’ll learn what momentum investing is not: it’s not ‘growth’ investing, nor is it an esoteric academic concept. You may have seen it used for asset allocation, but this book details the ways in which momentum stands on its own as a stock selection strategy, and gives you the expert insight you need to make it work for you. You’ll dig into its behavioral psychology roots, and discover the key tactics that are bringing both institutional and individual investors flocking into the momentum fold.