Book Bits | 11.10.12

Market Sense and Nonsense: How the Markets Really Work (and How They Don’t)
By Jack Schwager
Excerpt via publisher, Wiley
Many investors seek guidance from the advice of financial experts available through both broadcast and print media. Is this advice beneficial? In this chapter, we have examined three cases of financial expert advice, ranging from the recommendation-based record of a popular financial program host to an index based on the directional calls of 10 market experts and finally to the financial newsletter industry. Although this limited sample does not rise to the level of a persuasive proof, the results are entirely consistent with the available academic research on the subject. The general conclusion appears to be that the advice of the financial experts may sometimes trigger an immediate price move as the public responds to their recommendations (a price move that is impossible to capture), but no longer-term net benefit. My advice to equity investors is either buy an index fund (but not after a period of extreme gains—see Chapter 3) or, if you have sufficient interest and motivation, devote the time and energy to develop your own investment or trading methodology. Neither of these approaches involves listening to the recommendations of the experts.

Who’s the Fairest of Them All?: The Truth about Opportunity, Taxes, and Wealth in America
By Stephen Moore
Review via The Washington Times
Stephen Moore’s latest book, “Who’s the Fairest of Them All?: The Truth About Opportunity, Taxes, and Wealth in America,” fairly sets our liberal friends straight on the issue that seems to be confusing President Obama and the general American public a lot — economics and, in particular, tax policy. Mr. Moore, the senior economics writer for the Wall Street Journal’s editorial page, formerly president of the Club for Growth and a fellow of the Cato Institute and Heritage Foundation, has an encyclopedic knowledge of the tax fights of the 1980s. He condenses that nearly three decades in public policy in a slim 119-page volume that is an accessible and thorough guide to understanding economic growth. He understands that if we don’t learn the lessons of the past, we’re bound to repeat the follies, and so he has taken aim squarely at their chief originator, President Obama. While Mr. Obama may think of himself as Snow White — “the fairest of them all” — when it comes to taxing, he’s really Dopey, treating the world as if the Laffer Curve didn’t exist, as if food stamps and unemployment insurance actually grow the economy.
Diary of a Hedgehog: Biggs’ Final Words on the Markets
Summary via publisher, Wiley
Barton Biggs was a Wall Street legend, trusted by investors around the globe. Now, in his last book, Biggs offers savvy insights into the innermost workings of the markets—today and for the years to come. Packed with keen insights, global experiences, and opinionated stances on investing, Diary of a Hedgehog: Biggs’ Final Words on the Markets explores the ongoing downward economic spiral and where it’s headed, to help readers keep their money safe and secure. Offering a unique look at the current state of the markets, why they continue to be depressed, and where we can go from here, Diary of a Hedgehog: Biggs’ Final Words on the Markets is the ultimate guide to how investors—and the general public—should be handling their finances.
The Cycle of the Gift: Family Wealth and Wisdom
By James E. Hughes, Jr., Susan Massenzio, and Keith Whitaker
Summary via publisher, Bloomberg/Wiley
Giving is at the core of family life–and with current law allowing up to $5,120,000 in tax-free gifts, at least through December 2012, the ultra-affluent are faced with the task of giving at perhaps largest scale in history. Beyond the tax saving and wealth management implications, giving to family members opens up a slew of thorny questions, the biggest of which is, “How do I prepare recipients of such large gifts?” With that question and others in mind, Hughes, Massenzio, and Whitaker have written The Cycle of the Gift in three main parts: “The Who of Giving,” “The How of Giving,” and “The What and Why of Giving.” The first part focuses on the people most deeply involved in family giving, especially the recipients and givers (parents, grandparents, spouses, trustees). The second part, “The How of Giving,” addresses the delicate balance of givers who want to maintain some level of control and recipients who want some level of freedom in accepting and growing their gifts. The final part, “The What and Why of Giving” describes various types of gifts, from money to business interests to values and rituals.
Why Has China Grown So Fast For So Long?
By Khalid Malik
Summary via publisher, Oxford University Press
For analysts China presents a conundrum. It is clear that China has made rapid progress, and the landscape of the world is changing due to China’s unique position. Yet for decades, many have questioned this phenomenon, showing concern about cooked data, asset bubbles about to burst, and so on. Yet the Chinese economy has kept growing at a blistering pace, 9-10 per cent annually, and more at times, over a span of almost three decades. Analysing the last 30 years of reforms, this book helps us understand the Chinese growth success, the factors that made this possible, and the lessons that can be distilled from this experience for other developing countries. Arguing that traditional explanations are inadequate, the author applies the “development as transformation” thesis to provide answers to a wide range of questions
Risk Assessment and Decision Analysis with Bayesian Networks
By Norman Fenton and Martin Neil
Summary via publisher, CRC Press
Although many Bayesian Network (BN) applications are now in everyday use, BNs have not yet achieved mainstream penetration. Focusing on practical real-world problem solving and model building, as opposed to algorithms and theory, Risk Assessment and Decision Analysis with Bayesian Networks explains how to incorporate knowledge with data to develop and use (Bayesian) causal models of risk that provide powerful insights and better decision making. The book first establishes the basics of probability, risk, and building and using BN models, then goes into the detailed applications. The underlying BN algorithms appear in appendices rather than the main text since there is no need to understand them to build and use BN models. Keeping the body of the text free of intimidating mathematics, the book provides pragmatic advice about model building to ensure models are built efficiently.