Book Bits | 20 October 2018

The Behavioral Investor
By Daniel Crosby
Summary via publisher (Harriman House)
In The Behavioral Investor, psychologist and asset manager Dr. Daniel Crosby examines the sociological, neurological and psychological factors that influence our investment decisions and sets forth practical solutions for improving both returns and behavior. Readers will be treated to the most comprehensive examination of investor behavior to date and will leave with concrete solutions for refining decision-making processes, increasing self-awareness and constraining the fatal flaws to which most investors are prone. The Behavioral Investor takes a sweeping tour of human nature before arriving at the specifics of portfolio construction, rooted in the belief that it is only as we come to a deep understanding of “why” that we are left with any clue as to “how” we ought to invest.

Capitalism in America: A History
By Alan Greenspan and Adrian Wooldridge
Review via The Economist
No pain, no gain, is the moral of “Capitalism in America”, a business history of the United States by Alan Greenspan, the former chairman of the Federal Reserve Board, and Adrian Wooldridge, The Economist’s political editor. It will surprise no one to learn that these authors are fans of capitalism: the more disruptive it is, the better they like it. America’s exceptionalism as a capitalist economy, they argue, has been its distinctive tolerance for Schumpeterian creative destruction.

China, Trade and Power: Why the West’s Economic Engagement Has Failed
By Stewart Paterson
Summary via publisher (London Publishing Partnership)
Few people could tell you what happened on 11 December 2001, yet China’s accession to the World Trade Organization (WTO) will define the geopolitics of the twenty-first century. What were Western leaders thinking at the time? This book tells the story of the most successful trading nation of the early twenty-first century. It looks at how the Chinese Communist Party has retained and cemented its monopoly of political power – producing undreamt of riches for the political elite. It is the most extraordinary economic success story of our time and it has reshaped the geopolitics not just of Asia but of the world. As China has come to dominate global manufacturing, its power and influence has grown. This economic power is being translated into political power and the West now has a global rival that is politically antithetical to liberal values. Meanwhile, economic liberalism has lost its moral foundation, in part because economic outcomes are not perceived to be the result of fair competition. The weaknesses of the West’s democratic model are being laid bare as a lack of wage growth coupled with a policy of inflation targeting by Western central banks has led to falling real incomes for the many, and rising asset prices that have benefited the few.

Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street
By Carmen Segarra
Review via Kirkus Review
Segarra, now a self-described “advocate for regulatory transparency and reform,” guides readers into the inner sanctum of the Federal Reserve Bank in New York City and the offices of too-big-to-fail Goldman Sachs. She offers notes from the numerous meetings meant to convey suspect institutional cultures, explaining how she eventually realized that the high-level government regulators at the Federal Reserve exhibited zero interest in meaningful regulation of the unethical, corner-cutting executives at Goldman. As the author chronicles, instead of everybody from both institutions pulling together to avoid a repeat of the devastating worldwide financial crisis of 2008, there seemed to be an unholy camaraderie of corruption that was sure to devastate unsuspecting investors.

The AI Advantage: How to Put the Artificial Intelligence Revolution to Work
By Thomas H. Davenport
Summary via publisher (MIT Press)
Thomas Davenport offers a guide to using artificial intelligence in business. He describes what technologies are available and how companies can use them for business benefits and competitive advantage. He cuts through the hype of the AI craze—remember when it seemed plausible that IBM’s Watson could cure cancer?—to explain how businesses can put artificial intelligence to work now, in the real world. His key recommendation: don’t go for the “moonshot” (curing cancer, or synthesizing all investment knowledge); look for the “low-hanging fruit” to make your company more efficient.