Book Bits | 28 March 2015

Invest with the Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy
By Robert R. Johnson, et al.
Essay by co-author (Robert R. Johnson) via ValueWalk
In a recently published McGraw-Hill book – Invest with the Fed – my co-authors, Gerald R. Jensen from Northern Illinois University, Luis-Garcia-Feijoo from Florida Atlantic University, and I, provide a comprehensive analysis of capital market performance across different Fed policy periods from 1966 to 2013. This book is a culmination of over 25 years of rigorous academic study of Fed policy and capital market returns. In it, we examine returns to different asset classes – stocks, bonds, Hedge Funds, alternative assets, and foreign equities – and also study returns to different equity styles (value, growth, and momentum).
One of our most interesting findings is that it isn’t so much the absolute level of interest rates that is related to security returns, but rather, the direction of interest rate changes that is important.

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined
Summary via publisher (Princeton University Press)
Efficiently Inefficient describes the key trading strategies used by hedge funds and demystifies the secret world of active investing. Leading financial economist Lasse Heje Pedersen combines the latest research with real-world examples and interviews with top hedge fund managers to show how certain trading strategies make money—and why they sometimes don’t. Pedersen views markets as neither perfectly efficient nor completely inefficient. Rather, they are inefficient enough that money managers can be compensated for their costs through the profits of their trading strategies and efficient enough that the profits after costs do not encourage additional active investing. Understanding how to trade in this efficiently inefficient market provides a new, engaging way to learn finance. Pedersen analyzes how the market price of stocks and bonds can differ from the model price, leading to new perspectives on the relationship between trading results and finance theory. He explores several different areas in depth—fundamental tools for investment management, equity strategies, macro strategies, and arbitrage strategies—and he looks at such diverse topics as portfolio choice, risk management, equity valuation, and yield curve logic.

The One-Page Financial Plan: A Simple Way to Be Smart About Your Money
By Carl Richards
Summary via publisher (Portfolio/Penguin)
Creating a financial plan is overwhelming. Financial books, magazines and websites offer long lists of options that are confusing, convoluted and contradictory. Carl Richards eliminates that confusion. He gives you The One-Page Financial Plan: 12 clear steps presented on one single page. A simple guideline to getting the financial life you want without ever feeling overwhelmed. With 20 years of experience as a financial adviser, he then provides napkin illustrations, simple rules and financial shortcuts to help you take those important 12 steps. In The One-Page Financial Plan he offers help to anyone who’s ever felt lost and confused about what to do with their money.

The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth
By Tom Burgis
Summary via pubilsher (Public Affairs)
The trade in oil, gas, gems, metals and rare earth minerals wreaks havoc in Africa. During the years when Brazil, India, China and the other “emerging markets” have transformed their economies, Africa’s resource states remained tethered to the bottom of the industrial supply chain. While Africa accounts for about 30 per cent of the world’s reserves of hydrocarbons and minerals and 14 per cent of the world’s population, its share of global manufacturing stood in 2011 exactly where it stood in 2000: at 1 percent.

Keep the Change: A Collector’s Tales of Lucky Pennies, Counterfeit C-Notes, and Other Curious Currency
By Harley J. Spiller
Summary via publisher (Princeton Architectural Press)
Harley J. Spiller began collecting money at the age of five when, home sick from school, his father tossed him a sack of pennies and a Whitman coin folder. In the five decades since, author Spiller has amassed one of America’s most extensive collections of unusual financial artifacts as well as a wealth of anecdotes and quirky historical details about U.S. currency. In Keep the Change, Spiller takes an irreverent look at our most uncommon coins and bills. Readers learn why greenbacks are green; what happens to worn-out bills (compost is involved); how artists navigate the fine line between art and mutilation; whether it’s ever acceptable to burn money (short answer: maybe); and how coin clippers and counterfeiters through the ages have profited by manipulating money. This highly selective tour through currency legends and lore will inspire readers to look with a new sense of wonder at the bills that pass through our hands every day.

Becoming Steve Jobs: The Evolution of a Reckless Upstart into a Visionary Leader
By Brent Schlender and Rick Tetzeli
Review via The New York Times
The main point of the new business-oriented biography “Becoming Steve Jobs,” by Brent Schlender and Rick Tetzeli is that Steve Jobs has been misrepresented. Blame Walter Isaacson’s “Steve Jobs” (2011), as the authors do, for the public perception that Mr. Jobs never outgrew the managerial style of the scheming, screaming, cheating, smelly hothead he may — may — have been in his early years. Instead, Mr. Schlender and Mr. Tetzeli say in their new book, Mr. Jobs developed a wise, mature, deliberate executive style for which he is seldom given credit, one that helped lead Apple to glorious heights.