Book Bits | 5.31.14

Rational Expectations: Asset Allocation for Investing Adults
By William J. Bernstein
Summary via author’s website,
It’s been almost two decades since the first electronic edition of The Intelligent Asset Allocator appeared online, so I decided to start with a clean sheet of paper in the wonky world of quantitatively based asset allocation aimed at small investors. Continuing the theme of the Investing for Adults series, this full-length finance title is not for beginners, but rather assumes a fair degree of quantitative ability and finance knowledge. If you think you can time the market or pick stocks and mutual fund managers, or even if you think that you can formulate an optimally efficient mean-variance asset allocation with a black box, then you’d best peruse the reading list first, and come back in a few years.

Clash of the Financial Pundits: How the Media Influences Your Investment Decisions for Better or Worse
By Joshua M. Brown and Jeff Macke
Interview with co-author Joshua Brown via NPR
In their new book, Clash of the Financial Pundits, Joshua Brown and Jeff Macke argue that financial punditry is not going anywhere; it’s been around as long as there have been economies. The book includes interviews with high-profile pundits, including Jim Cramer of CNBC’s Mad Money, Business Insider CEO Henry Blodget and businesswoman Karen Finerman. Author Joshua Brown, himself a pundit on CNBC, discussed the history of financial media and the value of pundits who sometimes get it wrong with All Things Considered guest host Tess Vigeland.

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt
By Kwasi Kwarteng
Review via The Guardian
One of this book’s central premises is that our governments’ need to accumulate treasure has been “a powerful impetus behind developments in society”. Yet, as is shown here, the rise of oil, the coming of China and the creation of the euro (a direct result of Nixon’s ending of the Bretton Woods agreement) all led not to great social development but to the financial crisis of 2008. That crisis was, in some ways, a social development, but one whose consequences we will be facing for many years to come.

The World’s First Stock Exchange
By Lodewijk Petram
Summary via publisher, Columbia University Press
The launch of the Dutch East India Company in 1602 initiated Amsterdam’s transformation from a regional market town into a dominant financial center. The Company introduced easily transferable shares, and within days buyers had begun to trade them. Soon the public was engaging in a variety of complex transactions, including forwards, futures, options, and bear raids, and by 1680 the techniques deployed in the Amsterdam market were as sophisticated as any we practice today. Lodewijk Petram’s eye-opening history demystifies financial instruments by linking today’s products to yesterday’s innovations, tying the market’s operation to the behavior of individuals and the workings of the world around them.

Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order
By Eric Helleiner
Summary via publisher, Cornell University Press
Eric Helleiner’s new book provides a powerful corrective to conventional accounts of the negotiations at Bretton Woods, New Hampshire, in 1944. These negotiations resulted in the creation of the International Monetary Fund and the World Bank—the key international financial institutions of the postwar global economic order. Critics of Bretton Woods have argued that its architects devoted little attention to international development issues or the concerns of poorer countries. On the basis of extensive historical research and access to new archival sources, Helleiner challenges these assumptions, providing a major reinterpretation that will interest all those concerned with the politics and history of the global economy, North-South relations, and international development.