Book Bits: 6 May 2023

The Little Book of Picking Top Stocks: How to Spot the Hidden Gems
Martin S. Fridson
Summary via publisher (Wiley)
How well does it pay to own the Standard & Poor’s 500 Index’s best-performing stock of the year? Over the 2012-2021 period, the one-year total return ranged from 80% to 743%. This book identifies the quantitative and qualitative traits of stocks that made it to #1 and tells the stories of how they got there. A key indicator, the Fridson-Lee Statistic, makes its debut in these pages. Aiming for the massive upside of the #1 stocks entails substantial risk. It’s not something to do with more than a small percentage of your portfolio. But attempting to pick the coming year’s top performer can provide an outlet for speculative impulses that might otherwise spoil a prudent, long-term investment plan. And by investigating the statistically determined best candidates for #1, you’ll gain important insights into stock selection.

Hell to Pay: How the Suppression of Wages Is Destroying America
Michael Lind
Essay by author via The Wall Street Journal
In the last half-century, policy makers of both parties in the U.S. have successfully refuted Adam Smith. It turns out that it is indeed possible to pay wages to workers that are too low for their own maintenance, much less that of their families. This depends on using means-tested welfare programs like the earned-income tax credit (EITC), food stamps and housing vouchers, all of which compensate for wages that are too low for workers to live on.

Plunder: Private Equity’s Plan to Pillage America
Brendan Ballou
Essay by author via The Atlantic
Private equity firms buy businesses in the hopes of flipping them for a profit a few years later. The idea is simple enough. But companies bought by private equity firms are 10 times as likely to go bankrupt as those that aren’t. The industry’s defenders claim that this is simply because private equity firms often buy teetering companies; no wonder, then, that a disproportionate number fail. Besides, they say, no firm wants its business to go bankrupt.
But what if that weren’t true? What if private equity firms not only tolerated but profited from the bankruptcy of their companies?

The Uncertainty Solution: How to Invest with Confidence in the Face of the Unknown
John M. Jennings
Summary via publisher (Greenleaf Book Group)
This is not a typical investment book. It is an experiential guide on cultivating the mindset and behavior necessary to weather inherently uncertain and unpredictable markets. It doesn’t just tell you how to invest but how to think better about investing. Referencing studies on psychology, decision making, and investment behavior, Jennings provides a no-nonsense analysis of the financial markets and a road map to navigating its inevitable twists and turns. Jennings uses mental models to create a latticework of wisdom that will help you evaluate investment advice and learn better behavior in the face of uncertainty. To name a few: ignore expert predictions, be wary of stories, and try to invest like a dead person.

Not with a Bug, But with a Sticker: Attacks on Machine Learning Systems and What To Do About Them
Ram Shankar, et al.
Summary via publisher (Wiley)
A team of distinguished adversarial machine learning researchers deliver a riveting account of the most significant risk to currently deployed artificial intelligence systems: cybersecurity threats. The authors take you on a sweeping tour – from inside secretive government organizations to academic workshops at ski chalets to Google’s cafeteria – recounting how major AI systems remain vulnerable to the exploits of bad actors of all stripes. Based on hundreds of interviews of academic researchers, policy makers, business leaders and national security experts, the authors compile the complex science of attacking AI systems with color and flourish and provide a front row seat to those who championed this change.

The Myth of Progress: Toward a Sustainable Future
Tom Wessels
Summary via publisher (U. Press of New England/U. of Chicago Press)
Tom Wessels demonstrates how our current path toward progress, based on continual economic expansion and inefficient use of resources, runs absolutely contrary to three foundational scientific laws that govern all complex natural systems. It is a myth, he contends, that progress depends on a growing economy. Wessels explains his theory with his three laws of sustainability: (1) the law of limits to growth, (2) the second law of thermodynamics, which exposes the dangers of increased energy consumption, and (3) the law of self-organization, which results in the marvelous diversity of such highly evolved systems as the human body and complex ecosystems. These laws, scientifically proven to sustain life in its myriad forms, have been cast aside since the eighteenth century, first by Western economists, political pragmatists, and governments attracted by the idea of unlimited growth, and more recently by a global economy dominated by large corporations, in which consolidation and oversimplification create large-scale inefficiencies in both material and energy usage.

When the Heavens Went on Sale: The Misfits and Geniuses Racing to Put Space Within Reach
Ashlee Vance
Review via The Economist
The book is an illuminating romp through an industry marinated in the signature mix of starry idealism and ruthless capitalism brewed in Silicon Valley in the second half of the 20th century. But it is more than a paean to this spit-and-sawdust, fake-it-till-you-make-it style of business. Astra’s experience is a cautionary tale of the risks and stress of applying that sort of bravado to something as unforgiving as rocket science. The firm went public in 2021 and offers flights to paying customers. But its machines have a disappointingly spotty record.

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