Books 02 (Nov 08 - Nov 09)

[memphisb]

[quote=]The Black Swan
I started this book being blind, and I finished this book knowing that I will never view the world the same again.
nothing will ever beat the Bible for this experience

Its my next public transport book. Somehow I got a feeling the writing/content will be similiar to "A Random Walk Down Wall Street" by Burton G. Malkiel. Man, this book got me real depressed that I swore not to pick it up again.

[la papillion]

[quote=]The Black Swan
I started this book being blind, and I finished this book knowing that I will never view the world the same again.

nothing will ever beat the Bible for this experience[/quote]

Eh, read black swan no need to swan me too

[Cheng]

I'm swaning too! Searching for the black one.

What you do not know is far more relevant than what you do know.

[millionairemind]

Just finished reading The Two Trillion Dollar Meltdown by Chuck Morris.

The author goes thro' history on the changes to demographics in the 50s to 70s and how it impacts the US economy and structural changes to the financial markets thro' the years which ultimately ended with the great crash we saw in 2008.

It is an interesting read if you got 3 hours to spare cos' it is only 177pages long, but packed with lots of information.

Available from NLB

Here is a book review done by The Economist.

From The Economist print edition
The first big book on the credit crunch saw the crisis coming three years ago

IN 2005, while running a financial-software company, Charles Morris became convinced that credit markets were heading for a crash. He found a publisher who was willing to take a gamble and began tracing the roots of the yet-to-unfold crisis. However up to date it may seem, this book is no rush job. Mr Morris deftly joins the dots between the Keynesian liberalism of the 1960s, the crippling stagflation of the 1970s and the free-market experimentation of the 1980s and 1990s, before entering the world of ultra-cheap money and financial innovation gone mad.

He puts the eventual bill for the financial follies of the past few years at some $1 trillion—if all the excessive leverage (or borrowing) is wound down in an orderly fashion, which he considers unlikely. Thanks to securitisation, poor-quality mortgages are marbled through the entire global credit system. And there is more to come: commercial property, credit cards, corporate debt, credit-default swaps. For the most exposed institutions, it will be death by a thousand cuts.

Changes in the structure of the markets add to the problem. Unlike commercial banks, investment banks and hedge funds tend to increase their leverage during booms and shrink it in rough times. Since these two groups now account for half of all credit, their accelerated deleveraging is likely to make the credit contraction much worse than in past cycles. Mr Morris sees hedge funds—spared the worst at the start of the crisis but now suffering as their lenders demand more collateral—as the next weak link.

He describes three trends converging to create the bubble. By 2006 the growing trend towards deregulation had pushed three-quarters of all lending outside the purview of regulators. Securitisation created a serious agency problem, leaving loan originators, who were paid up-front, with no incentive to avoid bad credits and every reason to piggyback inappropriate products onto good ones (in one particularly depressing tale, a retired postal worker whose mortgage is almost paid off is switched to an interest-only product that leaves him in danger of losing his home). Banks and rating agencies were gripped by the pretence that all finance can be calculated by risk-modelling eggheads. It did not help that many investors blindly accepted the rating agencies as a kind of “financial Supreme Court”.

The story has no single villain, but Alan Greenspan comes close. Under him, the Federal Reserve fuelled the housing boom by sharply cutting the cost of short-term money. Mr Greenspan ignored warnings about subprime excess, while eagerly championing “new paradigms”, from hybrid mortgages to credit derivatives.

By November 2007, when the narrative ends, it was already clear to Mr Morris that this crisis was much more serious than the last big crunch, the 1998 Russian debt default and the bail-out of Long-Term Capital Management, an American hedge fund, by a group of banks under the Fed's direction. “In 2008 there is no one to call a meeting, there is no conference room big enough to hold the parties, and no one knows who should be on the invitation list,” he says.

Ominously, Mr Morris sees a closer parallel in the great Japanese asset bubble of the 1980s. He worries that the extent of the problem will tempt America to paper over losses and keep sickly lenders on life-support, as Japan did. If it does, then, like Japan, it is likely to suffer a lost decade.

He offers a raft of suggestions: originators should retain the riskiest portion of securitised loans; prime brokers should stop lending to hedge funds that fail to disclose their balance sheets; trading of credit derivatives should be brought onto exchanges for the sake of safety, even if this raises costs; and some version of the old Glass-Steagall act, which separated commercial banking and capital-markets activities, should be re-introduced. Ultimately, he argues, after a quarter-century of “market dogmatism” it is time for the regulatory pendulum to swing the other way.

There are risks in any such roll-back. Mr Morris admits that even the biggest bubbles contain innovations that endure: think of collateralised mortgage obligations, which suffered a meltdown in 1994 but later transformed the industry, saving borrowers billions. However, his provocative book is, by and large, a well-aimed opening shot in a debate that will only grow louder in coming months.

[la papillion]

Ok mm, will grab that. I saw a copy but picked another book instead. Currently reading "Where are the customer's yacht?". That book had been staring at me for more than 1.5 yrs already, so time to pick it up

[b0rderc0llie]

Ok mm, will grab that. I saw a copy but picked another book instead. Currently reading "Where are the customer's yacht?". That book had been staring at me for more than 1.5 yrs already, so time to pick it up

Haha nice book

Extracted from a website:

---
Around 1940 Fred Schwed wrote a book about Wall Street that asked a simple question: Where are the customers yachts?

He noticed that all the stock brokers, investment advisors, and fund managers had yachts. Obviously there was money to be made on Wall Street! But how about the customers? Where were their yachts? Wasn’t the financial services industry supposed to help the customer get rich?

The purpose of the financial services industry, on Bay Street and Wall Street, is not to enrich the customer. The purpose is to extract fees from the customer. The sooner you, the customer, figure this out, the sooner you start asking the right questions, the sooner you will be on your way to buying your own yachtrather than someone else’s.

Stock brokers, investment advisors, financial planners, and fund managers don’t get to buy yachts because they are great investors who know better than you what companies to invest in. Ultimately, they get to buy yachts because they’re great salesmen, who have perfected the art and science of extracting trading fees, spreads, commissions, service charges, trailer fees, expense ratios, administration fees, you get the idea.
---

[sidney]

Ok mm, will grab that. I saw a copy but picked another book instead. Currently reading "Where are the customer's yacht?". That book had been staring at me for more than 1.5 yrs already, so time to pick it up

i read this in lib 2 years ago. I can't remember the contents, it was a old, yellowish book. i read it all! But really i can't rem a thing. Faulty brain.

[winston]

How to Get Rich, by Felix Dennis: from Bill Egan

How To Get Rich is a fun book to read. Unlike the usual book and seminar hucksters, Felix Dennis really is rich (est. 585 mil pounds). Dennis has a very clear and friendly writing style. It feels like he is talking to you when you read the book. He tells a number of good stories about how he made different piles of money, including how he bought The Week in 1973 when he was totally broke and hacking a Bruce Lee biography to pay the bills.

This was just at the moment Lee died suspiciously, which jump-started all sorts of money making opportunities. There is wisdom here in Dennis' tales of success and failure; practical comments on negotiation, delegation, hiring, raising capital, poetry, and also dire warnings.

"Now comes the hard part. Before we really get started on getting started, I ask you to consider carefully the short list below. It is by no means comprehensive, nor will it be the last list in this book, but should you find yourself unable to measure up to even one of these initial demands (and I mean just one), then my suggestion is that you close this book and give it to a friend, or an enemy

- depending on the degree to which you enjoy ironical gestures.

- If you are unwilling to fail, sometimes publicly, and even catastrophically, you stand very little chance of ever getting rich.

- If you care what the neighbors think, you will never get rich.

- If you cannot bear the thought of causing worry to your family, spouse, or lover while you plough a lonely, dangerous road rather than taking the safe option of a regular job, you will never get rich.

- If you have artistic inclinations and fear that the search for wealth will coarsen such talents or degrade them, you will never get rich. (Because your fear, in this instance, is well justified.)

- If you are not prepared to work longer hours than almost anyone you know, despite the jibes of colleagues and friends, you are unlikely to get rich.

- If you cannot convince yourself that you are 'good enough' to be rich, you will never get rich.

- If you cannot treat your quest to get rich as a game, you will never be rich.

- If you cannot face up to your fear of failure, you will never be rich."

Concluding his tale of acquiring The Week and slowly making it work, Dennis says,

"Trust your instincts. Do not be a slave to them, but when your instincts are screaming, Go! Go! Go! Then it's time for you to decide whether you really want to be rich or not. You cannot do this in a deliberate, considered manner. You can't get rich by painting by numbers. You can only do it by becoming a predator, by waiting patiently, by remaining alert and constantly sniffing the air and by bringing massive, murderous force to bear upon your prey when you pounce."

http://www.dailyspeculations.com/wordpress/?p=1285

[winston]

From "How to get Rich" by Felix Dennis:-

If you are young and reading this then I ask you to remember just this: you are richer than anyone older than you, and far richer than those who are much older. What you choose to do with the time that stretches out before you is entirely a matter for you. But do not say you started this journey poor. If you are young, you are infinitely richer than I can ever be again.

Money is never owned. It is only in your custody for a while. Time is always running on, and the young have more of it in their pocket than the richest man or woman alive. That is not sentimentality speaking. That is sober fact.

And yet you wish to waste your youth in the getting of money? Really? Think hard, my young cub, think hard and think long before you embark on such a quest. The time spent attempting to acquire wealth will mount up and cannot be reclaimed, whether you succeed or whether you fail.

Even should you succeed in becoming rich, unlikely as that is, what will you have achieved? Independence of a kind? The luxury to choose what you wish to do with the rest of your life? Happiness? No, no and no. You will not achieve any of those things. Not when you have too much money.

As Francis Bacon, one of the greatest minds ever to grace England’s corridors of power, warned in his Essays: “I cannot call Riches better than the baggage [hindrance] of virtue. The Roman word is better, impedimenta. For as the baggage is to an army, so riches to virtue. It cannot be spread or left behind, but it hindereth the march; yea, and the care of it sometime loseth or disturbeth the victory.” It does indeed.

Wealth makes many demands and, by the time you have acquired it, you will be prey to certain habits. You will fear to lose it and must spend a great deal more time to defend it. No one is “independent” of the human race. “No man is an island entire of itself, every man is a piece of the continent, a part of the main.” Heed the words of John Donne, finest of poets: “And therefore never send to know for whom the bell tolls: it tolls for thee.” Aye, so it does.

No luxury of choices for rich little you. You will be too busy keeping the sea from washing away the sand you have spent so long collecting at such terrible cost to your health and your sanity and your relationships with others. It is always thus. This is no escape. You believe (I know you do) that it will be different for you. But it won’t be. It never is.

Happiness? Do not make me laugh. The rich are not happy. I have yet to meet a single really rich happy man or woman—and I have met many rich people. The demands from others to share their wealth become so tiresome, and so insistent, they nearly always decide they must insulate themselves. Insulation breeds paranoia and arrogance. And loneliness. And rage that you have only so many years left to enjoy rolling in the sand you have piled up.

The only people the self-made rich can trust are those who knew them before they became wealthy. For many newly rich people, the world becomes a smaller, less generous and darker place. It sounds ridiculous, doesn’t it? Ridiculous and gloomy.

But then, you are to consider that I have been very poor and I am now very rich. I am an optimist by nature. And I have the ability to write poetry and create the forest I am busy planting. Am I happy? No. Or, at least, only occasionally, when I am walking in the woods alone, or deeply ensconced in composing a difficult piece of verse, or sitting quietly with old friends over a bottle of wine. Or feeding a stray cat.

I could do all those things without wealth. So why do I not give it all away?

Because I worked too hard for it. Because I am tainted by it. Because I am afraid to. All those reasons and more. Perhaps, if I am lucky enough to become old, I will accumulate something else: the courage to give it all away before I die. That would be a good thing, I think.

(When I die, it is all going to a charity called “The Forest of Dennis.” You see, even when I do a good thing with my money, my ego insists that I name it for myself. Not a good sign.)

Giving money away when you are dead takes no guts. No courage. But to divest yourself of hundreds of millions of dollars, or the greater part of your fortune, before your death? That would be something to be proud of, don’t you think? It even makes logical sense.

For what is left afterward but a few tears by a graveside and years of bickering and waste over a complex will? (The wills of the rich are always complex.) Bitter years, where lawyers count the number of fairies they believe you once thought danced upon the head of a pin—years in which they enrich themselves at your descendants’ expense. A fine legacy, to be sure.

But you must make your own choice. I have said my piece and I meant every word of it. This small part of my book was composed in my mind years ago. It was easy to write. I knew all of it before my fingers touched the keyboard. It has troubled me for years and I thank you for allowing me to share it.

I suspect it will have little effect on you, though. You are probably young and are tired of being poor. Very well. Let us return to a recap of the “important bits” to help you on your journey. But just before we do, can I ask you to do me a small favor?

Please lodge one fact in your memory: that the last one thousand five hundred words was an “important bit.” In my heart of hearts, I know it was the most important bit you will read in this book.

Mark it with a bookmark and write today’s date upon it. Come back to it in twenty or thirty years, when new books printed on paper will be rare objects. Then cast your mind back to a time when you were young, and you first read this book, and to the thoughts of a fool, a rich poet, long dead, who once typed these words sitting in one of the most beautiful houses on earth, staring at a turquoise sea, sipping a glass of slightly chilled Chateau d’Yquem.

That will be enough for me.

Enough! Let’s get on with getting rich!

http://shanelyang.com/2009/04/24/felix- ... is-gollum/

[helios]

i received the e-book of Securities Analysis from someone; shall read this as bed-time stories