BOSTON Jan 7 The credit crisis is just over a
year old and already there are dozens of books on the market to
explain its causes or cure its ills.
Most are not worth the time it takes to read them,
according to a handful of money managers and market strategists
who agreed to take part in an informal survey. The books either
contain too few insights, they go over old ground, or they just
get it wrong.
-- "Too many of the books about the crisis are fluffy,"
said Yale professor and economist Robert Shiller, who was among
the most vocal sages predicting the real estate bust. Of all
the books he read last year, only a few were sufficiently
serious. One was "This Time is Different," a history of 800
years of financial schemes-gone-wrong written by University of
Maryland economics professor Carmen Reinhart and Harvard
professor Kenneth Rogoff.
-- Jack Ablin, the chief investment officer of Harris Bank,
said he learned valuable lessons from one of the quickly
issued, behind-the-scenes books of 2009: "House of Cards" by
journalist William Cohan. Harris, who penned his own book last
year offering investing strategies for the post-credit crunch
markets, praised the story of the rise and fall of Bear
Stearns. He appreciated the book's depictions of the
personalities of Bear Stearns executives and the firm's
tumultuous relations with competitors. "Both ingredients, it
turned out, led to the firm's demise," he said.
-- The credit crisis sent Eugene Stone, PNC's chief
investment strategist, scurrying to his bookshelves to find his
copy of the 30-year-old classic "Manias, Panics and Crashes: A
History of Financial Crises."
The book, by the late MIT professor Charles Kindleberger,
is a study of common elements that helped inflate financial
bubbles from the 18th century South Sea Company scandal to more
recent meltdowns like the emerging market debt defaults of the
1990s. Stone said he remains worried that the low federal funds
rate could spark yet another bubble, despite recent experiences
with overvalued real estate and technology stocks. "A refresher
course offered by this book might be a useful New Year's
resolution," Stone said.
-- Noted short-seller Douglas Kass, who profited from the
collapse of the financial sector in 2007 and 2008, recommended
an overlooked tome by a fellow hedge fund manager. Jeff
Matthews' study of Warren Buffett, "Pilgrimage to Omaha," got
much less attention than Alice Schroeder's biography "The
Snowball." But Kass says Matthews' book "radically changed" his
view of Buffett by examining some of Buffett's contradictions
and personal blemishes and humanizing the Oracle of Omaha.
-- Unlike his peers, Dylan Grice, global strategist at
Societe Generale in London, found so many of the books he read
useful he could hardly recommend just one. He endorsed
Kindleberger's classic and "This Time is Different" and also
suggested investors read "When China Rules the World" by Martin
Jacques, though he thinks the nearly 600-page book needs a more
enticing title. "It really is a richly nuanced work," Grice
-- Investing is not just a study of history and investors
could also benefit from reviewing a very different sort of
work, Paul Kedrosky, an investor and senior fellow at the
Kauffman Foundation, said. He recommended Yale professor Edward
Tufte's "Visual Display of Quantitative Information," first
published in 1983.
Despite having more data than ever before, Kedrosky
complains that investors continue to oversimplify or ignore
critical information. Tufte's book highlights pitfalls in the
ways information is commonly presented. "Anyone who does
anything with data -- which is to say all of us -- have no
business convincing anyone of anything if you haven't read
Tufte," Kedrosky said.
-- Legg Mason strategist Michael Mauboussin, who works
closely with money manager Bill Miller, said investors need to
be wary of accepting conventional wisdom too readily. He
recommended Columbia University professor Bruce Greenwald's
attack on the conventional view that the world is becoming one
vast, interlinked market. Greenwald's book is "Globalization,"
co-written with Judd Kahn.
-- Tadas Viskanta, author of the Abnormal Returns blog,
spends his days trawling the Internet for articles relevant to
investing. One of the most useful books he read last year was
Mauboussin's "Think Twice." Rebutting authors who favor
instinctual decision-making, Mauboussin writes that investors
should be careful to avoid decisions based on common
psychological mistakes. "I know 2009 was the year of the crisis
book, but many escaped my attention," Viskanta said. "We are
all prone to the behavioral traps Mauboussin mentions."
(Reporting by Aaron Pressman; Editing by Eddie Evans)