Book Review: Financial Risk Management for Dummies

Financial Risk Management for Dummies. 2016. By Aaron Brown. John Wiley & Sons, Ltd., 384 pages, $26.99.

The dummies to whom Financial Risk Management for Dummies is addressed are not outright novices. Rather, they exemplify the maxim that a little bit of knowledge is a dangerous thing. Aaron Brown, chief risk officer of AQR Capital Management, devotes much of the book to dispelling mistaken notions about his subject.

“Risk management is not about predicting or preventing disaster,” he writes. Neither, says Brown, is it about estimating probabilities or outcomes. The “frequentist” approach, with its analogies to casino games, has only limited application. “If all risks were playing roulette or drawing cards,” Brown states, “we wouldn’t need risk managers.” There is little in the book about measuring risk because generally speaking, risk that is measurable can be avoided, insured, hedged, or neutralized via diversification. Contrary to the likely expectations of many investment professionals, Value at Risk (VaR) does not enter the discussion until Chapter 6.

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DIY Financial Advisor- A Book Review

The Alpha Architect, LLC team of Wes Gray, Jack Vogel, and David Foulke has produced a dynamic, fun, and accessible text that has the power to free readers from agonizing over implementing a disciplined investment process and making investment decisions. The processes offered convincingly depict a route to success in investing. The authors present ample evidence that provides simple solutions to achieving selected investment objectives considering asset class risks and correlations among domestic and foreign stocks, US Treasuries, US real estate, and commodities.

The book is divided into two parts: Why You Can Beat the Experts, and How You Can Beat the Experts. This division aids the book’s overall purpose: to provide a sensible and systematic introduction to “doing investments yourself.” Why You Can Beat the Experts is fun to read and direct in its message. The authors question the real value of so-called experts. While the experts have access to information, more data, and experience, they are often wrong. Think about it: why would more data necessarily support better investment decisions? Rather than analyzing data until blue in the face, why not model the investment process? The authors “bust” many investment myths in this section of the book, and in doing so, entice the reader to pursue systematic decision-making—and be healthy skeptics.

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Mastering ’Metrics: The Path from Cause to Effect

The authors provide an easy-to-read overview of key concepts in econometrics for anyone desiring a strong intuitive description of how to conduct analysis using simple techniques. Covering a limited number of topics with practical examples of each, they offer a useful framework for conducting fundamental econometric analysis. Although the book does not directly discuss financial issues, it provides a good foundational review for the financial empiricist who wishes to better structure econometric tests.

Statistics is second only to accounting among the technical skills necessary for engaging in modern finance and is fundamental for anyone who considers quantitative work a core element of finance. Unfortunately, practitioners’ actual statistical and econometric knowledge and intuition may be more limited than their level of academic exposure would suggest. No one willingly reads a book on econometrics to close this knowledge gap, so technical skills atrophy rather than advance with money management experience.

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Book Review: Misbehaving- The Making of Behavioral Economics

MisbehavingRichard H. Thaler has spent his career studying the radical notion that the central agents in the economy are humans―predictable, error-prone individuals. Misbehaving is his arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth―and change the way we think about economics, ourselves, and our world. 

Traditional economics assumes rational actors. Early in his research, Thaler realized these Spock-like automatons were nothing like real people. Whether buying a clock radio, selling basketball tickets, or applying for a mortgage, we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists. In other words, we misbehave. More importantly, our misbehavior has serious consequences. Dismissed at first by economists as an amusing sideshow, the study of human miscalculations and their effects on markets now drives efforts to make better decisions in our lives, our businesses, and our governments.

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Book Review: The End of Banking By Manuel Stagars, CFA, CAIA, ERP

The End of Banking: Money, Credit, and the Digital Revolution
. 2014. Jonathan McMillan. 

Announcing the demise of the financial system as we know it has become popular in the aftermath of the Great Recession. In fact, the Financial Times has dedicated an entire series to the topic, aptly named Death of Banks, wherein author Izabella Kaminska chronicles the downfall of traditional banking.

A recent book called The End of Banking goes one step further: In addition to carefully explaining how the financial sector maneuvered itself into the financial crisis of 2007–08, it presents several unconventional ideas to do away with regulatory capital arbitrage that sticks taxpayers with the bill for bankers’ risk taking. The book proposes a fairly straightforward policy framework that promises to reduce shadow banking, decentralize financial services from too-big-to-fail banks, improve regulation, and realign the private and the public sector with transparent monetary policy.

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The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors

StewardshipofWealthIn his latest book, The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, Gregory Curtis goes beyond a traditional study on investment policy, asset selection and monitoring, and risk management of and the fiduciary issues involved in wealth management by thoroughly investigating the aspects of stewardship of the wealth of prosperous families. Curtis is the chairman and founder of Pittsburgh-based Greycourt & Co., a wealth advisory firm that serves high-net-worth families and select endowments on a global basis. This book builds on his Creative Capital: Managing Private Wealth in a Complex World. It provides a moral, ethical, economic, and investment compass for the wealthy.

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Growth of Large Companies May Be Driving Wage Inequality


The global trend toward wage inequality may be driven by a rise in the share of people employed by the world’s largest companies, suggest Professor Holger Mueller and his co-authors, Paige P. Ouimet of the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School and Elena Simintzi of the University of British Columbia’s Sauder School of Business, in their new working paper, “Wage Inequality and Firm Growth.”

Using a proprietary data set of employee pay at a broad cross-section of UK firms (both private and public) from 2004 to 2013, the researchers examined how the wage differences between jobs of differing skill levels within a single firm (“within-firm skill premia”) varied between firms and over time. They found that the wage differences between high-skill and low- or mid-skill jobs increased with firm size. As company size grew (measured by either number of employees or sales – both had the same results), the wages paid for high-skill jobs increased significantly, while the wages paid for low- or mid-skill jobs remained the same or decreased slightly. For example, the highest-level job at a company in the 75th percentile of company size carried a wage 280 percent greater than the highest-level job at a company in the 25th percentile. The result of this phenomenon is that as firms grow larger, a divide widens between the high-level and both the mid- and low-level job wages, driving greater wage inequality.

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Review: The New Economics of Liquidity and Financial Frictions by David Adler

The New Economics of Liquidity and Financial Frictions is a book about a new branch of economics that is largely a synthesis of macro and finance. In many ways, it is a radical departure from the older, frictionless approach still prevalent in economic textbooks and most of academia. This book provides a new understanding and approach to asset pricing, risk measurement and management, central banking policy, and the overall working of today’s economy, including questions of financial stability.

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Book Review: Lodewijk Petram's The World’s First Stock Exchange

If you have the common, errant idea of the Dutch as universally meticulous, arrogant and deadly boring people, you will not be disappointed by L. Petram’s book, The World’s First Stock Exchange.  Happily of a “European” size—i.e. less than 300 pages—it might though bore you to death. What might have been the fascinating tale of colorful Conraad von Beuningen, a follower of Spinoza sent on ambassadorial missions to both France and England, and eventually Mayor of Amsterdam who went mad after losing his fortune in short selling, is reduced to the technicalities of how he avoided prohibition against short selling. Yet, it is necessary reading and a valuable reference source for scholars with a serious interest in markets, exchanges and financial history.

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The Best-Seller for Equity Analysts to Master Their Profession

The most highly acclaimed and comprehensive learning tool available, Best Practices for Equity Research Analysts is an on-the-job reference filled with the practical knowledge and specific tasks buy-side and sell-side equity analysts need to claim their place among the most highly regarded in their industry.

Most equity research analysts learn their trade on the job, by apprenticing under a senior analyst or portfolio manager. However, these senior producers often have little time to train new analysts. Those who do have the time may not have developed research skills worth emulating (after all, over half of money managers underperform their benchmarks). Furthermore, in modern day equity research, analysts without a mentor don’t have time to learn on their own through trial and error because the stakes are too high.

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Museum Launches Book and Website Tracing the “Family Trees” of the 50 Largest US Banks

GoAF jacket_final_line_webThe Museum of American Finance and Columbia Business School Publishing today announced their collaboration on a new book featuring the genealogical “family trees” of the nation’s 50 largest banks alongside beautifully illustrated narrative histories of each bank. The book will officially be released on March 10, 2015.

Authored by renowned financial historians Dr. Robert E. Wright and Dr. Richard Sylla, Genealogy of American Finance explores how 50 financial companies came to dominate the US banking system and their impact on the nation’s political, social and economic growth. A story that spans more than two centuries of war, crisis and opportunity, it reminds readers that American banking was never a fixed enterprise but has evolved in tandem with the country.

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Book Review: Inside the Crystal Ball


This book is an invaluable resource for anyone striving for a command of the inner workings of the economy. The author details his impressively rigorous forecasting process, which draws on all major schools of macroeconomic thought. He also dives deep into the data to explain some of his expectations.

Beware of economic forecasters who achieve better-than-average accuracy in predicting extreme outcomes. They are less accurate than the average forecaster in predicting run-of-the-mill outcomes. Furthermore, it may not be by chance that certain prognosticators issue extreme forecasts with greater frequency than their peers. Those whose firms bear their own names depart from the consensus more often than other forecasters. Making a splash by “calling” a major setback can expand a forecaster’s following (and revenue base), even if the feat is achieved by acting as a “broken clock”—that is, predicting an economic decline year in and year out until it inevitably comes to pass as a function of the business cycle.

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Book Review: A Risk Professional’s Survival Guide


This highly readable and informative book can serve the needs of a variety of individuals. The end-of-chapter problems make the book suitable for a classroom setting for those who plan to become practicing risk managers. Readers interested in gaining a general overview of risk management will also find the book valuable.

World events and new financial products have shown the importance of risk management to the finance industry. The numerous mathematical models customarily invoked in addressing risk management can make it difficult for students of the subject to learn to put into practice the tools of the trade. In many traditional texts on risk management and finance, theory and application are taught separately. The theory is usually presented first, and then the concepts are reinforced by examining a case involving a real or fictional firm, either in the main body of a chapter or as an end-of-chapter homework assignment. In most instances, different firms are used throughout the book to illustrate the various concepts.

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Book Review: Dead Companies Walking

Dead-companies-walkingScott Fearon's Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity in Unexpected Places opens with an excellent summarization of his book. He begins, "My specialty is identifying what I call 'dead companies walking' which is what I call businesses on their way to bankruptcy and a zero-out share price." Fearon is no stranger to the task, having been doing this since he started his hedge fund in 1991. Since its founding, the fund has had only one down year.

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Book Review: Millennial Money


This easy-to-read book encourages millennials to invest in the global stock market for wealth accumulation. It provides the reasons why they should invest, strategies they can follow, and behavioral pitfalls they should avoid.

Millennials have gone through a lot in the last two decades.1 They experienced recessions in 2001 and 2008, with the latter leading to the global financial crisis (GFC). For most millennials, their chosen careers have been a roller coaster ride, and some have already moved on to second careers, mostly because of the GFC’s severe effects on employers. Millennials have seen the life savings of their parents and others dwindle over a relatively short time. Consequently, they are skeptical about investing their hard-earned money in equity markets. In Millennial Money: How Young Investors Can Build a Fortune, Patrick O’Shaughnessy encourages millennials to overcome their skepticism and benefit from the process of wealth creation.

Millennial Money is an easy read that instills high doses of confidence through its analysis of historical data to explain why investing in risky assets is essential. O’Shaughnessy highlights the fact that the millennials’ greatest advantage is their youth and shows how compounding helps them in the long run. One dollar invested today could be worth $15 by the time a millennial retires in 40 years. If one waited 10 years to start investing, however, that dollar would be worth only $7.50 at the same rate of return. In short, postponing investment has a huge impact on one’s retirement lifestyle.

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Book Review: Bonds Are Not Forever


This book is recommended for anyone interested in the contemporary role of bonds in investment portfolios. The author explores the history of debt from ancient to modern times and discusses the growth of derivatives, developments in risk management, inflation in the modern era, the political backdrop of today’s debt standoffs, and why “bonds are not forever.”

Bonds Are Not Forever: The Crisis Facing Fixed Income Investors explores the history of debt from ancient to modern times. It discusses the growth of derivatives, developments in risk management, inflation in the modern era, the political backdrop of today’s debt standoffs, and why “bonds are not forever.”

Author Simon Lack is well qualified to present such a wide-ranging and timely discussion, having spent his entire career in bond trading, derivatives, hedge funds, and investment management, including 23 years at J.P. Morgan overseeing some 50 professionals in a highly profitable group and sitting on the firm’s investment committee. In 2009, he founded SL Advisors, LLC (a registered investment adviser), and he is involved in a number of community volunteer boards. Often quoted in the business press, Lack is the author of the international bestseller The Hedge Fund Mirage and frequently speaks on financial subjects.

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Book Review: Zero to One

Zero-OneZero to One: Notes on Startups, or How to Build the Future is about how to build companies that create new things. It draws on everything I learned directly as a co-founder of PayPal and Palentir and then as an investor in hundreds of startups including Facebook," wrote Peter Thiel at the book's opening. Thiel, as the opening suggests, has lots of insights and lessons for those interested in business startups. The narrative is a mixture of professional and life guidance, the latter of which may not interest financial professionals.

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Review: 300 Hours CFA Exam Insights 2015 Edition eBook


Sun Tzu, the famous 6th century Chinese General and author of the timeless masterpiece, The Art of War wrote, “Know your enemy and know yourself and you can fight 100 battles without disaster.” 

While every CFA candidate hopes it will only take three battles to earn their charter, the concept is apropos. For the typical, newly enrolled CFA candidate, there is a general understanding about the demanding endeavor upon which they are about to embark.  They know that the test is difficult, that it takes a minimum of 18 months to complete and they’re probably aware of the subjects that will be tested on exam day.  

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Book Review: The End of Copycat China

CopyCat-ChinaIn 2005, Shaun Rein founded China Market Research Group, a strategic market intelligence firm based in Shanghai. Their clients included private equity firms, hedge funds, as well as Chinese businesses and multinationals. In the course of his market research, he comments, "As I traveled, I realized the changes and reforms were happening so fast that they were hard for people outside the country to follow." In his previous book, The End of Cheap China, and now, with The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia Shaun Rein shares with the readers his knowledge of the rapidly changing Chinese economy, and how businesses and investors are adapting, and must adapt.

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Book Review: Succession Planning for Financial Advisors



The author provides a step-by-step guide to implementing a succession plan. The book is directed primarily at owners of independent advisory firms but should also be of considerable interest to their employees, their clients, and regulators, as well as investment professionals at larger firms who are considering the establishment of their own practices.

Financial professionals who serve retail clients balance two primary tasks: providing expert investment management or advice and offering consistent and superior service to clients. Those who work for larger brokerage or advisory firms have much of the expertise, infrastructure, and procedures provided by their employers, but the growing number who choose to start and run their own businesses must develop these features by themselves. Despite independent advisors’ success at attracting clients—they are growing at a much faster pace than their larger competitors—author David Grau, Sr., finds that independent advisors fail miserably in one key area: succession planning.

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Book Review: China Goes West


The financial world lives to gain from new trends, to get out front, grab an edge, and bring in the profits before the trend matures and a lot of competition moves in. With this focus, Joel Backaler's new book is especially welcome in its description of, and insights on, the ramping up of Chinese overseas investments. China Goes West: Everything You Need to Know About Chinese Companies Going Global has detailed, sophisticated analysis of the Chinese companies that are expanding outward, and of what this can involve. It is a realistic picture rather than just a trend forecast.

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Book Review: Age of Ambition


Age of Ambition: Chasing Fortune, Truth, and Faith in the New China may be the best of the recent books on China. Author Evan Osnos was the Beijing correspondent for The New Yorker there, and his book is the record of an active journalist, "based on eight years of conversations." The resulting picture is of a large, dynamic country in the midst of rapid change, often in different directions. Osnos told the stories of individuals: some thriving in the system, others in deep trouble with political opposition, which gives a graphic feel for what it's like to strive and survive in China. We see practical realities ranging from how to bribe judges, to starting a Internet dating service.

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Book Review: Wall Street Research


Sell-side research is often seen as a competition among analysts for top rankings in surveys of investors. From time to time, scandals cause the profession to be viewed through the prism of ethical standards. Even the celebrity culture now colors perceptions of the analytical profession. In Wall Street Research: Past, Present, and Future, Boris Groysberg and Paul M. Healy of the Harvard Business School adopt the market for sell-side research as their framework. Oddly, this perspective is rarely used by brokerage industry types, who are otherwise thoroughly immersed in markets.

Brokerage houses tend not to think of research as a service bought and sold in a market because their ambition is to sell securities, not security analysis. The firms must nevertheless recover the costs of producing research. Prior to the US SEC’s abolition of fixed commission rates on 1 May 1975, broker/dealers paid for their teams of industry-specialized security analysts by bundling research with execution services. That worked well under pre–“May Day” commissions of 20–30 cents a share but proved unviable when those rates declined precipitously in the late 1970s.

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Book Review: Can China Lead?

ChinaChina is viewed as the only real competitor to U.S. economic and geopolitical position, and its future is one of the most timely and high priority economic issues here. Can China Lead?: Reaching the Limits of Power and Growth focuses on the issue by looking at the role of the Chinese Communist party. The authors are well qualified to evaluate China's future as a potential world leader: William C. Kirby and F. Warren McFarlan are on the faculty of Harvard Business School, which has done many case studies of Chinese companies (sixty-six are listed in the book's Appendix). Regina Abrami is at the Wharton School, and Director of the Global Program of the Lauder Institute. PMc Farlan is a guest professor at Tsinghua University, and codirector of the HBS China Business Case Center. Kirby is Chairman of the Harvard China Fund, and a honorary professor at several Chinese universities.

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Book Review: The Dollar Trap


The author, an international finance expert, focuses on the complexities of the US dollar as the global reserve currency. Exploring current fundamental modeling and the politics of international financial coordination, he details why, in spite of news reports concerning its demise, the dollar will continue to be the dominant world currency.

International investments are ultimately driven by the value of the dollar, the core currency around the globe. Currency movements are a primary determinant of international fixed-income diversification and are important for any international equity decision. Nonetheless, hedging is the default approach among money managers because their ability to forecast currency movements is so limited. Given the difficulty of forecasting, relatively little time is spent analyzing the fundamental components of currency returns. Dollar dynamics are often relegated to being treated as a mystery.

–Mark S. Rzepczynski

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Book Review: Young Money


Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits tells the stories of eight young Wall Streeters who were hired after the Crash. Author Kevin Roose, New York magazine business writer, shadowed each subject for more than three years. They started their jobs in 2009- 2010, and most, but not all, are from elite ivy universities. Their identities are not revealed, and understandably so, since they could be fired for unauthorized media contacts. While Roose says some of the personal details and events have been changed; the stories are true, and read as candid and revealing.

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Book Review: Unbalanced: The Codependency of America and China


The codependency between China and the US has been obvious for a long time. China's exports to the US help maintain employment, a key component to economic and social stability. This stability is seen as essential to the continued power of the Communist party. The US has become dependent on flow of capital from China's high savings rate, and on imports of cheap consumer goods. The thesis of Stephen Roach's Unbalanced: The Codependency of America and China is that this dependency is "unbalanced," and is starting to change dramatically. We are facing a "realignment of the world's two largest economies." Both countries are viewed as "on the cusp of important transformations."

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Book Review: Financial Blogging


Famous among CFA societies for her effective-writing workshops, Susan Weiner has produced a powerful resource that provides on-point guidance for mastering the blog as a short form of communication and also functions as an excellent tool for sharpening longer forms of investment writing. It will benefit novice and senior advisers alike.

Resolved: to write effectively! Susan Weiner, famous among CFA societies for her effective-writing workshops, has produced a powerful reference guide that should become the single best source for assisting independent and fee-only advisers in their blogging activities. The lessons contained in Financial Blogging: How to Write Powerful Posts That Attract Clients are highly accessible. Through exercises and outlines, reinforced with a workbook-style appendix, the reader quickly learns what it takes to accomplish excellent short-form communication.

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Book Review: Encyclopedia of Finance


This book is a valuable resource for those in need of a quick definition or formula as well as a vehicle for those wishing to dig more deeply into any of a wide range of topics. New in this edition are 200 definitions, 24 articles, and four derivations.

The 2,400 definitions in the Encyclopedia of Finance, edited by Cheng-Few Lee, a distinguished professor of finance at Rutgers University, and Alice C. Lee, a vice president of finance at State Street Corporation, could stand alone as a valuable reference for both practitioners and academics. Lee and Lee, however, have taken a more ambitious approach than simply providing definitions for common finance terminology. They have also included in the volume 74 papers by well-respected academics and practitioners, as well as derivations of a number of important formulas.

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Book Review: The Little Book

The-little-bookGrowth and Investment Portfolios (Little Books. Big Profits)

The title of the book may be The Little Book of Venture Capital Investing: Empowering Economic, but Louis Gerken delivered quite a large amount of venture capital (VC) coverage. The dramatic success companies like Google, Facebook, and Apple have given venture capital an aura of glamour and huge profits. The reality of VC and business start-ups is more complex and challenging. The role of companies coming out of this process has been transforming our lives. It fits in with the increasing popularity of entrepreneurship, which is now an important alternative career path. Entrepreneurship and business start-ups have moved from the creative fringes into the mainstream of what financial professionals need to learn about.

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Book Review: In Bed With Wall Street


In his book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, Larry Doyle is analyzing the relationship between Wall Street, the regulators, and Washington. Using his experience in Wall Street, Larry’s goal in writing this book was the pursuit of “truth” and “desire to help people.”  These are noble goals and Larry was brave enough to ask questions many people were afraid to ask.  Who regulates the regulators? How do we know that regulators didn’t collude with Wall Street firms?

However, Larry wasn’t clear about what type of truth he was looking for or how was he going to help people who were victimized by the crisis.  He wanted to expose the corrupt relationship between Wall Street and Washington even though we knew all along that this type of relationship existed before: revolving doors from Wall Street to Washington, or Wall Street to regulators and vice-versa.  We also know the role of lobbying from Wall Street to Washington. This is the structure of capitalism and the way we function here in the US.

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Book Review: Hedge Fund Market Wizards


This fourth book in the Market Wizards series includes 15 interviews with hedge fund traders. It details many variations regarding which markets to trade in, what time frame to incorporate, and how to use information. The wizards trade in all markets, including futures, options, equities, and bonds.

Determining how great traders acquire and use their special skills has been an elusive quest. We have no shortage of cookbooks on how to trade, but only a limited number of books describe the decision processes of those who speculate as a profession. Trader confessionals exist often as testimonies to egos, but few focus on the details of decision making.

Material that does successfully capture the essence of how speculators think is the Market Wizards series by Jack D. Schwager. These books are neither cookbooks nor testimonials but question-and-answer conversations with traders who talk about their thought processes, how they entered the business, their trading styles, and market battles they have undertaken. These interviews provide a sense of realism about how traders think. The interviewees are not always extraordinary individuals; often, they are simply hard-working professionals who manage the anxieties and uncertainties of trading by developing styles that work within the comfort of their skills and personalities.

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Ammo for Your Plain-Language Battle with Compliance

writing for dollars, writing to please

“Our compliance officer makes us write like this.” That’s the complaint I sometimes hear when I push financial professionals to write better. If you’d like to push back, consider  the point made by Joseph Kimble in Writing for Dollars, Writing to Please: The case for plain language in business, government, and law. Kimble is a lawyer who has taught legal writing for 30 years at Thomas Cooley Law School.

Lawyers and compliance professionals say that legal jargon is necessary to protect your firm. However, Kimble suggests that jargon may be part of the problem. How’s that? Readers often fail to understand legalese and other jargon. As Kimble says, “…this in turn will be more likely to engender disputes and litigation that never should have happened in the first place.” This makes me think of some of my pet peeves, such as the use of “mitigate.

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Book Review: Mission in a Bottle

Mission-In-A-BottleMission in a Bottle: The Honest Guide to Doing Business Differently--and Succeeding is the story of the start up and building of Honest Tea, authorized by co-founders Seth Goldman and Barry Nalebuff. This is an entrepreneurial story with a happy financial ending, when the company was sold to Coca Cola. While you have read your share of entrepreneurial autobiographies—this is unique, simply because of its comic-book presentation. The format engages the reader in a fascinating way.

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Book Review: The Effective Investor


Although certain passages of The Effective Investor are specific to South Africa’s economy and markets, the book has broad applicability beyond that country’s borders. A true renaissance man, author Franco Busetti renders the arcana of markets and modern portfolio theory accessible to both the novice investor and the experienced practitioner.

Franco Busetti, the author of The Effective Investor: The Definitive Guide for All South Africans, is a seasoned investment specialist. Trained as a chemical engineer, he also holds degrees in artificial intelligence and economics and is a CFA charterholder. In the 25 years that Busetti has worked in investment management, his “tours of duty” have included research director at Absa Securities and strategist and head of quantitative research at JPMorgan and Credit Suisse Standard Securities. The Effective Investor serves as a handy compendium on stock selection, portfolio management, and modern portfolio theory, with an emphasis on their practical application. Written in a tongue-in-cheek style, Busetti’s book not only informs but also entertains.

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Book Review: Making It Happen

Making-it-Happen"Make it happen" was the advertising slogan of Royal Bank of Scotland, RBS. It expressed the optimistic aggression of RBS which grew from its 1727 founding and long history of prudent banking to being the largest bank in the world just before its collapse during the 2008 financial crisis. The author of Making It Happen, Iain Martin, has written one the best accounts of a bank that rode the credit bubble over the edge. The book is clearly written and organized, and brings in the wider political and cultural context. Martin interviewed over 100 individuals, many of whom were former RBS bankers, all off the record. He concluded this group had "at best a partial understanding of the businesses that made them so much money."

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Book Review: The Federal Reserve and the Financial Crisis


Adapted from four lectures given by Ben Bernanke in March 2012, this book is a good primer on the workings of the central bank throughout its history, including its role in the recent financial crisis.

It is fitting that The Federal Reserve and the Financial Crisis should be published in the centennial year of the institution. Adapted from a series of four lectures given by Ben Bernanke at George Washington University in March 2012, the book is a good primer on the workings of the central bank throughout its history, including its role in the recent financial crisis. Concepts are introduced with clarity, and the prose is straightforward. The book is appropriate for students of central banking, and experienced readers will find it a worthwhile account of the historical record for what it both does and does not reveal.

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Book Review: The Downfall of Money


I still remember a conversation with Pat Hyland, Chairman of Hughes Aircraft, when I was director of their pension fund investments. Pat recalled being in Germany in the early 1920s, seeing people with wheelbarrows filled with paper money. This lasting memory prompted his concern to protect the pension fund from inflation. In Germany to this day, the hyperinflation era continues to influence government fiscal policy and attitude. Frederick Taylor's The Downfall of Money: Germany's Hyperinflation and the Destruction of the Middle Class recalls that financial crisis, and how it affected the public.

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Book Review: The AIG Story


The AIG Story is corporate history, and the first look at confidential company information. Maurice Greenberg's driving force created what became the world's largest insurance company. When he left AIG, it had $ 1 trillion in assets, and $ 11 billion net income. This is one of the most dramatic success stories in American corporate history.

My view of the story is tempered by having read two similar books by CEOs, for whose companies I worked. At times, I reported directly to one of the CEOs. I know enough about both of them to know something of how they operated—the dark side as well as the sunny side. But despite this caveat, The AIG Story is well worth reading, and instructive.

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Book Review: After the Music Stopped


Throughout this long and multifaceted work on the recent financial crisis and its aftermath, Professor Blinder demonstrates that he is the rare academic economist who writes clearly about a complicated topic, clarifying complex issues for readers who remain confused about what happened. Some readers may find his proposed remedies problematic.

If writing the second draft of history is supposed to involve both fact telling and interpretation, Alan Blinder’s After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead certainly qualifies. But if books written several years after the worst financial crisis since the Great Depression are supposed to reflect a deeper understanding than those written in the throes of the emergency, this one falls short. Moreover, as the subtitle indicates, the author attempts to combine work of adescriptive nature and work of a prescriptive nature into a single, large, and far-reaching undertaking.

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Book Review: The Billionaire's Apprentice


The billionaire is Raj Rajaratnam. Rajaratnam's Galleon hedge fund had put him into the billionaire net worth group. He is currently serving a sentence of 11 years after being arrested for insider trading.

His apprentice was Rajat Gupta. Gupta was the managing director of Mckinsey & Co. He has been sentenced to two years for conspiracy and securities fraud.

Anita Raghavan's The Billionaire's Apprentice: The Rise of The Indian-American Elite and The Fall of The Galleon Hedge Fund is the detailed account of what happened—a graphic story of foolish and reckless greed.

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Book Review: Worthless, Impossible and Stupid


Entrepreneurship has become an increasingly important option for financial professionals. Fortunately, there is now a lot more information on how to evaluate and succeed in this world. Most view today's entrepreneur as being in their 20s, operating in the technology industry. One of the values of Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value is it expands our view beyond the young and the tech focused. Author Daniel Isenberg is well qualified to be our guide into the broader view of the entrepreneur. He has been involved in business start-ups, was a Harvard Business School professor, and authored a host of case studies. Currently, Daniel Isenberg is the founding executive director of the Babson Entrepreneur Ecosystem Project, and an Adjunct Professor at Columbia Business School.

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Book Review: What Every Angel Investor Wants You to Know


The term "angel investors" originally was used for wealthy individuals who financed Broadway plays. Today it describes those who finance business startups. With the growth of entrepreneur activity in New York, it has gained new prominence for both those involved and startups, and for those who may help finance them. Most angel investors don't make any money. Most business startups fail. Many business startups have no informed idea on how to get funding. Angel investors can provide the initial capital before the business is ready to seek venture capital funding, making What Every Angel Investor Wants You to Know: An Insider Reveals How to Get Smart Funding for Your Billion Dollar Idea a significant asset. The book, by New York Angels Chairman Brian Cohen, is a systematic step-by-step guide with "Takeaways " at the end of each chapter and real-life examples—which are essential.

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Book Review: Reinventing Yourself


Career change is one of the most difficult things to do in your professional life. Yet, it has become an urgent imperative for many as the financial industry consolidates and downsizes. We are now in an era of rapid job turnover, and frequent change in industry business models. Steve Chandler, author of Reinventing Yourself: How to Become the Person You've Always Wanted to Be concludes, " some point you'll need to reinvent yourself professionally..." as this is "a new era of faster-moving professional trajectories, shorter tenures at jobs and the ability to instantly communicate your message across the world."

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Book Review: What You Were Really Meant to Do


My first boss in Wall Street advised me "All the happiness in the world won't buy you money." I got the message, as did most of my generation. But the recent consolidation in the business has forced many to rethink their career paths. The growth of entrepreneur opportunities is opening new avenues to follow. In every part of the finance and business worlds, everyone is facing many more competitive challenges. Systematic thinking about career paths has become as essential part of staying employed, and moving ahead. 

At the core of What You're Really Meant to Do: A Road Map for Reaching Your Unique Potential is "the difficult task of understanding who you are and what interests you," which is in contrast to following along defined traditional career routes, often becoming influenced by what your peers are doing, and what looks like the fastest road to a big bonus. It goes without saying, the self-discovery theme of the book is much different from the traditional career goal of finance professionals, which is to make money, as much and fast as possible. In an industry now characterized by restructuring and new business models, this has obvious dangers.

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Book Review: Thinking, Fast and Slow


Cogito, ergo sum.  Whether or not you agree with Descartes’ proposition, “I think, therefore I am,” is immaterial.  In Thinking, Fast and Slow, Nobel Prize winner Daniel Kahneman explores exactly how the human mind works. There are two systems that control the way we think.  System 1 allows us to make split-second decisions and is based on emotion (“fast thinking”), whereas System 2 is more calculating and logical (“slow thinking”).  Be prepared to learn exactly how much of our thought is based on System 1 (it is much more than you believe) and techniques that can be used to force our brains into a System 2 environment.  By the end of the book, Kahneman may have you believing that economic actors are not as rational as economic theory assumes.

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Book Review: Hungry Start-Up Strategy


Entrepreneurship has become an increasingly recognized career path. Many business schools now offer courses on entrepreneurship, and have become business start-up networks. College students have created successful businesses. College graduates have gone the start-up route, instead of working for an existing organization. Business executives and academics have chosen the start-up route as a new career path. In the financial services industry, the consolidation and constant layoffs have prompted some to explore starting a business.

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Book Review: How to Win Friends and Influence People

NYSSA CDC Monthly Reading Recommendation

It is with great pleasure that the Career Development Committee announces a monthly reading recommendation as our newest offering. To fulfill NYSSA’s mission to foster the interchange of ideas and information, we will recommend books, journals, and scholarly articles that we believe will support you in your career advancement. We hope that you will enjoy these readings and find them as beneficial as we do.

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Book Review: The New Tycoons


For Jason Kelly, “private equity by its nature and design, is secretive, a breathtakingly wealthy corner of the world.” Kelly is a writer at Bloomberg News, where he covers the global PE (private equity) industry. In his new book, The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything (Bloomberg) he uncovers hidden aspects of the field. Readers new to PE will find value in the book’s frontmatter, which includes a list of key organizations, individuals, and terms, and a chart illustrating the flow of money. Financial professionals will appreciate Kelly’s depictions of the major businesses and individuals and his coverage of trends and challenges.

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Book Review: Europe's Unfinished Currency


The financial media are full of news about the fluctuations of the euro, alternating between hope and despair amid accounts of complex European politics. Thomas Mayer’s new book, Europe's Unfinished Currency: The Political Economics of the Euro (Anthem Finance), covers the euro from its inception and helps to make sense of the turbulence. Mayer was chief economist of Deutsche Bank Group and head of Deutsche Bank Research; today he is a senior advisor to Deutsche Bank’s management.

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