Book Reviews

Burton Malkeil. Originally published in 1973 and many editions since then. This is a classic statement of the efficient market hypothesis and hence, implicitly, one of the original arguments for Index funds. But it doesn’t take a full book to just say that. He also does a great job of introducing some important stock market history and the compelling need for diversification. This should probably be on almost every financial literacy reading list.

Christopher Browne. 2007. The focus of this one is on stock analysis. In other words, trying to determine if a specific stock is a good investment. In some ways it is sort of an anti-random-walk book since the hypothesis is that by better understanding a stock you can make better decisions than “the market.” Of course, this does work for some investors, witness Warren Buffet and Peter Lynch. A worthwhile read if you are looking to invest in specific equities. Less so if you are focusing on funds (where you are basically paying someone else to do this).

Benjamin Graham (Updates by Jason Zweig), This is an investing classic. It probably should be required reading for anyone playing a meaningful role in managing an investment portfolio. It is the original statement of “value-based investing” which is the core of Warren Buffet’s approach. In fact, Warren Buffett is quoted as “By Far the Best Book on Investing Ever Written.” The disarmingly simple hypothesis is “Don’t spend more for something than it is worth.”

Peter Lynch, .Peter basically walks through his “values-based” approach to investing. Directionally aligned with the Intelligent Investor, but I couldn’t help thinking “easy for you to say” on many occasions! That said, he is remarkably forthright about his personal misses on both the buy side and sell side. I guess he can afford to be. It loses a little in its dated references (Sears was a “winner”). At the same time that very fact does provide a bit of a sanity check. One interesting observation he makes several times is that one winner can make up for many losers because the upside to winning is largely unlimited and the downside on losing is “only” 100%.

Sebastian Mallaby. 2010. This book reviews the history of Hedge Funds. It is probably not particularly actionable for us, but I still found it pretty interesting. In many ways it is another “Anti-Random-Walk” book. It explains what Hedge Funds are and how they work. It shows how, time and time again, different hedge fund managers have identified a ‘market inefficiency’ that they could attack – typically using lots of leverage. But in (what seems to your naive correspondent) a nod back to a Random Walk, a great many of these have collapsed over time due to the market (or occasionally regulators) ‘fixing’ the inefficiency. 

Anthony Scaramucci, 2012. This covers much of the same ground as the title above. The writing style is a bit less formal (bordering on campy) and it tends to follow more of a topical structure rather than the timeline structure of the earlier read. (But since Hedge fund strategies have tended to evolve over the years this is not a strict dichotomy.) One thing that was particularly interesting was a series of “interview responses” to the question “what is a hedge fund?” that was posed to a number of famous hedge fund managers.

Steve Bavaria, 2020. This book is very focused on how to invest in liquid assets. The basic argument is that for some investors (I suspect Steve would think most of us), it makes more sense to focus on “income streams” than “growth potential.”  One of the key arguments is that dividend payments are more stable and predictable than stock prices. The well-supported contention is that over time, this strategy meets or beats a “growth stock” model with less anguish along the way. Steve winds up boiling this all down to very specific recommendations – almost exclusively for exchange traded (e.g. low cost) funds. One interesting point is that he covers a number of different asset types (some are a little unusual – to me – such as CLO’s <Collateralized Loan Obligations> and recommends a highly diversified market basket of various sorts of income-bearing assets. I particularly like his comparison of “junk bonds” to equities in these same companies. The obvious point is that the stocks are in fact riskier. So, it is more than “stocks” and “dividends.” Steve also maintains a relatively low-cost subscription service on Seeking Alpha where all of this remains fresh and he actively engages in discussions.  Highly recommended if you are considering making your own investment decisions in the world beyond index funds. (or possibly if you are looking for something that isn’t individual equities to bounce off the index fund model).

I have to admit that while I find the arguments compelling, I haven’t really gone all-in on this model. It is just too much fun watching individual stocks… And of course, the momentum of a portfolio that existed long before the book was published.

John Bogle, .This book and others by Bogle are basically an “Index Fund Manifesto.” Bogle is one of the original (arguably THE original) finance leaders to popularize Index Funds. He was CEO of Vangard as this was all happening. The book is a quick and easy read. The prose is compelling in an almost intoxicating fashion. One observation I will paraphrase. If the “answer” is low-cost index funds, why pay someone 1% to select them for you? Highly recommended. 

Peter Schiff, 2012. This book is an exemplar of the “sky is about to fall” school. Schiff’s thesis is that the US economy is due a horrendous reset as a result our fiscal policies. Basically, that it is only a matter of time before the walls come crashing down. I have generally been able to see the arguments but have never found them compelling enough to follow the advice. There are a couple of times in the last 35 years when I wish I had, but so it goes. But someone who followed this advice when this book (2012) or its early version (2007) were published would be way behind today. That said, it is probably useful to get some sense of this school of thought as part of a rounding exercise. But nowhere near the top of my list.

Cosmo Destefano, 2022. This book steps back a bit from the above ‘investing-focused’ books and provides a bit more philosophical depth to the general question of managing your assets for growth with an ultimate goal of financial independence. That said, it is a great introduction to the basic questions of how much to try to invest and how to invest it; including the discussion of lots of pitfalls along the way. I think that the target audiance is probably people who are relatively early in their financial journey. I have bought several copies to give out (yes, with checks 😊) as graduation gifts. That said it is also a good read for someone who is further along – hopefully providing a sanity check. I prefer this to some of the other “save to get financially independent” books because it has a measured and unhysterical tone.

Ramit Sethi, 2019. This book is aimed at folks in their 20’s and 30’s who are basically “beginners.” The overall message is similar to others in this general genre including “Wealth your Way.” The message is:

• Minimize debt (esp “bad” debt)
• Control Spending
• Save
• Invest

This book is maybe a little more proscriptive, with an obnoxiously low take on his audiance: he treats the audiance as children in need of discipline. That said, the message is forcefully presented in a fast-moving manner. I did find the messaging around index funds to be valuable.

Liz Davidson, .his is sort of two different books in one. A lot of the material has nothing at all to do with Financial Advisors. It provides the same sort of “Wealth Building” that we see in Wealth Your Way, and I will make you Rich. Get out of debt, manage spending, save money, invest, etc. Some additional messaging that I don’t recall seeing elsewhere focuses on “making the most of company benefits.” It all seems pretty obvious to me. The other part of the book really does focus on financial advisers: talking about the different types of advisors and how they are compensated. She comes down in favor of hourly-fee based advisors but seems to suggest that these are hard to find (maybe more so in 2016 when the book was published??). Notwithstanding that advice, she infers most people will wind up with advisor(s) that are compensated based on assets, commissions, or both. At the end of the day, I did not get all that much from the book.

Craig Wear, 2022. This book is about convincing the reader that they might benefit from make large Roth conversions. Craig makes many good points; but on the whole, it is a little over-the-top. The book is clearly and openly aimed at supporting his advisory service Q3 Advisors. Craig would have one believe that you need to be an “expert” to understand optimizing a Roth conversion. Nothing could be further from the truth. That said, if you don’t want to invest the energy to understand this, an advisor (whether Q3 or someone else) will almost certainly help.

Bill Bachrach. 2000,2007. This book is written more or less at the same level as the preceding read, but it seems to spend a lot of time talking about hiring financial planners. It claims to be agnostic on the subject, but to my (somewhat biased) perspective seems to read more like an argument for professional financial planners. At any rate if you are looking to make a decision about hiring a planner, this may help.

This generally well-written book deals with the opposite side of the story. Basically, how to fund your retirement. The book seems to spend an awful lot of time focusing on the various nonlinearities of the tax law that can result in remarkably high marginal tax rates at certain points. This was interesting and startling, but also a bit repetitive – and it is really only actionable for people who land near those “sour” spots. The book is a bit fluffed out with IRS forms, rules, and actuary tables.

Wade Pfau, 2021. This book addresses the same timeline as the previous read, but it is considerably broader in scope and without the filler material. It includes a comprehensive review of medical insurance decisions as well as some “non-financial” considerations. One downside is that Pfau is a University Professor, and he makes every effort to write like one (e.g. the research suggests, etc.) A bit off-putting, but still, on the balance if you are going to read one book on the general subject, this may be the one. Notably a good discussion on the “when to take Social Security” question as well as an extensive discussion of different sorts of annuities.

Bruce Larson, 2016. This book is not as good as the title sounds. There are a few gems of information here and there, but in general, it seems obvious and on occasion just plain wrong. For example, he warns about taking capital gains on a house after a spouse dies before moving to single filer status. This is wrong. The tax code provides a 2-year grace period for this specific transaction, and it also allows for acceleration of 50% of the value as part of the deceased estate. Beyond that there is a lot of filler such as pages of tax forms and tables. Not recommended.

Michael Bonilla, 2019. This is a “micro book” that was apparently self-published. I say “micro” because it has a small page count and excessive white space. I picked this up after my initial interaction with an annuity sales organization. It was interesting because I could see a number of the sales tools here, but it is probably not worth bothering with unless you are concerned about an annuity sales pitch you are hearing.

Alessandra Denriat, 2015. This is another micro-book. It seems like it was written primarily to promote the author’s (apparently defunct) consulting activities. Notwithstanding the title, it takes a fairly uncritical look at annuities, and it is mostly about introducing different annuity products and less about “not getting ripped off.” The target audiance seems to be people who know nothing about annuities. If you have read other texts such as the Retirement Planning Guidebook it would be a waste of time.

Steve Weisman, 2009. This is closer to a real book. Steve is largely an annuity skeptic but does allow for the sensibility of annuities in certain limited cases. Examples of the skepticism include: 1) It never makes sense to fund an annuity from an IRA, 2) Tax-efficient index funds are often a better investment because more of the gains are accounted as capital-gains.

The message from this book and the two previous books, and the excellent material on the subject in Retirement Planning Guidebook, is that Annuities might make sense depending on your situation. But I find it hard to translate that general notion into numbers. In the end I think that “situation” is as much about your appetite for uncertainty as it is about numbers.

Charles W Mulford & Eugene E Cominsky, 2002. This is a rather long book with a somewhat academic slant (Both authors are professors). The target audiance seems to be analysts and outside auditors. I don’t think that much if it is really actionable for individual investors. That said it is certainly educational and more than a little bit disconcerting. The author’s present a taxonomy of different accounting mechanisms to tweak the resulting numbers ranging from completely above-board to outright fraud. The most compelling really being the large gray area between. Then they purport to explain how these can be “detected.” They seem to be on thinner ice there. In fact, the results of a survey they sent to CFO’s had responses basically along the lines of “If we are going to cook the books, you are never going to know.” For me it just adds to the general doubt of trying to manage individual equities in a portfolio. With over 20 years at tech start-ups/start-overs, there were a few examples that seemed to strike close to home…

James L Cunningham, 2022. This is a quick read. The book is current and fairly well-written. Guess I would mostly characterize it as a “fear of God” message. 1) Don’t die without a will and 2) Make sure that as little of your assets as possible go through the will. Basically, the second half of the book sings praises of “Living Trusts” with relatively brief mentions of other trust variations. The author pounds again and again at the need for professional advice (especially from Lawyers) in getting all this right. Most of that seems sensible, but occasionally a little over the top. For example, arguing that one should have a Financial Planner, a CPA, and an attorney to help navigate an IRA. The constant railing against the use of “Form books and Form Websites” (in favor of an attorney) is also maybe just a little over the top.

Mike Piper,2023. This book addresses how you should spend your money as well as the most effective ways to give it away – whether to charities or as gifts. There are a number of ways that this comes back to planning and modeling. For example, if you are likely to making substantial charity contributions late in life or as part of an estate, it is less useful to do Roth conversions.

Alexander A Bove & Melissa Langa, 2021.This covers a lot of the same ground as Savvy Estate Planning, but in more detail. The page count is only slightly higher, but the presentation is much denser. I am guessing twice as many words. This is especially evident in the presentation of the **many** different types of trusts and their suitability to different goals and situations.  Also, much more emphasis on taxes and more material on selecting an attorney for both legal document creation, estate settlement, and trust management. Both sets of authors suggest that this will usually not be the same firm unless you are dealing with a large firm with a number of specialists. I have a slight preference for this book because Savvy Estate Planning seems a bit too theatrical at times. But either one would probably be fine for a sanity check or kick start of this process for you.

Morgan Housel, .This a great book and an easy read that should probably be on everyone’s short list. It helps you understand how people, including yourself, make the decisions that you make and how these thought processes are often counter-productive.

Lawrence A Cunningham, 2023. The is a compilation of Buffet’s annual message to Berkshire Hathaway stockholders. It is compelling because, well, Warren Buffet is compelling. Certain elements of the messaging are consistent over the many years and others have evolved a bit. One common theme is using realistic rules for calculating earnings; he is not a fan of GAAP (Generally Accepted Accounting Practices) calculations. Another theme is long-term value. Like Peter Lynch’s One Up on Wallstreet, it is up-front about a number of personal investment failures. Like Lynch’s book it makes a good case for how thoughtful active investing can win. Unfortunately, most of us do not have the skills or resources for that path. Indeed, Buffett now recommends index funds for the majority of investments held.

Svetozar Rachev, et al., 2008. I picked up this book hoping to gain some insights into Monte Carlo simulations. Turns out to be too technical for me. I guess just too long since those A’s in college math. I didn’t get very far with it, I suspect others in my audiance won’t either. Too bad, because I have not really found much accessible material on the subject.