Books might help to make sense of economy

  • By Gail MarksJarvis Chicago Tribune
  • Monday, December 19, 2011 7:33pm
  • Business

If there is someone on your holiday shopping list who would like to put the rough times of the past few years into perspective or start the year right with a more thoughtful approach to investing, I have some ideas for you.

The theme running through many books released recently has been: How did the United States get so far off track, and how do we get it right? Individuals, too, are looking for a fresh start after losing money in the stock market and on homes. Here are some books a friend or loved one might appreciate.

Nassim Nicholas Taleb’s “The Black Swan” is nothing like the ballet movie, and it’s one of my all-time favorite books because it reminds us that the improbable can happen without warning, or little warning, and be painful. We learned that in dramatic fashion in 2008-09 with a financial crisis of grand proportions. The idea behind “The Black Swan” is that we assume swans are white, so we never contemplate or prepare for the devastation that could come with an unlikely “black swan” event. Yet, when the unthinkable shows up, we must deal with the reality. Another fascinating read that deals with the way our brains sometimes lead us astray is psychologist Daniel Kahneman’s “Thinking, Fast and Slow.”

Emanuel Derman’s “Models. Behaving. Badly.” captured my attention because it deals with a tendency by the brainiest to over-rely on models and fail to miss critical points. That’s been my gripe with economists clinging to outdated models and assuming more than a year ago that a robust recovery would be imminent. If you know someone who believes in models, perhaps they will enjoy an oath Derman created with a colleague in response to the financial crisis: “I will never forget that the model is not the world.”

James Rickards’ “Currency Wars” is a controversial book written by an investment manager who has worked with the U.S. Defense Department on war games. It’s got a doomsday quality, and gold bugs love it. While some argue the chaos Rickards envisions is preventable, the book alerts readers to the risks the U.S. could face in a financially weak state with a declining dollar.

Diana Henriques’ “The Wizard of Lies” tells the reader how Bernie Madoff pulled off the biggest Ponzi scheme in history and what he was thinking over decades as he cheated friends and enjoyed national financial prominence. It’s a great read and provides insight into how the investment business works.

Sheldon Garon’s “Beyond Our Means” examines the messages that various cultures send people on saving and spending and the vastly different impacts they leave in nations, ranging from Japan to Germany and the U.S. For the U.S., a country that nearly choked to death on debt, this book provides insights for a new agenda.

Niall Ferguson’s “Civilization: The West and the Rest” also draws contrasts between various parts of the world and shows how developing nations are gaining strength by embracing some of America’s greatest characteristics at a time when the U.S. is letting them slip. For example, he emphasizes the significance of exceptional education, a point also made by Raghuram Rajan in his book “Fault Lines.”

Joel Greenblatt’s “The Big Secret for the Small Investor” or “The Little Book That Still Beats The Market” would be a good starting place for the person who has turned away from stocks the past couple of years and would like to return with the basics about investing. Greenblatt is a respected professional investor, but unlike most, he can explain the essentials so simply that anyone can get it in a few minutes. People working with an adviser can make sure they are getting their money’s worth if they read Larry E. Swedroe and RC Balaban’s “Investment Mistakes Even Smart Investors Make and How to Avoid Them.”

Marilyn Cohen and Chris Malburg’s “Surviving the Bond Bear Market” is an important book for many to read after shunning stocks and building up massive exposure to bonds. While some think they are safe because they have no stocks, bonds can turn harsh, too, and this book explains how to protect yourself.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.