FROM TODAY'S WALL STREET JOURNAL (how timely!):
Some (Investing) Books for the Beach
By DAVE KANSAS
August 7, 2006; Page R3
With heat baking much of the U.S. in the past couple of weeks, many folks are trying to find relief on the beach or at the lake. When trotting out to your favorite vacation spot, it is always good to bring a few books along to pass the time.
It doesn't hurt to mix in some learning with the trashy page-turners. Many investing books make for better doorstops than reading. But there are more than a few gems out there. The following list offers some good reads on subjects that will augment your investing knowledge while not boring you to tears.
The selections are grouped in three areas: investing strategies, history and economics. Opting for one from each category should have you well equipped for vacation-reading time.
Investing Strategies
"Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor," by John Bogle (John Wiley & Sons Inc.). This book from the former Vanguard chief provides good basics on how to think about mutual-fund investing. Mr. Bogle, naturally, favors the indexing strategy that made Vanguard famous, while touching on other aspects of fund investing such as long-term planning, asset allocation and proper risk taking.
"The Intelligent Investor Revised Edition," by Benjamin Graham and Jason Zweig. (Collins Business Essentials). Mr. Graham is famous for his book "Security Analysis," considered the bible of value investing. This book takes a more main-street approach and provides excellent pointers on how to approach investing. Warren Buffett is among the many Mr. Graham admirers in the investment firmament. Mr. Zweig, a Money Magazine writer, updates this classic with modern examples that outline Mr. Graham's still-salient points.
"The Little Book That Beats the Market," by Joel Greenblatt (Wiley). If you are looking for a quick investing read, this is for you, since it is, in fact, little. Mr. Greenblatt, a successful hedge-fund manager, provides a sharply written, anecdote-rich, easy-to-understand investing strategy that any junior-high schooler would understand. While the book boasts of a "magic formula," it is basically a reiteration of an age-old theme: Smart investors buy good companies cheaply. Unlike long-term value players, Mr. Greenblatt makes the case for a bit more portfolio turnover.
"Navigate the Noise: Investing in the New Age of Media and Hype," by Richard Bernstein (Wiley). Mr. Bernstein, long-time strategist at Merrill Lynch & Co., has a lively writing style and dissects the rather cluttered world of financial information in a manner helpful for individual investors. As the book title implies, there isn't a shortage of financial news and information available today, from the Internet to newspapers to television. Mr. Bernstein tells you what matters.
History
"Reminiscences of a Stock Operator," by Edwin Lefèvre (Wiley). This is a classic that gives readers a sense of a trader's mind. It is a fictionalized account of Jesse Livermore, considered one of the great speculators during the 1920s stock-market boom. Though many things have changed on Wall Street, the mind of a trader remains the same.
"When Genius Failed: The Rise and Fall of Long-Term Capital Management," by Roger Lowenstein (Random House). A wonderful inside-the-room tale about the collapse of Long Term Capital Management, a hedge fund that counted Nobel laureates among its ranks. LTCM played such a huge role in the market that it couldn't be allowed to completely fail, and the drama surrounding its rescue seems to come straight from a pulp novel. But it is all true.
"Barbarians at the Gate: The Fall of RJR Nabisco," by Bryan Burrough and John Helyar (Perennial/HarperCollins). One of the best-written books about finance, it recounts the brutal takeover battle for RJR Nabisco, eventually won by private-equity firm Kohlberg Kravis Roberts & Co. With private-equity firms, including KKR, once again playing a huge role in the markets, this book gives a good insider tale about how these money machines operate.
"Devil Take the Hindmost: A History of Financial Speculation," by Edward Chancellor (Farrar, Straus and Giroux). There are many books about the history of speculation gone awry, but this is one of the most comprehensive and well written. Mr. Chancellor covers all the familiar bases (tulip mania, the South Sea scheme, the 1929 crash),and also hits on unlikely areas such as railway mania of the 19th century. He provides an interesting take on the origins of speculation.
"The Economic Consequences of the Peace," by John Maynard Keynes (Penguin). An analysis of what went wrong during the post-World War I peace discussions. Mr. Keynes was briefly attached to the postwar-negotiating team but resigned in protest. This book correctly anticipates how the heavy reparation bill for Germany would lead to future problems.
Economics
"The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers," by Robert L. Heilbroner (Touchstone). A fun little romp through the minds of economic thinkers from Karl Marx to Thorstein Veblen and Joseph Schumpeter. If you have an interest in how economic ideas have evolved over the centuries, this is the book for you.
"Against the Gods: The Remarkable Story of Risk," by Peter Bernstein (Wiley). Not strictly about economics, it provides an excellent history about risk and its vital role in markets, tracking it back to the mathematicians who first grappled with the notion of risk. This book is highly regarded on Wall Street. Mr. Bernstein's "The Power of Gold: The History of an Obsession" would appeal to goldbugs. But if you can read only one book, "Against the Gods" is the one.
"Freakonomics: A Rogue Economist Explores the Hidden Side of Everything," by Steven D. Levitt and Stephen J. Dubner (HarperCollins). This clever book applies economic thinking to find cheating among sumo wrestlers, test flimflammery by teachers and explanations for the surprising drop in crime rates during the past 15 years. Written in an accessible way, "Freakonomics" shows how economics isn't just the plaything of wonky tweed-jacketed professors. Full disclosure: Mr. Levitt and I went to high school together.
"The Theory of the Leisure Class," by Thorstein Veblen (Dover Thrift). I enjoyed this one partly because "The Great Gatsby" is perhaps my favorite book. The rich -- even though there are more of them -- still remain different from the rest of us, long after Mr. Veblen penned this book.
