The finance book nobody wants
Posted on October 29, 2007 by Richard Beddard
Filed Under Investing |
The world is awash with finance books. Do we really need one about Black Swans?
I received a book in the post today. It’s from Robin, a reader of this blog, who also contributes by way of the comments he leaves.
More interesting than the book, perhaps, is the reason it’s ended up on my desk, and to retrace that story we must go back to a blog-post I wrote a couple of weeks ago about James Montier’s new book, Behavioural Investing.
My first impressions were largely positive, as indeed are my thoughts a hundred pages in. But Robin must have heard me groaning under the weight of its 700 pages because he offered to review it, should I not have the time.
Although there are a lot of pages, each one is not that heavy, so I offered to send him my copy, when I’d finished it.
But as I read those pages, I realised Behavioural Investing is likely to join my “shelf of fame,” on which I keep a small collection of investment books I intend to read again, and again.
That presented me with a dilemma. How to let Robin down gently.
It’s in situations like this that company expenses come into their own, and so the Interactive Investor mothership has purchased Robin a copy.
But this little story is not over, though, or it would be the story of the finance book at least two of us want.
Robin decided to return the favour:
“I have a copy of ‘The Black Swan’ by Nassim Taleb”, he said, “and I really do not want to keep this book!”
“I would be happy to send this to you, so you can see it and make your own judgement. You can then keep it or give it to your local library as I would not want it back.”
Since Nassim Taleb sticks it to modern finance theory and Robin has more time for it than I do, I can understand why he’s not keen. He sent it wrapped in an article Professor Taleb wrote in the Financial Times, saying:
“Look for the title containing the word ‘Phoney’…”*
Curiously, I’ve never been tempted to buy one of Professor Taleb’s blockbusters (and the publishers have never seen fit to send me one).
This may be a baseless opinion, but I’m repulsed by his public persona. He comes across as a kind of intellectual’s Michael Moore. A polemicist who will just make himself sound clever, and leave me none the wiser.
Now I’ve got a copy, I’ll try to read it, if only to find out if he lives up to the grotesque figure I’ve imagined.
And as seems likely, but one never can tell, should it not make it onto the “shelf of fame”, I’ll offer it to another reader of this blog, or the public library.
Maybe it will sit on a shelf there, filed somewhere between alone and unloved. The library book nobody wants to read.
But I must go in with an open mind. I keep telling myself that.
*Update: The article is from last Wednesday’s FT, published the day before the winner of the FT/Goldman Sachs Business Book of the Year Award was announced. ‘The Black Swan’ didn’t win, ‘The Last Tycoons’ by William D Cohan did. There are excerpts from all the books shortlisted, on FT.com.
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8 Responses to “The finance book nobody wants”
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Richard, this is the populist one…the better - and earlier - one he wrote (imho) was “Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets”
Of course if you are familiar with Complexity theory it is all rather old hat (Eric Beinhocker recently trod here with the Origins of Wealth) or is that old bird
…thats the Taleb book I’m talking about, not Montier…
Hi Alan,
Nice to hear from you
Although rather disturbing to think I might have to wade through another Taleb I’m already beginning to feel a bit queasy about the first!
Speaking of Complexity Theory, I was very disappointed that Taleb has such a close friendship with one of my early heroes, the hugely inspirational Beniot Mandlebrot.
I loved Mandlebrot’s early work but I kind of never got beyond generating mountains and pretty patterns. I have never quite understood how this could be applied to weather systems and financial markets.
Anyway, I guess it can’t have worked that well because I do not think there are that many rich scientists out there
Hi Robin,
Likewise, Benoit Mandelbrot is a big hero of mine. I’m not sure if I’ve posted this before but I interviewed him in 2004.
In mathematical terms it was a kind of de-slinged David against Goliath situation! I found him very personable though, and able to explain himself well. He tells a good story in the interview about how he and Markowitz crossed paths while developing rival theories of finance.
Hi Richard,
That is a superb interview. It has inspired me to place an order for the book ‘The (Mis)behaving Markets’.
Having something which can simulate market data realistically will be very useful for testing my mechanical program across different market conditions (I hope).
Therefore I take back my previous comment about not thinking that fractals are useful in financial markets
However, just because the markets are self-similar does not validate Taleb’s view that these wild swings in the Markets are related to his ‘Black Swan’s’. Wild swings are predictable to a degree (i.e. you know they are going to happen) and Black Swans are not.
Thanks Robin, interviewing him is a highlight of my career so far. From memory the book contains some horrendous equations. Whether a reader could replicate markets from them, I don’t know. It’s way beyond me. It would be fascinating to hear how you get on!
[…] of Fooled By Randomness, precursor to Black Swans (aka the book I still haven’t read, aka the book we love to hate): We did not find in the book any discussion of how to identify rare event opportunities, or any […]