My Side of the Street

 

by Jason DeSena Trennert

I’m always up for a good book with an insider’s look at the world of finance and hijinks on Wall Street. The tri-named author of this book, who I’ll call Jase because that’s what he goes by and because his name is so long, seems to have been an insider for something like thirty years, lately as the owner of his own research firm. He has plenty of interesting stories, unusual anecdotes, and some unheard tales from inside the world of finance. Unfortunately, many of his stories fall a little flat, and none of them deliver on the promise of this book’s enticing subtitle. I expected a “warts and all” look at how Jase and his moral bearing, ethical, everyday friends and colleagues bested the “wolves, quants, and flash boys” in battles in the trenches of high finance, but after the subtitle, there is nary a mention of any of those things, much less any high pitched, multi-million dollar investment battles. It’s just Jase going about his business being a good fiduciary representative.

All that’s well and good but I expected a lot more. At least Jase is a skilled writer. He’s clear, succinct, and highly readable, at times humorous, at times philosophical, at times poignant. His stories and anecdotes for the most part are worth telling and reading. I don’t know that his 9/11 story added much to the book (it certainly didn’t add to the diaspora of stories surrounding that infamous day), but it’s nice that he has a personal take on these things and it certainly makes us feel for him more as we get to know him better. Still, with no thread to tie the stories together, the whole book just muddles through. Some of the stories seem to be thrown in at the last minute because Jase remembered something and wanted to share it with the reader. Maybe this isn’t a bad reason to include something interesting, but I would have preferred a more well-constructed approach.

All that said, I really enjoyed this book. I would have preferred some more fireworks and war stories, but I still felt that I got something out of it for the effort of reading the whole thing. Maybe Jase can get together with another Wall Street insider like Joshua Brown, author of Backstage Wall Street. Beefier, more broad-ranging stories would make a best seller for sure, which this, unfortunately is not. Still I give it three and a half dollar marks.

The Innovator’s Hypothesis

by Michael Schrage

One of the things I liked about this book is, the author starts out by immediately explaining how the Innovator’s Hypothesis works and what is used for, as well as how it works. One of the things I didn't like about this book is, after that, he spend six chapters or so telling stories that are supposed to support the effect of the 5x5x5 (five people, five days, five experiments) strategy that tests, and hopefully proves, The Innovator’s Hypothesis. Is it fluff? Well, not exactly. Is it useful? Yeah, kind of. Then what’s the problem? Well, saying that cheap fast, easy experiments that test a workable hypothesis on improving a business is easy to say, but,

it isn't all that easy to do. Plus, if you are in the twilight of your career (hello, me), are you going to undertake a bunch of experiments to improve your business? Yeah, I didn't think so.

Obviously, there’s more to it than that, which is what this book is about. The author is a long time business consultant who draws on his experience to demonstrate his analysis of different types of successful (and not) businesses. Amazon, Google, P&G, Blockbuster, big pharma companies, credit card companies, and more, all have been part . There is lots of food for thought and plenty of practical advice. I thought that the 5x5x5 model the author propounds was clever and workable, especially towards the end of the book when he explains that you don’t necessarily have to stick to the 5x5x5 formula. I also thought that the examples he provides will be quite helpful to people who really read this book with a mind to doing experiments in their own company. (I, myself, have no intention of attempting this, because there is no benefit to my company that will directly impact me.)

Something that I thought was kind of glossed over in this book is coming up with the testable hypothesis is more difficult than I think most people appreciate, and, once the hypothesis is in place, coming up with the experiments to test the hypothesis also will be a considerable challenge. To be fair, the author provides guidelines for executing both of those tasks, I just think he makes it sound a lot easier than it really is. From an execution standpoint, everything is fairly cut-and-dried if you follow the author’s train of thought, but ultimate success and meaningful results will be, I think, much harder to come by.

This book is intelligently written and the methodologies and logic supporting the author’s arguments are well-documented throughout. As long as the reader has no misconceptions about how difficult it might be to implement and execute these strategies in their own business, I think most business operators and company managers will at least gain some valuable perspective from this book, even if they don’t start doing their own experiments. I too was able to imagine having been motivated by this book earlier in my career, but business experiments sound like a lot of hard work, so I leave them to somebody else to actually do. Still, the book is good, the writing is fluid and clear, and it gave me a lot to think about, so I value the whole package at three and a half dollar marks.

A Force for Good

Edited by John Taft

After reading this book, I actually wrote three reviews. Two of them I ended up discarding because after rereading some sections, my opinion either changed or I thought of something better to explain what I felt on reading that part of the book. That makes this the fourth review I’m writing.

The original review title was: “A step in the right direction that (unfortunately) won’t get you very far”. I went with that because I felt that the book had too many vagaries as far as actual execution of a financial plan. That is to say that I found the premise (promise?) of this book exciting: Get a bunch of qualified, serious-minded, economic thinkers and doers, and have them analyze the recent economic crisis and the current state of economic affairs so that they can then lend us an ethical and moral standard on which to base future economic activity so that everybody ends up better off and economic crises become things of the past. But in the end, they didn’t really come up with a way to make all their ideas become reality. Still the book has a lot of positives.

The list of essay writers reads like a veritable who’s who of economic thought, which raises the expectations higher. The editor, himself a leading economic thinker, explains how the book came into being and what it is trying to accomplish, and then, we plunge right in.

The chapters and essays come steadily and relentlessly with many being quite short and concise. Some essays provide history lessons, some just analysis, some a combination thereof. All of them present some ideas for avoiding financial crises in the future.  Most are very dry, but everything was quite readable. The common tenet throughout the book is, companies and individuals who are entrusted with other people’s money need to act responsibly, not be greedy, and use a moral and high ethical approach to business. It sounds good, and more than a few of the contributors make it sound achievable. A number of the essays, however, fall back on legislation and legislating bodies (politicians) as the way to go, but given the current pusillanimous state of Congress, those ideas (I thought) fell flat.

That is to say, there is absolutely nothing wrong with any of the ideas and proposals and supporting theoretical arguments that are presented en masse by the great thinkers assembled here, except, there is no plan of execution and nobody is going to undertake it upon himself or herself to be the one to start the great “ethical economics at any cost” movement. (For one, it’s hard to make much money doing that.) I like what the writers have to say for the most part, and I like the presentation and concept of this book. Ultimately though, high-minded does not always result in high-achieving. Of course, we want our financial advisors and consultants to behave themselves. Of course we all want to play win-win games that benefit everybody. Of course, we want to be part of something that is great and beneficial to all of mankind. Unfortunately, we are all human, and none of the writers has a clear concept of how we can motivate people to ignore their own profitability and success and sacrifice it for something else. (After all, as a member of society, if I make myself a little better off, isn’t society a little better off for my achievement, as long as I haven’t taken something from another member of my society?) In the end, I give this book three dollar marks for its readability and for being a highly informative book. I just don’t think it is all that good.

The Intelligent Option Investor

by Erik Kobayashi-Solomon

Having only started trading options in the last year, I've had good success so far, but I’m always willing to learn more. Mr. Kobayashi-Salomon, a former Morningstar strategist who now runs his own company providing institutional investors with analysis and strategies,  now brings us The Intelligent Option Investor, a book that is not only about options, but about finding the true value of stocks and then acting on those findings within the limits of one’s risk tolerance (and ultimately, budget). The information could just as easily be used for regular stock investing, but it is targeted for broader use in the options market.

Based mainly on the Black-Scholes-Merton valuation formula and the resulting BSM “cone”, the author builds a formidable structure of value analysis tools and methods, carefully illustrating and explaining their actual application not only in finding the value of stocks, but also in finding the projected value of those stocks based on the options market prices that lie either inside or outside the valuation cone. It is heavy going but is very useful information that I found very useful and intriguing. This first section of the book is also very important to understanding the rest of the book, which deals entirely with options. The author demonstrates the uses of the BSM cone in a number of different option strategies. Because it is all about making the reader “intelligent”, this book is not so much about finding the best strategy, per se. So it tells you what to look for, what to expect, and then leaves it to you to do the grunt work of figuring out where to put your money. (There are plenty of online tools for achieving this, mostly just by using a good brokerage’s website.)

Personally, I found the value cone quite intuitive, but because I don’t have much experience with options, it really gave me a lot to think about and consider in my own investing (not just options). A more experienced option investor might feel talked down to, but nothing is lost by going over this material as a review or refresher. Another thing I found valuable is that this book provides different types of option investing strategies based on the BSM cone. This is great for me, because I am becoming more risk averse, so I have no problem using the strategies that limit downside risk and avoiding the big risk, big upside potential strategies. It’s nice that the author gives the reader these kinds of options (sorry).

One caveat is, you should already know how to trade options before diving into this book. The author doesn't spend a lot of time telling you what options are, how they are traded, and what the fundamental differences are between the options types. It really just sticks close to its title and the premise that it will make you an intelligent options investor, because it assumes you are already an options investor. In the end, I found this book really did teach me a lot about options that I didn't

know and it does make me a more intelligent options investor. The careful explanation of the BSM cone and is application makes this a valuable book for any investor, but for an option investor, it’s the most useful tool I’ve ever run across, which is why I rank this book at five dollar marks.

Dual Momentum Investing

by Gary Antonacci

For whatever reason, I've seen more than a few books of late about trend investing. While this one comes up with a bit of a different title, the gist of the strategy that is proposed here is the same: Buy what’s hot and sell what’s not. The author, Gary Antonacci, won an award for a paper that became the heart of this book. He developed a simplified strategy for moving money between three investments based solely on their momentum: the S&P 500 index, All Country World Index, and the ACWI excluding US based stocks. He adds some meat to the bones of this strategy by using not just simple momentum, but what he calls absolute and relative momentum – the “Dual Momentum” of the title. The strategy itself ends up being called the Global Equity Momentum or GEM strategy.

Assuming the author’s supporting charts and data are accurate, there is a good case to be made for this being an effective investment strategy, but I do see some drawbacks. As simple as the strategy is, its execution will take a lot of research and constant monitoring to be sure to know when the hot investment is cooling down and cool investment is heating up. The author suggests a number of ways of doing this, including using a (free) website he has set up. And like most simple investment strategies, this one can be made more complex by taking other investment trends and factors into consideration, such as simple moving averages, P/E ratios, 52-week high proximity, and the like. Personally, think incorporating some of these indices would be a good idea, but I can also see how this would take up a lot of time. Personalization versus time/cost ratios will come down to the individual investor.

The biggest drawback of this book is that the author spends the first half of the book quoting a slew of research papers and economic articles in support of the strategy, including its timing, allocation percentages, and investment types. Only around page 95 of this 150-page book, does he actually introduce the strategy. The buildup to a one page flow chart for implementing and maintaining the strategy is, I thought, a bit extreme, but in all honesty, the strategy is about one of the simplest, and possibly effective, investment strategies I've ever seen.

While I can see giving the dual momentum investing or GEM strategy five dollar marks for simplicity and ingenuity, the book itself, being full of quotes from a 13-page bibliography, is just a little too sluggish to rate that high, so I give the whole package four dollar marks.

Retirement GPS

by Aaron Katsman

Boy, it's been a while. Even so, the holidays have got me tied up, so, I'll just post a short version of a review that I've also put up on Amazon. Enjoy!

I was happy to accept a gratis copy of this book from the author, as I had just finished reading and reviewing You Can Retire Earlier Than You Think and I was interested in finding more information about retirement investing with a mind toward retiring, either early or comfortably or both. I thought the GPS of the title would sort of provide some guidance for determining one’s financial position (right?) as it pertains to retiring. What Mr. Katsman has actually written, however, is more of a generic global investing guide that does not necessarily limit itself to retirement investing. There is no guidance for deciding anything about your ability to retire, but there is still a lot of valuable information in this book.

Mr. Katsman is an American who lives abroad and primarily (only?) invests overseas. The GPS of his book stands for “Global Portfolio System” and is mainly concerned with getting average investors to diversify internationally and consider a number of “normal” investments (mutual funds, bonds, etc.) in countries other than the United States. The author considers this to be a great retirement investing strategy, but I felt it wasn't a retirement strategy so much as an international investing strategy. retiring. The strategies and suggestions are interesting and sound and certainly worth considering from an investment standpoint, but they could be for retirement investing, income investing, growth investing, or just portfolio building outside of retirement funds. I would even argue, that for people who are still investing but have already retired, they might want to avoid some of Mr. Katsman’s strategies, as they involve different sorts of risks such as exchange rate risk, geopolitical instability, and factors that elderly investors are probably better off avoiding entirely. (I certainly can't picture someone like my 74 year old retired parents trying to buy Argentinean bonds or Chinese renminbi mutual funds or the like. 

To his credit, Mr. Katsman applies his vast overseas investing experience and shares a lot of the nuts and bolts of such investing in this book. The overall tone of the book is friendly and chatty, which is good for the most part, but some of his personal anecdotes need considerable stretching to tie into his discussion of investments. This book is still very readable and comprehensible. I learned a lot about a wide range of subjects, from the Chinese stock market, to the intricacies of European bonds, to exchange rates, and of course, the economic strengths and weaknesses of a large number of overseas economies. The world is a big place, however, so anyone who agrees with Mr. Katsman better be prepared to do a lot of their own research beyond this book, not only on the instruments they plan to purchase, but also the nature of the markets and country where those instruments are being sold. (I haven’t got the stomach for it, myself.)

All in all, this is a well-written, detailed, well-informed book on international investing. The global portfolio system is a neatly developed concept and strategy that is useful for retirement and long term investing, with possible applications to short term investing and out-and-out speculation. Mr. Katsman’s strategy alone rates four dollar signs, and with the lucid execution of this book to explain it, I think the overall package rates four dollar signs as well.

You Can Retire Sooner Than You Think

by Wes Moss

I've read a lot of financial, business and economics books over the years. As I've gotten closer and closer to retirement age, I've paid more and more attention to portfolio protecting strategies as well as books and advice related directly to the actual retirement process. Now in my early 50’s, I’m looking realistically at the prospect of early retirement, possibly in as few as two or three years, so naturally, I've been studying up on the brass tacks of preparing and executing a retirement strategy. For that reason, I didn't think I would find much useful information in Wes Moss’s book that I hadn't already taken into account in my own planning and actions.

I was right, but I was wrong.

Mr. Moss is a syndicated talk show host and certified financial planner of some standing and recognition. He took it upon himself to conduct a survey of retirees in an effort to quantify happiness and determine exactly what makes retirees happy. Of course, he suspected that the amount of retirement assets would play into it, but to his credit, he let the data dictate the answer. What he found was not only illuminating, it is incredibly instructive.

This book is his attempt to relay the findings of a survey he conducted in an effort to identify and quantify the elements of a “happy” retirement. He succeeded in filtering those elements down into five simple “secrets” to achieve a happy, fulfilling retirement. The good news is, some of the secrets are not so secret and in fact, I have already taken some of them into consideration and acted on them. Things like, developing multiple streams of income, driving a sensible and affordable car, staying healthy and active, and pursuing a motivational interest. For me, this is common sense, but I think it will be a revelation for a lot of folks in my age bracket. So I was right in that, some of this book was (for me) preaching to the choir. And you might think that makes it not terribly useful, but I found it vaguely uplifting to have my ideas vindicated by a disinterested third party (so to speak). I was wrong, though, because Mr. Moss has allowed his clients (the survey takers) to also provide better perspective and concrete facts in support of what makes a retiree happy (or unhappy).

What I was wrong about was, Mr. Moss’s clients (the survey takers) provide different perspectives and concrete experiences to back Mr. Moss’s ideas, and that’s where what makes this book different makes it better. There are no investment strategies, per se, in this book. Mr. Moss is more along the lines of offering advice like: pay the mortgage off fast, become active in your community, and pay for the big stuff (house repairs and remodels, once-in-a-lifetime vacations, etc.) before you retire and while you have an income, to avoid unforeseen circumstances derailing your entire retirement. How you go about doing that is up to you. It’s a defensive strategy, but one that has proven effective for a remarkable number of happy retirees. Again, I’m already on board (just purchased a grand piano for my second career as a jazz pianist, thank you very much), and I’m looking forward to having a happy retirement because of it.

This is not a mainstream book about retirement. For portfolio building and tax avoidance strategies, you’ll have to look elsewhere. But for a sensible approach to enjoying your life in retirement, I don’t think a better book has been written. It’s different and better, and that’s what makes this book worth every bit of five dollar marks.