Memorial Day Weekend marks the unofficial beginning of summer so I thought for this next posting, it would be fun to share a few books that are on my own summer reading list this year:
1) The Investment Answer by Daniel Goldie, CFA, CFP® and Gordon S. Murray discusses the basic financial tenets of having a diversified portfolio, using fee-only advisors, rebalancing regularly, avoiding active management, and investing for the long-term. Although familiar advice, critics have praised the book for the clear, accessible language in which it was written and its simple message.
The idea for the book came as Mr. Murray, a former bond salesman at Goldman Sachs and manager director at Lehman Brothers and Credit Suisse First Boston, was diagnosed with terminal brain cancer with an anticipated life expectancy of only a few months. In a recent NPR interview in which Robert Siegal asked how he was feeling, Mr. Murray stated, “…when you have a belief system, then it’s easy to get excited, because there’s just a difference when you believe what you’re talking about.”
Murray’s story of working as an investment banking veteran but who now recognizes the poor advice of Wall Street has resonated with a large audience. Since its publication earlier this year, Murray sadly passed away, but he would be pleased to know that his book has become widely popular. Only a mere 93 pages, it is a concise, quick reminder of a tried-and-true investment philosophy.
2) The Big Short by Michael Lewis is perhaps more of your typical summer read than The Investment Answer in that it unfolds more like a novel. Lewis, perhaps most known for The Blind Side and Liar’s Poker, has a talent for bringing out the drama and complicated personalities of real-life characters and this book seems to be no exception. The author tells the tale of the most recent subprime securities crisis through the eyes of some of those directly involved, such as Michael Burry, a Stanford Medical student who stared his own Hedge Fund, Steve Eisman at Oppenheimer, bond trader Greg Lippman, Treasury Secretary Henry Paulson and his assistant Tim Geithner, to name a few.
Much has been written in the last couple of years about the subprime securities crisis but this book peaked my interest not only because of Lewis’ talent as a writer. His approach in narrating the book through a cast of characters also emphasizes the point that so many people behaved recklessly and collectively contributed to the crisis that followed. In a previous article, I had written about the release of Lewis’ book in conjunction with the first hearings of the Financial Crisis Inquiry Commission, posing a question about Wall Street’s innate conflict-of-interest and bottom-line incentive at the potential expense to the individual investor. The Big Short looks to be a quick read that I imagine will re-affirm this aspect of Wall Street more than ever.
3) The book that I am setting aside for my next long vacation is Too Big to Fail, Andrew Ross Sorkin’s account of the subprime mortgage crisis, albeit on a grander, more epochal perspective. First published in the fall of 2009 but recently released in paperback, the book promises high drama and readability but not at the expense of extensive and meticulous research. Less commentary and analysis than perhaps other accounts written about the subject, Sorkin’s book seems to offer more of a chronological, play-by-play of the events, beginning with the fall of Lehman Brothers to the frenzied aftermath among the federal government to determine their role in containing the crisis.
The last two books were released a couple of years ago and my delay in getting to them was perhaps partly intentional. There was so much blame to go around from Wall Street to the federal government to even individual investors, that it’s hard not to look at that time without a certain degree of cynicism and frustration. It may be why Goldie and Murray’s The Investment Answer also tops the reading list — as a reminder that, whether it’s another subprime mortgage crisis or another crisis that emerges, the best investment story may be the one with the least amount of drama.
Tom Orecchio is a principal and wealth manager with Modera Wealth Management, LLC (“Modera”). Nothing contained in this blog should be construed as personalized investment, financial planning or other advice, and there is no guarantee that the views and opinions expressed herein will come to pass. Investing in the stock and bond markets involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be construed as a solicitation to buy or sell any security or engage in any particular investment strategy.
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