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View Diary: Books That Changed My Life--Okay, Which Book DID? (78 comments)

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  •  Since we're talking about investments (6+ / 0-)

    I should mention one book that is over 150 years old, and informs my investment decisions every day:

    Memoirs of Extraordinary Popular Delusions and the Madness of Crowds.

    This book kept me from sinking my clients during the Internet Craze (just like Tulipomania).

    Bernie Madoff is just Sir John Blunt reborn.  And John Law could have created the leveraged real estate/mortgage crisis which crested in 2008.

    It is popular in my business to tout the idea of the "Efficient Market".  I say balderdash.  Emotion, greed and delusion are no less powerful now than they were in the 1500s in Holland, or in the 1700s in London and Paris.  

    I learned the following rules, among others, from this book:
    1.  If it sounds too good to be true, it probably is.
    2.  Whenever the consensus becomes "This time it's different", bet the other side.  (One caveat here:  Bet value, but be careful of lemmings.  They can keep running a lot longer than you think.)  

    Ancora Impara--Michelangelo

    by aravir on Fri Dec 06, 2013 at 07:41:27 AM PST

    •  LOL, Aravir! (4+ / 0-)
      Recommended by:
      aravir, P Carey, RiveroftheWest, Limelite

      Yes, I've heard of Tulipmania and the South Sea Bubble.  Just goes to show that we never learn, right? Glad that book kept you from sinking your clients.

      Good to see you--thanks for stopping by!

      "Religion is what keeps the poor from murdering the rich."--Napoleon

      by Diana in NoVa on Fri Dec 06, 2013 at 07:49:55 AM PST

      [ Parent ]

    •  The rest of the book is good too (6+ / 0-)

      The first two chapters are financial in nature, and are rightly emphasized as the best part of the book.  But I eventually read the entire thing, and it made me aware of madness in other areas that I had underestimated.

      First, I had always thought that maybe a few hundred women had been executed for being witches, but after reading this book, I realized that the numbers ran into the tens of thousands.  One item I found particularly interesting was that at a trial where one man was accused of being a werewolf, fifty witnesses testified against him.

      Second, my conception of dueling was that of an occasional settling of scores on the field of honor.  This book made me aware of the unrelenting, oppressive nature of dueling, of how many men hated it, but knew that their lives would be made unbearable if they refused to participate.

    •  See also (1+ / 0-)
      Recommended by:

      The Big Short on how to make money during a bubble by betting against it, and if enough of us did it, how to burst the bubble early before it can create such a big crash and recession.

      I hear that Nouriel Roubini, who predicted the last crash, is expecting a global housing crash. I think that I see signs of a looming US stock market crash, but I am not an economist.

      Ceterem censeo, gerrymandra delenda est

      by Mokurai on Fri Dec 06, 2013 at 03:36:03 PM PST

      [ Parent ]

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