Private Equity Laid Bare
By Ludovic Phalippou
Published in September 2017
Thibault’s Score: 3/5
Private Equity Laid Bare advertises itself as a “non-boring, never complacent textbook.” While it is a textbook, I’m not sure that I can say that it is non-boring or never complacent.
I would say that this book is intermediate in terms of its difficulty level. The book focuses on explaining the technical details of private equity rather than giving a broader overview. There is a lot of discussion about hyper-specific LPAs, valuation calculations, etc…
Some case studies are given, but only to illustrate various points. When he discusses Blackrock’s LBO of Safeway, he does so to illustrate the moral hazards LBOs can cause. I wish he would have spent more time storytelling about specific real world case studies, and used those intricacies to illustrate his points; not the other way around.
The writing is quite good. I really love how Phalippou uses analogies from Alice in Wonderland. His writing style is similar to my own.
I do not recommend this book to people who want to learn the basics of private equity.
A History of the Middle Ages
By Crane Brinton, John Christopher, and Robert Wolff
Published in 1955
Thibault’s Score: 2/5
A History of the Middle Ages is a long boring survey history of the middle ages. I’ve had it in my iTunes library for several years, and could never bring myself to finish it, until now.
I generally don’t like survey histories, as they tend to be overly vague. Furthermore, I generally dislike old history books because they often have bad historiographies.
I didn’t really learn much. I was already very familiar with almost all of the contents of this book. While there were fascinating tidbits / nuggets here and there, the general thrust of the work wasn’t very interesting. One interesting little story I had not heard was that there is a Byzatnine Greek version of the story of Buddha.
The book is also quite disorganized. The chapters neither flow by topic, nor chronologically. As a result, the action can be quite hard to follow, even for an amateur medievalist.
The one positive thing is that the audiobook’s production is absolutely amazing. Charlton Griffin’s voice is amazing. The sound effects and music really make the book come to light. If it wasn’t for the high production quality of the audiobook, I would not have been able to finish it.
I cannot recommend this book.
When Genius Failed: The Rise and Fall of Long Term Capital Management
By Roger Lowenstein
Published in October 2000
Thibault’s Score: 4/5
The title of this book misled me to believe that this book would be about the concept of long term capital management - instead, in this context, Long Term Capital Management (LTCM) was a hedge fund that existed from 1994 until its collapse in 1998.
LTCM’s strategy was to hedge bond bets - go both long and short at the same time. The firm’s founders, which included two nobel prize winning economists, had adopted a perverted version of Burton Malkiel’s Random Walk Down Wall Street strategy, which assumed that because markets were efficient, market events always occurred on a random distribution.
The fund was founded in 1994. Just four years later, they had accumulated billions of dollars worth of AUM. The firm attracted a team of self-important quants who looked down on non-mathematically inclined traders. Their abrasive ways would later come back to bite them.
After the Russian government defaulted on its sovereign debt, the late 1990s saw a global emerging markets financial collapse. This caused strange price fluctuations, and LTCM began losing money on both sides of its trades. Soon, LTCM found itself in bankruptcy proceedings.
LTCM had made many enemies during its four years of existence. As a result, nobody wanted to step in and bail them out. The Federal Reserve got involved. Rival bankers grudgingly united to cannibalize what remained of LTCM.
This is an amazing book. It is fun, interesting, and always captivating. I rarely read page turners like this, and strongly recommend it to anyone with an interest in finance.
Common Sense on Mutual Funds
By John C. Bogle
Published in 1999 (Updated in 2009)
Thibault’s Score: 1/5
Common Sense on Mutual Funds builds on A Random Walk Down Wall Street by arguing that most mutual funds are, essentially, scams. The book argues instead that passively managed Index Funds have lower management costs, and are more able to ride the wave of markets.
The author, John C. Bogle, founded Vanguard, one of the first Index funds. As such, he is not an impartial author. Much of the book feels somewhat “markety,” like the author is trying to sell you his specific financial services.
While I agree with the general premise that Index Funds are superior to managed funds, and that mutual funds tend to be scams, I couldn’t finish it. I only read about half of the book. The writing style is tedious, somewhat dreary.
Furthermore, I am not the target audience. The target audience is retail investors who want to develop personal finance strategies. I was reading the book as a consultant attempting to learn more about the industry.
I don’t recommend this book.
Secrets of Sand Hill Road: Venture Capital and How to Get It
By Scott Kupor
Published in June 2019
Thibault’s Score: 3/5
The Secrets of San Hill Road is a concise overview of how the Silicon Valley VC industry works. The book is written by Scott Kupor, the managing partner of legendary VC firm Andreessen Horowitz.
I learned a lot from this book, and appreciated the writing style. It is easy to understand, even for novices. A few minor things annoyed me, such as the use of the femine (rather than gender neutral) “she / her'' to describe everyone - this made things confusing at times. The positives far outweighed the negatives.
Most interesting was the discussion of who LPs are, and what sort of incentives LPs have. Learning more about the internal structure of VC funds, and the different roles everyone has is interesting. My favorite part of this section was the part where Kuport discusses LPAs.
I also enjoyed reading about the contents of contracts between VCs and investees. The key takeaway is that properly understanding the incentives is key. Kuport includes many case studies that are highly memorable.
The most major issue that I had with the book wasn’t Kupor’s fault: I simply was not the target audience.
This book is written for entrepreneurs seeking VC funding who also don’t know much about how VC consulting work. I am not seeking VC funding, and actually am a consultant for several VC funds. As someone sitting on the other side of the table who already knew much of the information presented, this wasn’t exactly what I was looking for.
That being said, if the above description of a target audience corresponds for you, then this is a must read book.
A Random Walk Down Wall Street
By Burton Malkiel
Published in 1973, Revised in 2014
Thibault’s Score: 5/5
A Random Walk Down Wall Street is by far the best personal finance book that I have read so far.
This book lays out the strategy of stock market indexing.
When originally published in 1973, there were no Index Funds available on the stock market. Three years after this book was published, the first Index Funds were launched. Now, they are widely available and play a major role in many portfolios.
The basic premise of the Index Fund strategy is that markets are efficient, random, and hard to predict. Furthermore, markets tend to grow over time. As a result, one is almost always better off betting on the market as whole as opposed to betting on specific companies.
The best way to do this is to invest a small amount in every company in the S&P 500, or an Index Fund. This doesn’t mean that there is no nuance - you can invest in top quartile companies, and weed out the bad ones. You just don’t choose the winners. You can also skew somewhat more heavily towards one industry / geography or another.
This strategy can be used by small time retail investors as well as institutional investment funds; it scales really well.
I personally really like the “random walk” approach. I agree with the assumptions, like the fact that it doesn’t require much work / effort, and like how it balances risk with reward. I personally plan on using this strategy.
The book itself is written in a witty and easily understandable way. I recommend it highly to anyone who wants to learn more about finance.
Memoirs of Extraordinary Popular Delusions and the Madness of Crowds
By Charles Mackay
Published in 1841
Thibault’s Score: 3/5
This book is often regarded as one of the oldest finance textbooks, which is why I wanted to read it. It was written by Scottish journalist Charles Mackay.
The book isn’t strictly economics-focused; instead it covers a wide variety of topics where the madness of crowds produced negative outcomes.
It covers everything from economic bubbles, to alchemy, to the crusades. There are many fascinating anecdotes and nuggets of information. Despite this, many chapters were quite boring. Many of the stories, especially about the alchemists, are very entertaining.
Mackey does not attempt to create a set of generalized principles. He almost exclusively relays narrative stories recounting the history of various events. As such, I personally do not agree that it qualifies as a finance textbook.
Here is a list of some of the five most interesting things that I learned:
1: France sold Louisiana to the United States because a failed attempt to create a land-backed currency resulted in hyperinflation.
2: The personalities of many of the alchemists covered in this book is almost identical to the personality of later financial shiesters.
3: The British government attempted to prevent bubbles by vaguely passing legislation banning bubble companies.
4: Fortune tellers repeatedly would make end of the world predictions and cause riots in London during the early modern era.
5: St. Thomas of Aquinas allegedly built an android to do household chores, but scrapped it because it was mean.
I highly recommend the first few chapters that focus on financial bubbles to anyone who is interested in finance or economics. However, the rest of the book can be quite boring and irrelevant.
1177 B.C.: The Year Civilization Collapsed
By Eric H. Cline
Published in September 2015
Thibault’s Score: 5/5
1177 BC, despite the potentially “clickbaitish” title, is an excellent book.
The book covers the history of the bronze age collapse. The century from roughly 1250 BC until 1150 BC is marked by the fall of the hyper-authoritarian palace states that appeared around the Eastern Medeterrainian. The date of 1177 BC was chosen somewhat arbitrarily as the date of the bronze age collapse, but the book covers the broader period.
Cline begins by painting a picture of the rich cultures and civilizations of the Eastern Medeterarian on the eve of the collapse. He then proceeds to systematically cover the events of the collapse, culminating with an overview of the ensuing dark ages.
The causes of the bronze age collapse are not well understood. It is known that several devastating earthquakes trembled the region, and that mysterious “sea peoples” raided the coastline. Other factors such as climate change, revolutions, and technological change may have also played a part.
What I really enjoyed about this book was that Cline walks the fine line between explaining the historiography as well as telling an entertaining story. Many history books, such as those by Harold Lamb, tell a story without reference to the evidence and sources to the point of making me cringe. Others go into pure historiographical minutia without telling any stories or capturing the key points of interest in an era.
Cline does a great job at telling a story while keeping the historiography in mind. He is constantly telling us about archeological findings, inscriptions, and different primary sources.
Overall, this has to be one of the best written historical books I have ever reviewed.
Against the Grain: A Deep History of the Earliest States
By James Scott
Published in August 2017
Thibault’s Score: 4/5
Against the Grain is another brilliant book written by the always excellent James Scott. Against the Grain is a popular history written to survey and summarize the academic literature explaining the rise of the state.
Scott also advances a number of more controversial points, likely informed by his anarchist background.
The main thesis made in Against the Grain is that the early states arose when small scale “guerilla” farmers were coerced into city states. He points out that hunter-gatherers had more free time, more food, and healthier lives than their compatriots living in cities. He concludes that the only reason why a small scale farmer or hunter-gatherer would adopt the lifestyle of a sedentary farmer is due to coercion.
Based on these assumptions, Scott also concludes that the periodic collapses of the early palace states actually often resulted in better living conditions for the masses. He concludes that the collapses must have been non-violent and that the ensuing “dark ages” were actually much freer and more prosperous.
Most controversially, this line of reasoning also leads him to condemn state-building technologies such as writing.
Due to my lack of historical knowledge of the period, I have no means by which to access Scott’s claims. On one hand, it seems plausible that hunter-gatherers were coerced into states and that the people on whose backs the states were built suffered. On the other hand, Scott’s condemnation of writing and technology seems dubious. I simply do not know what to make of Scott’s arguments.
Either way, I strongly recommend this book to anyone interested in learning more about the origins of the state.
The Alchemy of Finance
By George Soros
Published in 1987
Thibault’s Score: 2/5
I initially picked up this book because I was interested in hearing what the much reviled George Soros had to say about finance. That being said, The Alchemy of Finance was a huge disappointment.
I neither got insight into any of the conspiracy theories surrounding George Soros nor did I get much value out of reading the book.
Soros opens up his treatise by explaining that he had set out to apply his philosophical ideas to finance. He explains his affinity for the scientific method and for thinkers like Karl Popper. He also makes a fascinating point: because financial markets have profit and loss, they can be used as an arena to test the objectivity of various theories.
The rest of the book is a lengthy explanation of Soros’ theory of reflexivity. Simply put, a reflexive system is one where the participants are both influenced by and influence the system.
Reflexivity as it applies to financial markets has many practical implications. For example, rising paper stock prices may bring real business benefits to a corporation. Suppliers might see the rising prices, and offer the corporation better deals. Customers might be attracted to the firm due to the stock price. This could cause a virtuous cycle.
The style of writing is incredibly boring and difficult to understand. It reminds me of the semi-autistic libertarian treatises on economics that I used to read.
I didn’t get many insights from this book, and do not recommend it.
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