Tag Archives: Book Review

Three Take-Aways: The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s

Reading Time: 4 minutes

“The structure is not genius; even for the exclusive hedge funds, genius turned out to have been a rising market.” – The Go-Go Years (pp. 348)

One of my goals with some additional time is to embark on “learning projects” across a few domains.  Capital market history is one of those domains.  That is where this book fits in.  Expect more notes along similar lines.

Overall, I personally found the writing style of the author to be difficult to follow, in spite of my interest in the content.  The story covers the period including the evolution of mutual funds and the stock exchanges, the rise in prominence of conglomerates, and the “Nifty Fifty” growth stocks.   

It is possible that I am over-fitting, but history does seem to rhyme.

Three take-aways from the book:

  1. The Cause of Investor Amnesia

“Indeed, by 1969 half of Wall Street’s salesmen and analysts would be persons who had come into the business since 1962, and consequently had never seen a bad market break.”  (pp. 113)

This sounds familiar to a theme I hear today.  Or maybe a theme I believe in today.  Many investors today, if they came of age post-Great Financial Crisis (2007 – 2008) have known mostly good times with few meaningful setbacks.  That has been a long period of time; close to 15 years, where any setbacks have quickly been reversed.

  1. Wall Street Crisis

“At the start of December, Wall Street hung by its fingertips.  Roughly one hundred Stock Exchange firms had vanished over the past two years through merger or liquidation.  Forty thousand customer accounts were involved in the thirteen cases of liquidation, and most of them were still tied up, the customers unable to get their cash or securities.” (pp. 341)

“Legislation to create a federal Securities Investor Protection Corporation, on the model of the Federal Deposit Insurance Corporation to protect bank depositors, was before Congress; it had no chance of passage until the present mess in Wall Street was cleared up, and thus, while it might help in future crises, it was powerless against this one.” (pp. 341)

The details on the crisis within Wall Street itself was all new to me.  See take-away #1.  And, so were the origins of SIPC.

There were brokerage failures during the GFC.  The causes of those were mostly characterized based on bad decisions and investments.  Whereas, the brokerage failures during the period covered in the book appear to be based more on a bad business model that was not keeping up with the times.

Regardless, the thought of investors losing their securities or not having access to them for an extended period was a “new” risk to consider (https://www.investors.com/etfs-and-funds/sectors/stock-market-schwab-implodes-money-safe/).

  1. Fun With Accounting

“Where a series of corporate mergers is concerned, the current earnings per share of the surviving company lose much of the yardstick quality that the novice investor so trustingly assumes.  The simple mathematical fact is that any time a company with a high earnings multiple buys one with a lower multiple, a kind of magic comes into play.  Earnings per share of the new, merged company in the first year of its life come out higher than those of the acquiring company in the previous year, even those neither company does any more business than before.  There is an apparent growth in earnings that is entirely an optical illusion.” (pp. 157)

“Moreover, under accounting procedures of the late nineteen sixties, a merger could generally be recorded in either of two ways – as a purchase of one company by another, or as a simple pooling of the combined resources.  In many cases, the current earnings of the combined company came out quite differently under the two methods, and it was understandable that the company’s accountants were inclined to choose arbitrarily the method that gave the more cheerful result.”  (pp. 157)

“The conglomerate game tended to become a form of pyramiding, comparable to the public-utility holding company game that flourished in 1928, crashed in 1929, and was belatedly outlawed in the dark hangover days of 1935.  The accountant evaluating the results of a conglomerate merger would apply his creative resources by writing an earnings figure that looked good to investors, they, reacting to the artistry, would buy the company’s stock, thereby forcing its market price up to a high multiple again; the company would then make a new merger, write new higher earnings, and so on.  The conglomerate need neither toil nor spin – only keep buying companies and writing up earnings.  It was magic, until the pyramid became top-heavy and fell.” (pp. 158)

This is why my favorite financial statement is the Cash Flow Statement; a topic for another post.  At least investors during the period were focused on earnings.  That seems to be a novel idea for current investors.

And a bonus take-away:

“For example, those familiar old forces so long so helpful to business management in getting the most possible work out of low-level employees – company loyalty and personal competitiveness – scarcely seemed to operate on the new breed of back-office employees at all.” (pp. 196)

Apparently they had millennials back in the 1960s too.

A few other recent book notes:

  1. Titan: The Life of John D. Rockefeller, Sr.
  2. Range: Why Generalists Triumph in a Specialized World
  3. Principles
  4. That Wild Country
  5. Superforecasting: The Art and Science of Prediction

Three Take-Aways: Titan: The Life of John D. Rockefeller, Sr.

Reading Time: 2 minutes

“Rockefeller equated silence with strength: …’success comes from keeping the ears open and the mouth closed.” (pp. 174)

This was a beast of a book: 676 pages not including Acknowledgments and Notes.  I fought a valiant fight and eventually made it through it.  The book was an interesting take on the industrialist period and Rockefeller’s contribution to it, but not gripping.

Three take-aways from the book:

  1. Legacy

“As architect of the first great industrial trust, he proved the ultimately fragile nature of free markets, forcing the government to specify the rules that would ensure competition and fair play in the future.” (pp. 667)

Rockefeller’s legacy has oscillated a bit depending on the time and viewpoints.  A point made in the book about Rockefeller and other industrialists (a.k.a. robber barons) of that period, is that they operated in a business environment that was radically different than the one we have today.  Many of the laws around corporations and capitalism did not exist, or took a much different form.  And so, defensibly, many of the industrialists felt that they were pioneering and stabilizing forces in their industry rather than anti-competitive.  In hindsight, we look at their actions with a much different lens.   

  1. Timing of Wealth Creation

“Beyond his talents as a businessman, Rockefeller benefited from a large dollop of luck in his life, making more money in retirement than on the job.” (pp. 557)

Compounding.  The eight wonder of the world.  If you read about Buffet, the pattern is similar in terms of wealth creation.  Rockefeller made more money after the Standard Oil breakup than before it.

  1. Personal Finances & Philanthropy

“Rockefeller engaged in strenuous rituals of austerity, and he grimly sought to simplify his life and reduce his wants.” (pp. 504)

“They [his children] were expected to spend a third of their money, save a third, and donate a third to charity.” (pp. 629)

Rockefeller was not ostentatious like some of his contemporaries – at least relatively speaking.  In fact he was almost humorously frugal, which stemmed from a fairly religious (Baptist) belief system.  And he required his kids to follow suit.

Rockefeller Sr. also pioneered a model of philanthropy imitated by many of the wealthy today.  And he was notoriously private and hand-off regarding most of his philanthropic works – including the University of Chicago and some of what are now National Parks – like Grand Teton.

A few other recent book reviews:

  1. Range
  2. Principles
  3. That Wild Country
  4. Superforecasting: The Art and Science of Prediction
  5. Essentialism: The Disciplined Pursuit of Less
  6. Fortune’s Formula

Three Take-Aways: Range: Why Generalists Triumph in a Specialized World

Reading Time: 2 minutes

“Compare yourself to yourself yesterday, not to younger people who aren’t you.  Everyone progresses at a different rate, so don’t let anyone else make you feel behind.”  – Range (pp. 290)

This book was talking my book, and since I agreed with most of what was being said, I liked it. There were some interesting sections on teaching and learning, sports and athletics, and career trajectory.  

The sports one hits pretty close to home right now since our daughter is nine.  It seems like kids are being required to pick a sport very early these days.  I was glad to see some research suggesting that’s really not a good idea to specialize early.  By the way, I sat next to a three time Olympian on the chairlift the other day, and she told me the same thing.

The book also had a lot of overlap with a couple of my other recent reads – Superforecasting and Principles.  It even referenced Young Men and Fire (pp. 245) – a book by Norman Maclean (of A River Runs Through It fame) which has stuck with me since I read it a few years ago.

Three take-aways from the book:

  1. Learning Should Be Hard

“Desirable difficulties like making connections and interleaving make knowledge flexible, useful for problems that never appeared in training.” (pp. 96)

“All forces align to incentivize a head start and early, narrow specialization, even if that is a poor long-term strategy.” (pp. 119)

If learning is easy, then you are probably doing it wrong.  Or learning in a way that will help you utilize that knowledge in the future.  Learning should be somewhat difficult.  Early wins might be a bad sign.  

  1. It’s Not People vs. Computers, It is People + Computers

“But the centaur lesson remains:  the more a task shifts to an open world of big picture strategy, the more humans have to add.” (pp. 29)

“Our greatest strength is the exact opposite of narrow specialization.  It is the ability to integrate broadly.”

As the world becomes more digital, you should think about where people spend their time and where computers spend their time.  Each is a tool.  And like every tool, it has its strengths and weaknesses.  This felt extremely applicable to both individual careers choices as well as managing people, processes, and companies.

  1.  Identify & Solve Problems

“Like Kranz, Von Braun went looking for problems, hunches, and bad news.  He even rewarded those who exposed problems.” (pp. 259)

“…successful problem solvers are more able to determine the deep structure of a problem before they proceed to match a strategy to it.” (pp. 115)

This one had a lot of overlap to Principles.  Solving problems is one of my best strengths or at least that is what I tell people in interviews.  And it seems like a good area to focus on going forward, as it is a place where people add a lot of value vs. automation.  In order to creatively solve problems, you need broad perspective.  

A few other recent book reviews:

  1. Principles
  2. That Wild Country
  3. Superforecasting: The Art and Science of Prediction
  4. Essentialism: The Disciplined Pursuit of Less
  5. Fortune’s Formula

Three Take-Aways: Principles

Reading Time: 2 minutes

“Remember that everyone has opinions and they are often bad.”  – Principles (pp. 375)

The second time is a charm.

I tried to read this book, Principles by Ray Dalio, back in 2019 and failed.  Unsure why.  It might have been a little too deep or hit a little too close to home.  I also happened to be buried neck deep in work.

However, the second attempt was much more enjoyable and successful.  There are some really interesting personal and organizational concepts presented throughout the book. 

This is one of those books that you should flip through at least once a year.  It’s up there with the Hard Things About Hard Things and High Output Management.

Three take-aways from the book:

  1. Go Slow & Creatively Look For Options

“There is almost always a good path that you just haven’t discovered yet, so look for it until you find it rather than settle for the choice that is apparent to you.” (pp. 38)

“I felt about this fork-in-the-road choice the way I felt about most others – that whether or not we could have our cake and eat it too was merely a test of our creativity and character.” (pp. 72)

“And it reminded me that when faced with the choice between two things you need that are seemingly at odds, go slowly to figure out how you can have as much of both as possible.”  (pp. 63).

Sometimes I tend to react fast.  Or make fast decisions.  Or jump to the outcome that I think is most likely.  Or just, in general, want to come up with solutions quickly.

     This is a good reminder to go slow.  Get creative.  Look for options.

  1. Figure Out Where You Are Rather Than Try To Forecast The Future

“In other words, rather than forecasting changes in the economic environment and shifting positions in anticipation of them, we pick up these changes as they’re occurring and move our money around to keep in those markets which perform best in that environment.” (pp. 42)

This made so much sense to me.  I know enough about forecasting to know that you really should not base much of your income on your ability to forecast market movements.  But really understanding where you are in the market cycle and continuing to adjust to new developments really makes a lot of sense.  Easier said than done.

  1.  Identify & Solve Problems

“Most people would rather celebrate all the things that are going well while sweeping problems under the rug.  Those people have their priorities exactly backward, and there is little that can be harmful to an organization.” (pp. 473)

I love to solve problems.  Which is good, because as an executive in a small company, I seem to be faced with a constant stream of them.  The philosophy that problem identification should be rewarded vs. punished is important in a company.  And problems should be made visible, so they can be solved.  Each problem solved makes you that much better.

P.S. I would like to take the personality test at some point.

A few other recent book reviews:

  1. That Wild Country
  2. Superforecasting: The Art and Science of Prediction
  3. Essentialism: The Disciplined Pursuit of Less
  4. Fortune’s Formula
  5. The Hard Thing About Hard Things

Three Take-Aways: That Wild Country

Reading Time: 3 minutes

I really enjoyed this book.  And learned quite a bit about public lands in the United States.  The format tends to be one section on the history of public lands, followed by the author in that setting in the present.

We have spent a lot of time, since moving out West, in national parks, national forests, national monuments, and BLM land.  This book helped me understand the various types of public lands, the history behind many of them, and some of the current issues facing public land management.

A result is that I tend to take a little bit more patient approach with others in public land settings.  For example, I am a bit more patient with crowds at national parks, since that ensures those places will remain that way (and maybe be expanded).  However, I still believe owners of off-leash dogs who interfere with my Strava PR’s on our local trails to be communists (maybe kidding).

Three take-aways from the book:

  1. Public Lands

“Unbeknownst to many, American citizens are collective co-owners of an incredible swath of land across the country.  Approximately 640 million acres of it.  That’s roughly 28 percent of the total United States landmass (an area larger than Alaska, Texas, and New York combined).”

Growing up and residing primarily on the East Coast, I just didn’t appreciate the scale of Federal public lands nor the various types.  Having lived out West here for a bit, I understand all that a little better and can appreciate some of the issues.

  1. Land Transfer Movement

“I’d learned over the preceding months that this idea, the disposal of public lands, had been proposed many times over the previous hundred years by a rotating cast of industrial-age robber-baron businessmen, lobbyists, and powerful politicians.  The stale argument had been resurrected again for the twenty-first century, but this time it was supported by both radicals like Bundy and mainstream politicians.”

Land transfer proposals generally seem to shift land use in favor of one demographic or land user, typically “extractive industries (oil & gas, mining, logging, etc.)” vs. a more balanced approach across different types of users that are mandated under Federal stewardship.

“I explained how, if managed the right way, these landscapes could be shared and enjoyed by all sorts of people.  Many of the nation’s national forests and refuges and BLM lands are multi-use – with hikers and hunters, fishermen and backpackers, horse riders and rock climbers all coexisting in the same space.  In many cases, recreational uses coexist with commodity uses too.  Loggers and bird-watches often use the same forests.  Hikers and ranchers might enjoy and utilize the same desert spread.”

  1. State vs. Federal Land Ownership

“Public land management by states can be very different than that by the Federal government.  As I learned over the course of my journey, the US Forest Service and Bureau of Land Management (the governing agencies for the public lands most discussed for transfer) are both mandated by law to manage their lands with multiple-use and sustained-yield principles, as well as strong conservation and recreation goals.  In most cases, state lands are managed differently.  Many states have laws that require them to manage their land holdings for maximum profit or solely in support of specific beneficiaries, such as public schools.  On top of that, many states allow more relaxed environmental regulations on their lands, making it easier for rampant resource extraction to occur.”

In general, I think I would spend some time scrutinizing the true motivations of anyone lobbying for Federal lands to be transferred out of Federal custody.  I am not sure they are radical, I think they are mostly likely just selfish.

P.S. I really like this shirt.

A few other recent book reviews:

  1. Superforecasting: The Art and Science of Prediction
  2. Essentialism: The Disciplined Pursuit of Less
  3. Fortune’s Formula
  4. The Hard Thing About Hard Things
  5. The Conscious Parent

The Subtle Art of Not Giving A F*ck

Reading Time: 3 minutes

“In my life, I have given a fuck about many things. I have also not given a fuck about many things. And like the road not taken, it was the fucks not given that made all the difference.” – The Subtle Art of Not Giving A F*ck

This is meant to be more of a book report, than a review.  In particular, I want to highlight three key take-aways from the book, The Subtle Art of Not Giving A F*ck: The Counterintuitive Approach to Living A Good Life by Mark Manson, that I found impactful.  This also serves as a way for me to recall influential points in the book.

The title is certainly catchy.  Maybe a bit gimmicky.  The content of the book turned out to be a little different than I was anticipating.  Not in a bad way.  It just was.  And a lot of the themes are ones that I have encountered elsewhere – not to say they are not relevant or important or presented with a unique perspective here.

Three take-aways from the book:

  1. Not Giving A F*ck

This is the theme of deciding what is important and not important in your life. You should care about things that advance your goals and priorities, and care significantly less about those things that do not.  As I have written previously, the harder part and the part I still need to work on is what are those goals.

Again, a bit gimmicky. But the heuristic of saying to yourself “I have no more f*cks to give here” is certainly memorable and helpful.  It has helped me in more than one meeting.

“Most of us struggle throughout our lives by giving too many fucks in situations where fucks do not deserve to be given. We give too many fucks about the rude gas station attendant who gave us our change in nickels. We give too many fucks when a show we liked was canceled on TV. We give too many fucks when our coworkers don’t bother asking us about our awesome weekend.”

“The idea of not giving a fuck is a simple way of reorienting our expectations for life and choosing what is important and what is not. Developing this ability leads to something I like to think of as a kind of ‘practical enlightenment.’ “

  1. Most Things Are Unimportant

Most of our lives are pretty small and unimportant in the grand scheme of things.  We would prefer not to think about this too much.  I would also add that our view of the world tends to be pretty limited and incomplete.

“All day, every day, we are flooded with the truly extraordinary. The best of the best. The worst of the worst. The greatest physical feats. The funniest jokes. The most upsetting news. The scariest threats. Nonstop. Our lives today are filled with information from the extremes of the bell curve of human experience, because in the media business that’s what gets eyeballs, and eyeballs bring dollars. That’s the bottom line. Yet the vast majority of life resides in the humdrum middle. The vast majority of life is unextraordinary, indeed quite average.”

“It’s these dynamics that plague us now. We are so materially well off, yet so psychologically tormented in so many low-level and shallow ways.”

  1. Problems & Negative Experiences = Meaning

This is a theme that I have encountered more and more in my recent reading.  And I wholeheartedly agree with the idea.  Problems are a feature, not a bug.  I stole that from somewhere.  

I really enjoy solving problems.  Even better.  I really enjoy solving problems on teams with people I respect.  This has been a good self-learning for me as I try to set some goals.

“The desire for more positive experience is itself a negative experience. And, paradoxically, the acceptance of one’s negative experience is itself a positive experience.”

“Being open with your insecurities paradoxically makes you more confident and charismatic around others. The pain of honest confrontation is what generates the greatest trust and respect in your relationships. Suffering through your fears and anxieties is what allows you to build courage and perseverance. Seriously, I could keep going, but you get the point. Everything worthwhile in life is won through surmounting the associated negative experience.”

“Problems never stop; they merely get exchanged and/or upgraded. Happiness comes from solving problems.”

“True happiness occurs only when you find the problems you enjoy having and enjoy solving.”

A few other recent book reviews:

  1. Superforecasting: The Art and Science of Prediction
  2. Essentialism: The Disciplined Pursuit of Less
  3. Fortune’s Formula
  4. The Hard Thing About Hard Things
  5. The Conscious Parent

Three Take-Aways: Superforecasting: The Art and Science of Prediction

Reading Time: 2 minutes

“Superforecasters are perpetual beta.” – Superforecasting

This is meant to be more of a book report, than a review.  In particular, I want to highlight three lessons from the book, Superforecasting: The Art and Science of Prediction by  by Philip E. Tetlock and Dan Gardner that I found impactful.  This also serves as a way for me to recall influential points in the book.

Forecasting is near and dear to my heart. Although I have evolved my view a bit over the years.  One thing is for certain in my financial forecasts.  I am wrong.  It’s just a matter of how “wrong”.  But in many cases, the most important part of forecasting is not the absolute accuracy of the forecast, it is the discipline and planning the forecasting process instills.

Three take-aways from the book:

  1. Forecasting Is Not Mystical

“Foresight isn’t a mysterious gift bestowed at birth. It is the product of particular ways of thinking, of gathering information, of updating beliefs. These habits of thought can be learned and cultivated by any intelligent, thoughtful, determined person.”

This kind of reminds me of how strategy is sometimes viewed.  Forecasting and strategy have a bit of mystical aura.  In practice though, both are bit less sexy than most folks think.  They are hard work. They are an incremental process.

If you think someone is going to hike up to the mountain top and come down with the answer, prepare to be disappointed. If someone tells you they can go to the mountain top and come down with the answer, be highly skeptical.   

  1. Forecasting As A Skill

Similarly to the first point, forecasting is a skill.  And skills require consistent practice to build and maintain.

“Superforecasting demands thinking that is open-minded, careful, curious, and—above all—self-critical. It also demands focus. The kind of thinking that produces superior judgment does not come effortlessly. Only the determined can deliver it reasonably consistently, which is why our analyses have consistently found commitment to self-improvement to be the strongest predictor of performance.”

One of the tools I use to assist in my forecasting practice is the Stagger chart – that I learned about in Andy Grove’s book, High Output Management.

  1. An Ensemble Approach

Good forecasters assimilate lots of external information.  Constantly.  And update their views accordingly.  See my incremental comment earlier.

“Now look at how foxes approach forecasting. They deploy not one analytical idea but many and seek out information not from one source but many. Then they synthesize it all into a single conclusion. In a word, they aggregate. They may be individuals working alone, but what they do is, in principle, no different from what Galton’s crowd did. They integrate perspectives and the information contained within them. The only real difference is that the process occurs within one skull.”

And asking questions is an important part of getting additional information.

“Practice “constructive confrontation,” to use the phrase of Andy Grove, the former CEO of Intel. Precision questioning is one way to do that.”

And do not expect a consensus view (a major pet peeve of mine).

“A smart executive will not expect universal agreement, and will treat its appearance as a warning flag that groupthink has taken hold.”

A few other recent book reviews:

  1. Essentialism: The Disciplined Pursuit of Less
  2. Fortune’s Formula
  3. The Hard Thing About Hard Things
  4. The Conscious Parent