ValuePickr Forum

Multi-Disciplinary Reading - Book Reviews

I intend to update this thread with interesting books, along with my short book reviews from both investing and other disciplines. The motive is to discuss great books each of us may have read and to motivate each other to read more and to discover new books. The other book threads are mostly just about investing and I believe that to develop knowledge wholesomely, a lot more is necessary - be it biology, game theory, psychology, material science, zen, mathematics or economics. Investing requires a lot of patience and sitting on your hands - Why not sit with a book rather and compound knowledge along with wealth?

Let me start this off with a few I have read recently.

Guns, Germs and Steel, Jared Diamond - Why are some countries richer than the others? Why have some races conquered others and why is there so much inequality in the world? This book is a brilliant scientific work that goes on to answer these questions by going back to the history of the past 13000 years. While a lot of popular opinions go with racial or genetic superiority as the explanation for why Europeans were able to displace native Americans in the Americas and aborigines in Australia, this book goes much, much deeper and lists out the various factors to reason out the way history has unfolded the way it has.

The crux of it lies in random gifts of geography, biodiversity and germs. The Eurasian landmass being aligned east-west instead of north-south (uniform daylight times, similar climes aiding in spread of crops) and being a large continuous stretch of land (Unlike Africa with its Sahara, Americas with their constriction of land around Panama etc.) having had a lot more flora and fauna that was domesticable led to early food production, a movement from hunter-gatherer to settler lifestyle which lead to specialisers and living in close proximity to domesticated animals leading to germs and a resistance to it and so on. I didn’t know that germs from the Spanish killed more native Americans than did guns. This book is a revelation and should be essential reading to understand how a disadvantaged society/tribe might face its effects for a lot, lot longer than one can imagine.

The main problem I had with this book though isn’t about the content or the research behind it but the way it was edited. There is just way too much repetition of concepts here across chapters which makes it a tedious and cumbersome read at times. I wish this was better edited to make it more concise and easy to read. Compressing 13000 years of human history into 400 pages though is no mean feat. 9/10

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This is perhaps the most important book ever written about human beings. I make a statement like that and instantly I realise that its driven by the Availability heuristic, since I have very recently finished reading it. It is my “System 1” which is “Jumping to conclusions”. So maybe its time to summon my “System 2” to substantiate.

The two systems approach to thought is the most important concept in the book as its repercussions are felt throughout life and consequently, the book. Our System 1 is alert, performs quick judgements, jumps to conclusions, has an exhaustive associative memory that it can search at stunning speeds, keeps us at ease, answers difficult questions by substituting them with easier ones and so on - understandably its very necessary for day to day activities but can be very flawed in a lot of judgements - especially ones where the impact can be larger.

Our system 2 is lazy, effortful and can perform more complex analysis based on more variables but is inherently slow and resource-intensive but is relatively more accurate. It is System 2 that we usually identify ourselves with but its almost always our System 1 that makes our decisions for us and when questioned, we summon our System 2 to substantiate, like my exercise in writing this review. Curious bits are that you could summon your system 2 more easily by frowning and your System 1 by smiling which is why you could be disarmed into accepting a bad proposition if you are made to smile before you make your decision.

The rest of the book is filled with equally important knowledge - On anchoring, substitutions, intensity-matching, how our brain handles probability, which is not too well as it outweighs the low-probability event like winning a lottery (possibility effect) and seeks certainty even in a situation where probability of loss is low (insurance) but seeks risk when certainty of loss is high.

Then there is the discourse on loss-aversion and how we handle loss and why we feel loss at more intensity than we feel gains and how it affects us in every facet of life - monetary or otherwise. The section on “bernoulli errors” was very interesting as well in understanding the utility value of raises and how the reference level (which could be our current salary when compared to a raise of salary) affects decision-making. Prospect-theory and its flaws as well was a fascinating read, as was the endowment effect - why an object we pay $x is suddenly worth $x + $y (to us), the minute we make the transaction.

Sunk-cost fallacy - I have spent money on this so I must make the best use of it - most times sending good money after bad or future resources after past ones etc, availability cascade and availability entrepreneurs - the bad news cycle and how it influences decisions especially around elections, ratio-nality, averages vs sums - on why its so easy for us to perform averages than sums and how this affects so many decisions of ours be it in choosing a dinner set or combinations of items and experiences, cognitive illusions, experiencing vs remembering selves - if we sum up all the feelings of an experience and compare it with how we feel about the overall experience, we might be surprised by how often we have contradicting views because our remembering self loves making memories and coherent stories while our experiencing self doesn’t have a voice of its own.

These might just be scratching the surface of the wealth of knowledge in the book and unlike others written over a period of few years, this book is one intelligent man’s complete life’s work in collaboration with many of his ilk backed by controlled experiments over varied sets of people over decades. If you read one book in a year, make it this one. If you have read it already, it might be time to read it again as this gets better with knowledge and experience. 11/10

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Stuff Matters, Mark Midownik, 2014 - This is a love letter from a material science buff. Around us are a wide-ranging set of materials in the everyday objects we use and take for granted. How did man make these materials and mass-produce them and why? How have newer materials improved our lifestyle and helped us progress? How every new material has helped a revolution - Be it steel and the industrial revolution or silicon in the current electronic revolution, or paper and porcelain in the past. Why do we hate plastic and concrete so much but love diamonds (when ideally we should be loving graphite)? The list of musings in this book is vast pertaining to materials.

Steel, Paper, Concrete, Chocolate, Plastic, Glass, Porcelain, Carbon etc. are covered with each chapter picking one and dissecting it at various levels - from atomic, nano, micro, macro, miniature and human scales. The chapter on chocolate analyses the origin, science, art, culture and human emotion behind each tasty bite. Only gripe if I can call it that, was that the delved depth varied a bit for different materials. This is a quick, fun read. 8/10

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Poor Charlie’s Almanack, Charlie Munger - I have never enjoyed a book this much, so much so that I think it must be a crime to derive so much pleasure from just reading a book. When I feel something as bizarre, I would usually put it down to weird quirks of the human mind but now I know the exact human misjudgements at play that leads one to feel things like that. I had come across the psychology of human misjudgement talk years ago and had made a note to read this book someday and am glad to have managed it finally.

Other than the powerful 100 pages on human misjudgement, there is the equally powerful talk on ‘practical thought about practical thought?’ where Munger draws on multi-disciplinary knowledge from physiology, psychology, economics and physics to dissect how an empire like coca-cola can be built from scratch and become worth over a trillion dollars in the future.

The rest of the book is a bit biographical, talking about how Berkshire Hathaway came about, the values behind the partnership with Buffett, greek philosophy and literature, roman empire and its downfall, an unending admiration of Ben Franklin and disgust towards Academia especially pertaining to the soft-sciences and Wall St. and accounting shenanigans, advocacy of index investing for charitable funds and the like and an unrelenting flood of zingers and anecdotes filled with wit and wisdom. This book is just outstanding and I foresee myself reading this over and over again in the future. 10/10

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Zero to One, Peter Thiel, 2014 - This was a very quick read at 180 pages but the truth is it didn’t even have interesting content to fill those 180 pages. Just like the pareto principle/power laws, a bulk of the important stuff is in the first 40 pages and rest is just fluff driven by rant and hubris.

How to build a monopoly is pretty much the same thing as “Practical Thought about Practical Thought?” talk by Chalie Munger. I liked the bits about competition driving destruction and should be avoided - again reinforced by a simple parable of two old women who inherited a shoe company by Munger. The part about Definite/Indefinite Optimism/Pessimism was an interesting concept too and all this is in the first 40 pages.

The rest was just placating the PayPal “Mafia” and their spoils and dissing biotech and green energy and talking about quirks of founders and why wearing t-shirts and jeans to pitches was a necessary criteria than suits (hilarious). At least its a quick read and it will be pretty clear in the end that Thiel is no Taleb. 6/10

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The Selfish Gene, Richard Dawkins, 1976 - If you have ever wondered about the origin of life, the reason why we are here, why we do the things we do and other such seemingly simple but almost unanswerable questions, this book is a must read. You will have new mental models to dissect such things as individual behaviour, group behaviour, things like culture, religion, caste, violence, politics, business and so on.

Building on ideas from gene theory, biology, mathematics, game theory and various examples from the plant and animal kingdom, Dawkins addresses a complex set of problems. There are some parts of the book which will leave an indelible mark - especially the game theory strategies in life of hawks vs doves (just outstanding), the idea of replicators vs vehicles/survival machines, genes acting at a distance like a programmer and program, the concept of relatedness and how it influences our behaviour, dissection of altruism and so on.

Most books repack known knowledge in a new easy-to-understand format but this is one book which has so many ideas hitherto unknown (to me at least) packed with the readability of a sci-fi thriller. This is easily going to be one of my favourite books of all time. 10/10

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The Dhandho Investor, Mohnish Pabrai - Pabrai has quite blatantly lifted everything that worked for Buffett Partnerships in the 50s and built Pabrai Funds and has been quite successful as a practitioner of Buffett/Munger/Graham value investing. The book starts with studying a brief history of how and why Patels in the US have been successful owning 1 in 5 of all motels while having started with nothing before the 70s, about what made Lakshmi Mittal his wealth, how it stands in comparison to Sir Richard Branson’s and so on. It talks about different types of “dhandho” in the process.

The real value of the book comes towards the end though, in low-risk high-uncertainty businesses, portfolio position-sizing based on odds/edge and kelly’s formula (something most human brains seem to come pre-installed with), making few bets, infrequent bets but big bets, concentrated portfolios, being always in a position where its heads I win, tails I lose very little and so on. There wasn’t much here that was very new having been through a lot of Buffett/Munger literature but every new practitioner brings his own flavour to it and makes it interesting. 8/10

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Fooled by Randomness, Nassim Nicholas Taleb - Beyond all the contempt and condescension in the tone of the book (which makes for a interesting, hilarious read), there is so much here in terms of probability theory, behavioural economics, biases and heuristics, discussions on luck, chance and skill, the idea of work, interspersed with an adequate amount of the ancient pond (evolutionary biology) and relatively modern times (marcus aurelius, socrates, seneca et al.), greek literature and philosophy, specifically stoicism and of course options trading. Key takeaways are that everything that is considered true is merely awaiting falsification (Karl Popper), which is essentially the difference between absence of evidence and the evidence of absence. Another running theme through the book is that of the difference between knowing and doing, of intelligence and emotion. There is enough said here about the “black swan” that I wonder what fresh ideas he had in a book by that specific name. This is one of the best books I have read that sates and at the same time stokes my multi-disciplinary search for knowledge. 10/10

Some of my favourite parts of the book, which hopefully will influence you to pick up and read it.

A mistake is not something to be determined after the fact, but in light of the information available until that point.

Mild success can be explainable by skills and labor. Wild success is attributable to variance.

There is asymmetry. Those who die do so very early in the game, while those who live go on living very long. Whenever there is asymmetry in outcomes, the average survival has nothing to do with the median survival.

When things go our way we reject the lack of certainty.

We favour the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.

Mathematics is principally a tool to meditate, rather than to compute.

My lesson from Soros is to start every meeting at my boutique by convincing everyone that we are a bunch of idiots who know nothing and are mistake-prone, but happen to be endowed with the rare privilege of knowing it.

Too much success is the enemy, too much failure is demoralizing.

The epiphany I had in my career in randomness came when I understood that I was not intelligent enough, nor strong enough, to even try to fight my emotions.

No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word.

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Read this book recently. It’s definitely a good read for those interested in popular science books

As the name of the book suggests, it gives a broad overview of the big bang & The Standard Model of particle physics. What I found most intriguing is the information on gaps in our understanding of the dark energy and dark matter.

The most memorable line in the book - “Without the billion-and-one to a billion imbalance between matter and antimatter, all mass in the universe would have self-annihilated, leaving a cosmos made of photons and nothing else—the ultimate let-there-be-light scenario.”

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Another popular science classic is Bill Bryson’s A Short History of Nearly Everything.

It’s a survey of how different discoveries and inventions came to be. The book has lots of great anecdotes from the lives of different scientists. Even though it’s a non-fiction, the writing is so good it reads like a novel. A must read for anyone even remotely interested in science.

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Hi
Nice idea for a thread.

Sharing a few non fiction goodreads which I could pull out in a jiffy from my book shelves, other than the ones covered above.

  1. The Success Equation by Michael Mauboussin - It covers a lot on the idea of luck vs skill applied specially to sports. Other books on similar lines are books by Max Gunther.
  2. Fortune’s Formula by William Poundstone - Reads like a thriller! Mixes worlds of mathematics, gambling, mafia and investing. Good historical background on the Kelly’s equation.
  3. Extraordinary Popular Delusions and Madness of Crowds by Charles Mackay - Reminds us that we are not the only ones in this phase of madness. Covers the famous Tulip bubble and South Sea Bubble.
  4. The Man Who Knew Infinity by Robert Kanigel - A biography of Ramanujan. Exemplifies what happens when passion is compounded with talent.
  5. What is Life by Erwin Schrodinger - Lectures given by him covers how life interacts with physics and chemistry. One of the books which lay the idea of genes which later Crick and Watson discovered.
  6. Men of Mathematics by E T Bell - Each chapter covers legendary mathematicians (western). Very nice collection if one loves mathematics. Legend has it that John Nash was inspired by this book to study Maths.
  7. Faraday, Maxwell and the Electromagnetic Field by Nancy Forbes and Basil Mahon - Another excellent book on how these two men impacted the future. And how different their approaches were.
  8. How Not to be Wrong by Jordan Ellenberg - Nice read covering how simple maths helps us in rationalising ideas/opinions. Important read from an investment point of view too.
  9. The Checklist Manifesto by Atul Gawande - Drives the point across professions the importance of checklists and processes. Must read for investors also.
  10. Being Mortal by Atul Gawande - How old age leads to the final departure from a doctor’s point of view. I like gifting this book to my friends. A must read.
  11. When Breath Becomes Air by Paul Kalanithi - A moving book on how a person feels when his time is limited. What goes on in terms of thoughts at such a situation. Beautiful book.
  12. No Shortcuts to the Top by Ed Viesturs - A must read. Viesturs teaches us Risk Management. I like his approach to work and thought process. I think he would be a great money manager.
  13. Annapurna by Maurice Herzog - An adventurous account of Man’s first ascent of an 8000er peak. Brilliant! ( Some portions are exaggerated as per other climbers accounts)
  14. Seneca on the Shortness of Life - A very short but deeply thoughtful book on how to approach life. Many things which we are taught will seem a little wrong once you read this.
  15. Candide by Voltaire - The only non fiction book I have put here. Voltaire is awesome with his words. I think one needs to have Voltaire’s critical thinking ability if one calls himself an investor. Though my favourite fiction author is Rohinton Mistry.

I will eagerly pick book recommendations from this thread now :wink:

Regards
Deepak

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Describes how the justice system in America can screw over the accused if they don’t have proper legal representation, & the exemplary work done by the Author’s Equal Justice Initiative to fight for the wrongly convicted/disproportionately punished people. Some of the cases described in the book are chilling.

The most memorable quote in the book - “Each of us is more than the worst thing we’ve ever done.”

On the shortness of life, Seneca - A primer on stoicism in three essays. The first one is the most famous one on the shortness of life, where Seneca argues that life is long enough if you know what to make of it. Latter day pop culture quotes of living life to the fullest and living each day as if it were the last and so on draw their inspiration from snippets in this book written in 1st century AD. Although living life to the fullest is equated to a life of excess (of material and experience), it is exactly what Seneca argues against.

The second essay “Consolation of Helvia” reads as a letter to his mother from exile. This one talks about tempering the suffering and being resilient to loss. My favorite passages were the ones involving gifts of Fortune and being in a state to deal with the same as being taken away than torn away.

The third one is “Tranquility of mind” that is the essence of stoicism. Seneca deals extensively with vices and virtues in this one, of being able to temper and tether the wandering mind, to be able to handle both victories and defeats with a serene state of mind.

There are gems in every page of this very short book that wastes no time or words, true to it’s philosophy. There is nothing new here though that you may not already know, for most of it is just common sense, but it tries to bridge the gap between knowing and doing. 10/10.

P.S. Warning: Language is archaic.

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One up on wall street, Peter Lynch - Have avoided reading this book because of the suited man on the cover and the bait-y self-help vibe title. This is not a bad read at all since it is a bit different from the graham-buffett-munger style of investing. For eg. Lynch holds a frown-worthy 1500 stocks in his fund portfolio, looks for turnarounds, makes purchase decisions on simple first-level thinking most times. It does land him with a considerable number of failures than one would like to admit in a book but still manages to eke out good returns purely out of landing big winners from time to time.

There is also good primer on reading balance sheets and valuation and other basics which would be useful for a beginner. Nice to get a different perspective from Buffett’s “Turnarounds seldom turn”, “Buy a business as if the markets won’t open for next 5 years” and so on. This is an excellent book for a beginner. 8/10

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The little book that beats the market, Joel Greenblatt - A short, quick read about magic formula investing which is nothing but choosing companies that have a high return on capital which are still fairly valued on a EBIT/EV basis - Good companies at great prices in short. A bit too simple a criteria but he does provide backtested data that goes back quite a few years to show how it beats the index. Pretty good concept for the passive or rather, not-so-active investor, since it does involve a lot of churn on a monthly basis. Also, it doesn’t take care of filtering the cyclicals at the end of the commodity cycle which is what you end up with mostly (Paper, Sugar etc.). 7.5/10

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Rich Dad, Poor Dad, Robert Kiyosaki, 1997 - I have decided to set my biases aside and read even the ubiquitous books. This took just a day to read because the key knowledge of the book could fit a brochure. As most of it is front-loaded, a lot of the pages that followed felt obnoxiously repetitive. For someone who is completely financially illiterate though, this might still be a worthwhile read. If you think your house is an asset, or if you have a lot of debt, or if you are in the endless cycle of salary, expenses, mortgage with little savings, perhaps the simple language of the book could help reinforce the idea of assets vs liabilities, understanding cash flow and what’s in the asset side of your balance sheet, regular income vs passive and portfolio earnings and things like that.

What I absolutely hated though was the amount of importance given to flipping properties as a means for creating wealth. A lot of the book is hollow motivational tripe as well. What really irked me the most though was the amount of cross-selling the book was doing to the author’s motivational courses, other books, seminars, board games and so on. Clearly, the author is a better salesman than a writer - which he himself agrees. He also primes his readers to be ready to fork large amounts if they needed worthwhile knowledge. With all these caveats, this is still a reasonable book for someone who is a complete novice when it comes to money management.

Its pretty poor when it comes to risk management though (what’s money management without proper risk management?) because that probably doesn’t sell in a motivational self-help book? Who needs to hear about all the ways something can go wrong. 6/10

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IMG_1878

The best book ever

Focussed work in distracted environment

  1. cut off from everything
    Known as environmental clearance

  2. focus in intervals of 30 min

  3. shut off after deep work and enjoy life

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Bulls, Bears and Beasts by Mr. Santosh Nair is a book that discusses the rise of a fictional character as a trader in the stock market.
The path of the fictional character to the zenith of trading was marked by difficulties. But, he defeated those impediments and emerged victorious. It enlightens us with the unscrupulous activities promoters often indulge in. The book also discusses the transformation Indian stock exchanges have undergone. Also, the rise of the influence of FIIs is explained. Stock market booms and busts have an important position in this book. The various scams Indian companies engineered have been explored. The book discusses obliquely the past of some famous investors today. There’s a lot more in the book. I’ve not even scratched the surface. What I appreciate is the lucid language used. It’s not daunting for a reader. It’s a nice, pleasing read. Mr.Santosh Nair has in an appealing manner elucidated the transformation of India’s capital markets.
It’s important to note that this isn’t a guide for investing. It’s a book that discusses history and present of Indian capital markets and allied activities.

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Walden, Henry David Thoreau, 1854 - This is Thoreau’s two years of self-imposed exile as a social experiment between 1845-1847, where he built his own cabin in the woods of Walden pond near Concord, Massachusetts, documented at times like a journal and at times as poetry of musings and at times as political satire. He lives a life of simplicity in a stripped-down, self-sustainable manner (cultivating his own beans and potatoes), with bare necessities and being almost one with nature, drinking physically and spiritually from Walden pond.

What made it a very difficult read though was Thoreau’s extensive descriptions of nature in an archaic fashion, replete with obscure references and from timeless classic literature of the world from the Odyssey, Confucius and the Vedas. I thought Thoreau’s philosophy of life as well was pretty similar to Stoicism.

Though the language is very old-fashioned, the ideas are still very relevant and the deterioration of objectives and ideals have only accelerated past the industrial revolution and men still remain slaves to their occupation and life-styles, each feeding off the other, neglecting their connect with nature and how simple life can be, if one lets it to be.

“If a man does not keep pace with his companions, it is perhaps because he hears a different drummer”. 8/10

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The Black Swan, Nassim Nicholas Taleb, 2007 - NNT perhaps considers repetition elegant. There’s not much here that wasn’t already in ‘Fooled by Randomness’,a fantastic read. Even within the book, there is an inordinate amount of beating the Gaussian, normal distribution, standard deviations and related prob-stat concepts to pulp. The ideas that had to be conveyed were conveyed early on in the book when he describes mediocristan and extremistan - of how things like weight, height follow the normal distribution and are mediocristan territory while book sales, wealth etc. are scalable and belong to extremistan. The laws that govern each of those lands vary accordingly - Gaussian vs Mandelbrotian - Non-scalable vs scalable, black swan resistant vs susceptible.

Some other nice takeaways were the concept of the anti-library - of having books that you haven’t read to represent the knowledge you don’t (yet) possess. I sort of vouch for this as the numbers of unread books in my library has grown with my moving from deterministic to probabilistic ventures. The barbell strategy - of risk-avoidance for a major portion interspersed with high-risk small bets - Sort of like periods of extreme idleness, laziness and long walks with short bursts of extreme activity instead of “running”. The ludic fallacy was another - Our tendency to smooth the jagged edges when we model real-life situations. For eg. basing real-life decisions based on the sterile games of dice where the odds are controllable/controlled, as in a casino.

NNT considers himself a skeptical empiricist and doesn’t believe in using complicated mathematical models in fields like economics - something he attributes to “physics envy” of these fields - Or our wish to boil complicated aspects of life to a handful of equations which are prone to extreme errors. Are some models better than no models or is it going to be like navigating the Alps with a map of the Pyrenees? Black swan is essentially the “unknowable unknown” - It is unknown until its known and it would be paradoxical to attempt the knowing. 8/10

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