Personal Favorite Books Read in 2013
As the year comes to an end it is time to put together my annual favorites from the last 365 days. I read 48 books this year and am just finishing the 49th “Hatching Twitter” (I would love to hit 50, two short of my one a week goal). There were plenty of great books I have blogged about over the year that were not included on the list for sake of repetition. A good indication a book has resonated with you is that you have recommended it on more than one occasion, you have talked about the ideas on numerous occasions (with numerous people) and that you’re attempting to implement them (or have) into your life.
Also see a quick article: How to Read Intelligently
I will reiterate myself and recommend all of the following books below if you have not read them already and have an interest in business, investing, finance, or accumulation of knowledge in general. The books I have included I would be willing to read multiple times over the course of my life, as depicted by an Oscar Wilde quote “If one cannot enjoy reading a book over and over again, there is no use in reading it at all.” There are numerous others not included that I have re-read and will re-read in the future albeit for the sake of exhaustion they were not included. (None of the books below were published in 2013).
Against the Gods: The Remarkable Story of Risk
By Peter L. Bernstein
(Both Warren Buffett and Charlie Munger recommended this book) This was my favorite book of 2013 (although I read it in December so I am subject to the recency effect). Starting in 1200 and working towards present day, Bernstein examines the fundamental components of risk, finance, and applied mathematics. Brief histories of famous mathematicians, economists and their ideas are examined including Pascal, Fermat, Fibonacci, al-Khowarizmi, Cardano, Galileo, Daniel and Jacob Bernoulli, Graunt, Hailey, De Moivre, Bayes, Gauss, Galton, Poincare, Einstein, Bachelier, Laplace, Keynes, von Neumann, Morgenstern, Markowitz, Tversky, Kahneman, Black, Scholes, and Leibniz. The book is based on mathematics and may not be of much interest to people who do not have a mathematics background or/and an interest in history. An extensive review is available here.
Thinking Fast & Slow
By Daniel Kahneman
This book has been very influential on my attitude and life since reading and methodically taking notes on the biases that I had been previously blind to. The basis of the book is what Kahneman calls system one and system two. System one being an implicit system (un-intentional, subconsious, immediate) and system two being an explicit system of thought and rationalization. Prospect theory is a major component of Kahneman’s writing and works over the years; developed from Bernoulli’s utility theory, which is also addressed in Against the Gods. Essentially the majority of people are risk averse and the price they are willing to pay changes based on the reference point (anchoring) or how the option is offered (framed). Amos Tversky was also an enormous influence on the discoveries of decision theory and would have likely shared the Nobel Prize in Economics with Kahneman and shared in writing the book, provided his life was not cut short. The book should be read in doses by anyone with an interest in rationale choices, decision theory, behavioral finance, psychology, economics or a drive to accumulate knowledge, with a pad of paper, a pen and a wide open mind.
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
By Marc Levinson
I never thought that I would have become so infatuated with global logistics until I came across this book about the shipping container and brief history of American logistics throughout the 20th century. From the early-unorganized docks and streamliners to massive cargo ships capable of carrying over 16,000 standard 20’ shipping containers. It is an epic documentation of the rise of the shipping container starting with the first re-fitted oil tanker that carried fifty-eight containers from Newark to Houston. Bill Gates had recommended the book in his summer reading list, I promptly picked up a copy and read it front to back. The funny thing about reading is the more you learn, the more you want to learn and this book was no different, sparking my interest in railroad, airline, trucking and shipping logistics around the world. Thanks Bill.
Competition Demystified: A Radically Simplified Approach to Business Strategy
By Bruce Greenwald
Competition Demystified examines the competitive strategies of various [case study] businesses, from Apple, Compaq and IBM to Coors and Anheuser Busch, the book is packed with real world examples. Greenwald focuses on barriers to entry, the prisoners dilemma, the power of thinking local, supply, demand, economies of scale, switch costs, customer captivity, entry/preemption, cooperation, and valuation metrics (briefly). I found numerous tidbits of knowledge that I have filtered into my investment checklist and analytical process.
Antifragile: Things That Gain From Disorder
By Nassim Taleb
A mind bending book that I have read in very small doses (10-20 pages at a time) with deep intellectual thought. It has opened my eyes in an unimaginable way to uncertainty, knowing what you don’t know and admitting it. Taleb also opens our eyes wide to the fallibility of what we think we know, history, academics, and other people of power throughout history. [Amazon Review] Just as human bones get stronger when subjected to stress and tension, and rumors or riots intensify when someone tries to repress them, many things in life benefit from stress, disorder, volatility, and turmoil. What Taleb has identified and calls “antifragile” is that category of things that not only gain from chaos but also need it in order to survive and flourish.
The antifragile is immune to prediction errors and protected from adverse events. Why is the city-state better than the nation-state, why is debt bad for you, and why is what we call “efficient” not efficient at all? Why do government responses and social policies protect the strong and hurt the weak? Why should you write your resignation letter before even starting on the job? How did the sinking of the Titanic save lives? The book spans innovation by trial and error, life decisions, politics, urban planning, war, personal finance, economic systems, and medicine. And throughout, in addition to the street wisdom of Fat Tony of Brooklyn, the voices and recipes of ancient wisdom, from Roman, Greek, Semitic, and medieval sources, are loud and clear.
The AIG Story
by Lawrence Cunningham
A business biography of AIG, crafted by Lawrence Cunningham (The author of The Essays of Warren Buffett) with Maurice (Hank) Greenberg, ex-CEO of AIG. The AIG Story chronicles the rise and fall of AIG in two sections, during Greenberg’s tenure and after his removal due to attorney general Eliot Spitzer relentless financial re-statment witch hunt through media prosecution. The AIG Story is a reminder that businesses are built on a foundation of the firm’s culture and a few rotten apples can ruin the whole bunch. The culture is dictated by upper managements vision, ideals, ethics, and character, thus The AIG Story taught a valuable lesson of the perils of lack of oversight, regulation, and management driven by the wrong (easily manipulated) incentives. Thanks to the nationalization of AIG they have begun to return to their roots, only after destroying shareholder wealth.
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"When you find yourself on the side of the majority, it is time to pause and reflect." - Mark Twain