Charles Whelan (2002)
1. Economic literacy gives people the tools to make better personal and social decisions about the issues they face throughout their lives. But the subject of economics has long been considered brooding and dry. If you perused Economics 101 in college, this is your antidote. Charles Whelan, a former correspondent for The Economist, writes in a charming style. Using words rather than mathematics, he makes difficult and sometimes arcane economic concepts understandable, fun, and even laughable. Above all, he makes economics relevant to everyday life. If you want to understand the dilemma facing monetary policymakers as growth slows and inflation remains high, read How Markets Work, How Incentives and Psychological Instincts Guide Us. If you are confused about what If you’re struggling to understand how government policies promote a healthy economy, this book is for you. Whelan writes with an anti-Midas touch. If you touch gold, it will breathe life into it.
Michael Lewis (2003)
2. ‘Moneyball’ chronicles the success of Billy Beane, who was General Manager of the Oakland Athletics from 1997 to 2016. He put together a winning baseball team, even though he was constrained to one of the least budgeted teams in the major leagues. Michael Lewis explains how the collective wisdom of baseball professionals was often flawed. New statistics such as slugging percentage and on-base percentage have turned out to be more reliable indicators of actual future performance than traditional metrics such as scouting percentage, batting average and RBI. If he could get a lower salary than a better player in a more traditional gauge, Mr. Bean could put together a competitive team with a player who would spend three times as much on his salary, a technique he later used in Tampa Bay. Copied by Raise of The Tampa Bay Rays reached the World Series in 2020 despite having one of the lowest-paid him in baseball. “Moneyball” is an influential sports his story, but broadly applicable to innovators in many areas of business. Broad business lessons are clearly communicated. But easily copied insightful strategies eventually lose their advantage.
win the loser’s game
Charles D. Ellis (1998)
3. Charles D. Ellis presents a highly influential investment story in his classic book, Winning the Loser’s Game. Using his tennis analogy, he explains that most points are scored by opponents’ mistakes rather than by their own skillful play. Success is achieved by hitting the ball back and waiting for your opponent to make a mistake rather than attempting a fancy shot. In investing, it’s even harder to outsmart someone who has become a professional investor with better information, faster computers, and more resources. Trying to select the best stocks, industries, or managers always leads to mistakes. To win without losing, buy and hold a wide range of index funds to avoid the temptation to outsmart the market. Paradoxically, even most experts would be better off indexing as markets become more efficient. Founder of the consulting firm Greenwich Associates, Ellis writes with clarity, humor and energy. Now in its 8th edition (published in 2021), it is an essential guide to investment wisdom.
thinking, fast and slow
Daniel Kahneman (2011)
Four. Psychologist Daniel Kahneman, who won the Nobel Prize in Economics in 2002, has written a wise and accessible book that offers advice to anyone making a personal or business decision. Our emotional and intuitive reactions—what Kahneman calls our “quick thinking”—are often the cause of serious mistakes, especially in the area of investing. People tend to be overconfident and optimistic in their predictions. They systematically make biased judgments and too often follow the herd. They suffer from pride and regret and have asymmetric reactions to gains and losses. Slow thinking is more deliberate, logical, and analytical. You shun quick judgments and emotional instincts and devote your mental effort to the complexities of decision-making. When we have to make decisions based on predictions, we recognize uncertainty and employ broad probabilistic estimates of future events. The book is an intellectual masterpiece, but written in a simple, engaging, and entertaining style. It is a masterpiece that touches the human heart.
billionaire next door
Thomas J. Stanley and William D. Danko (1996)
Five. Thomas Stanley and William Danko studied the households of millionaires in the United States and came to a surprising conclusion. The typical billionaire doesn’t live in luxury with fancy homes and cars. All thanks to inherited trust funds. Most billionaires are first-generation rich. They often started their own businesses. America’s wealth is often the result of a strong work ethic, frugal spending habits, and regular savings and investments. Drawing on case studies of a staggering number of middle-class billionaires in America, Stanley and Danko describe role models for young people who weren’t born with a silver spoon. The billionaire next door doesn’t care about social status or flashy spending, he cares more about financial independence. They live in a modest house in a middle-class neighborhood. Many people buy the latest model used car instead of the top-of-the-line new car. They avoid spending tomorrow’s cash today on luxury clothing and merchandise where the asset’s depreciation cycle never ends. Still, they seem much happier than their flashy peers.The template for a successful financial life lends itself to a good read and fruitful following.
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