5 comments about Freakonomics: Un economista politicamente incorrecto explora el lado oculta de lo que nos afecta.

1. The basic premise of this book is that statistical analysis in the service of micro-economics can be used to illuminate how people actually behave. (This is distinct from the related question of how people ought to be behave, which properly belongs in the realm of ethics or, more dubiously, religion and politics.) In a world that is increasingly divided into murderous factions fueled by absurd beliefs based on centuries-old "wisdom", this book is a breath of fresh air, and its empirical approach to everyday life would do much good, if adopted by world leaders.



2. Let me preface this by saying how psyched I was to read this. Copies at the library were perpetually checked out so when I finally planned ahead and got it on hold I had some anticipation going. This wasn't a bad book, but it wasn't the sum of it's parts.
   
   Each chapter goes into an interesting article on some topic. The best of these for me was the analysis of race and trends in baby names. Something like a third of black babies in California have a name that no other baby in the state has. White babies tend to have the same names as one another. One of the more blah chapters for me was about how the crime drop in the 90s was a result of abortion being legalized. The authors show coorellation but crime is very complex, and the treatment so brief that this seems political and not deep at all. Politics isn't taboo at all, but here it seems to be driving the authors and that doesn't lead to fun interesting eddies. Basically the chapters are a mixed bag. Some are pretty good. Some could easily have been left out, because they just weren't so well done and seem unfocused. They fit together to make a bunch of stand-alone articles, not a single whole book.
   
   Almost any chapter from this book would be good to read. On the other hand, hearing about any one chapter is probably going to raise your expectations. If you like the snippets you hear, then buying the book will get you a heap of those snippets. If you are cool with that then go for it.



3. el sr levitt escribe un libro en el que se pretende no tener un tema unificador, como prodría ser algún tópico de microeconomia o de calculo financiero. Pero el enfoque dado en el texto tiende a favorecer un analisis de diversas situaciones que ocurren en las sociedades desde el punto de vista de hechos verificables, a la luz de los datos confiables, y de un pensamiento no aprisionado bajo algún estereotipo fijado de antemano sino aquel de refutar las creencias populares convencionales.



4. La primera parte del libro. La visión de Levitt - que Dubner se encarga de plasmar en palabras - del mundo actual es sorprendente, y uno se encuentra con un libro muy alejado de las interminables cifras y estadísticas que harían de cualquier libro de economía un desafio. De hecho, las curiosas preguntas que plantea acerca de la sociedad permiten obtener conclusiones sorprendentes que de otro modo hubieran sido impensables.
   Ejemplos cómo el que la legalización del aborto en EEUU permitió que repentinamente - y pese a que todos los analistas preveían lo contrario - se redujera drásticamente el crimen en los años 90 en este pais es un ejemplo de los interesantes enfoques que Levitt afronta en este libro.
   Sin embargo, aún asi los autores se desinflan con largas diatribas en las que reinciden una vez sobre la misma idea y en el que existe un fallo fundamental para el lector no estadounidense: las cuestiones abordadas sólo afectan a la historia y sociedad americanas, a excepción de el ejemplo, donde sugiere que "la elección del nombre de un niño está determinada por patrones socioeconómicos", creo que en latinoamerica eso es evidente!
   Luego hay una interesante discusión sobre el sumo japonés. Un deporte que refleja la historia y tradición `honorable' y donde se puede preciar un trasfondo mucho más oscuro del que muchos podrían pensar.
   Aparte de esos dos casos, lo cierto es que, este buen libro pudo haber incluido algunos otros enfoques económicos más globáticos.



5. A great read with a variety of fascinating topics examined. Data is presented quite objectively, and users can draw own conclusions as to causality (though some possible hypotheses are presented).

5 comments about The Coming Generational Storm: What You Need to Know about America's Economic Future.

1. This book gives a great review of the issues facing America in this century due to government give aways. After reading it I found that several current news stories seemed to be confirming the predictions in the book. The numbers are 3 years old, but the suggestions for saving Social Security and Medicare still seem to be valid. I was a little disappointed in the funds listed in the book, but I have received updated listings by visiting the Scott Burns web site.



2. Kotlikoff and Burns rightly portray congress, the president, judges, the AARP, and anyone else who favors increases, or even the status quo, of social security, Medicare, and Medicaid policies as truly irresponsible. The fact that these three entitlement programs will bankrupt the country within 50 years has been known for at least 10 years (when I started to pay attention to politics). Every year, reforms are spoken about, even good ones that would for the most part protect the programs. But every year, the situation becomes worse because nothing is done. And Bush II foolishly expanded Medicare.
   
   On the flip side, economic predictions decades into the future seems fairly irresponsible as well. As is pointed out in this book, other countries are in far worse condition than the US for the same stupidly financed entitlement packages. They will go belly up first. While the US will certainly feel their pain as well since their economies are intimately tied to ours, we will learn from their mistakes and fix our own problems.
   
   All my life, I've been listening that one disaster after another is going to crush us. In grade school, I learned that we would run out of food in the mid 80's through the 90's and billions would starve to death. Didn't happen. Humans now consume more calories on average throughout the whole world than ever before. Then in grade school and middle school I learned that we would run out of energy. Despite the blip of the last year, oil prices have steadily been dropping and they will continue to drop. We will never run out of oil or energy. Destruction of the ozone layer. It's still there. The depletion of our forests. The US today has more forest cover than 80 years ago. Foreign holdings of the US debt. Nuclear war.
   
   And on and on, disaster after disaster that never materialized. Not because the harping drew attention to the problem, but because in the stating of every single problem, the assumption was that nothing would change. That the human response would not adapt as new information and incentives came about. Not a smart assumption.
   
   We will solve the entitlement problem, but, yes indeed, we will have to feel the pain first. And so what? We'll still solve the problem. The sun will rise in the east and set in the west and the US will be around for a long time and in a dominant position, social security, Medicare, and Medicaid not withstanding. The US and the world will continue to become a better place, but in fits and starts.
   
   I've always been an optimist. I really do believe in the power of imagination and human ingenuity.



3. This book should be required reading for all high-school sophomores who are going to inherit the economic problems the authors lay out in the prologue. The more awareness my generation (x) and the younger generations get about the mounting economic conditions we will face within the next 25 years, the better prepared we will all be to fix, or at least adjust to them.
   
   At times the book is a bit too academic and for that I give it only 4 stars but there are parts that you can skip and still not miss the authors' explanation of why we are doomed and what - possibly - we can do to mitigate the situation. Robert Shiller summarizes the points that the authors make below:
   
   "There's a lot of frivolous criticism of our politicians, but this book hits the mark, convincingly documenting their biggest sin: the failure to account for the magnitude of a huge government deficit crisis. The accounting scandals of Enron, WorldCom, and Parmalat pale by comparison. Read this book so you can start preparing for much higher taxes in the future for you and your children."
   --Robert J. Shiller, Yale University, author of Irrational Exuberance and The New Financial Order
   
   Perhaps the worst part of all of this is that we CAN fix the debt obligations that are hanging over us but doing so would require massive sacrifices on behalf of all citizens (unlikely since so many of us "expect" the government to play a role in financing our retirement and healthcare) as well as for both sides of the political aisle to work together (even more unlikely in these partisan times when all the Dems and Republicans want to do is blame one another). Failure to grasp the gravity of a $54 Trillion debt obligation and its impact on the quality of our lives will only continue to erode the value of the dollar as more developing nations such as China, India and Brazil increase their ownership of the US by buying up Treasuries that the government continues to issue. Not good, especially when so many of our middle class jobs are being lost to these countries at the same time.
   
   This is perhaps the most important issue of our time. Until voters are heard and a real politician runs on a platform to fix the escalating economic crisis that awaits us all, do what you can to prepare yourself; save as much as possible in both tax deferred and taxed accounts (the latter of which will benefit you in the future since you will likely be in a lower tax rate today than you will 20 years from now when the govt. has no choice but to raise personal income taxes to finance the debt). Also, go to the gao.gov website and click on "Fiscal Wake Up Tour" in the left hand gutter, then click on the CBS New Program 60 Minutes hyperlink. If you dont have the time to read this book, at least read this article and watch the video interview with the head of the GAO office. By that time, the message and its implications should be painfully clear to you.



4. This is an absolutely incredible book. Anyone who is interested in the future of our Social Security System and the Medicare and Medicaid systems must read this book. The authors provide good, documented evidence to explain what is broken in these vital systems. The authors explain why current politicians' plans for reform will not work and need to be revised. Most importantly the authors also give their suggestions on how to fix Social Security and Medicare and Medicaid. This was a required reading in my college Economics class and as soon as I finished it I mailed it home for both of my parents to read.



5. This is, simply put, a real eye-opener. I've been saying for years that the economy was a house of cards (and the housing bust and present/coming recession are proving me right), but I had no idea. This will change some of what I do regarding my present and future finances.
   
   I give the authors credit for the way they add in occasional humor in the book. It doesn't obscure the subject at hand, but lightens up an otherwise difficult subject.

5 comments about The Affluent Society.

1. Written long before modern realization of how our desire for affluence as part of our "right by birth" has largely caused such things as global warming and elimination of species, Galbraith gives a very indepth exposé of the origins and tendencies of the North American material ethos. I would have given this book 4.5 or 5 stars save for the fact that it takes a bit of work on the reader to bring it fully up to date with respect to some of the consequences we now see.
   
   That said, I would heartily recommend this work prior to reading his or other author's more recent works on the direction of modern western society.



2. it' s the first time I read something like that in economics.



3. John Kenneth Galbraith is probably the economist that I have read most. This book is a classic and very much worth reading for it analysis of the market system. But when all is said and done I consider it more a work of speculative fiction. I read a book similar to this by Bertrand Russell back in the 60's but both books are lacking a bit in scepticism of the human beast. The very idea that we would all be so wealthy one day that we wouldn't know what to do as a society - or that somebody would have to mail us a check in order to encourage spending and that poverty would be a secondary problem etc. etc. etc. Is plain naivete or maybe wishfull thinking.



4. John Kenneth Galbraith was one of the great public intellectuals of 20th century America. He advised Presidents and politicians, wrote best-selling books, taught economics at Harvard, appeared on TV, and served as the U.S. Ambassador to India. Nevertheless, mainstream economists looked down their noses at him. They scoffed at his sweeping generalizations. They questioned his technical prowess, noting that his books had no math. Many suspected that he was a "mere sociologist" masquarading as an economist.
   
   These critics may have been jealous of Galbraith's literary fame and towering public profile. In any event, they certainly misconstrued his significance in American intellectual life. Galbraith's great gift as a thinker was his razor-sharp eye for cant. He knew where economic ideas came from, how they supported vested interests, and where they diverged from the plain facts of everyday life -- and he conveyed these lessons to educated general readers in elegant prose. In the end, he may have been a gadfly and critic, not a model builder -- but so what? If mainsteam economists taught us how to think about markets, Galbraith taught us how to think about mainstream economics.
   
   "The Affluent Society" is one of his masterpieces. Written in the 1950s, ideas fly from its pages, touching on everything from Ricardian economics to oligopolies and inflation. The central idea, however, is arresting. Galbraith argued that modern economics was forged in the austere world of the 19th century, when national economies struggled simply to feed and clothe their populations. Sensible at the time, the core assumptions of economics were carried over to a different century facing a different set of problems. In the 20th century, supermarkets bursted with unnecessary soaps and cereals, car models changed every year, and billions of advertising dollars were spent on campaigns to convince consumers that they needed items they never even knew they wanted.
   
   Galbraith argued that, with the problem of scarcity more or less solved, society was free to loosen the connection between income and labor, and to spend more money on public goods such as schools, hospitals, and clean air. He rejected as anachronistic the objection that such measures would reduce economic efficiency by mandating higher taxes or rewarding idleness: what was the value of having an efficient economic system if the goods it produced answered no urgent human needs? Galbraith thought that society should focus on the development of human capacities and the building of decent communities and workplaces, and not fret unduly over allocative efficiency.
   
   Galbraith was wrong about many things, but he was always thought-provoking and mind-expanding. The continuing force of "The Affluent Society" will be clear to anyone who reflects on the crazy popularity of SUVs or tallies up the money we lavish on pets -- in a day and age when American cats get better medical care than most African children, it's safe to say that the supply side problem has finally been solved (at least for us and our pets). The book should be read by all serious students of economics or 20th century American society, and it belongs on any bookshelf of social criticism next to the works of Thorstein Veblen and C. Wright Mills.



5. A true classic that is as relevant to explaining today's society as that in which Galbraith wrote it - and never more so than Galbraith's argument that we need a better social balance between private and public expenditure. As the gap grows between the urban rich and poor, he notes, more of the rich are able to opt out of public services such as schools, police and transport. With urbanization a dominant theme of the coming decades, it's worth being reminded of Galbraith's observations on how public expenditure on urban infrastructure is generally presented in political discourse - "at best, public services are a necessary evil; at worst, they are a malign tendency against which an alert community must exercise eternal vigilance" - which, as he points out, leads to some interesting contradictions - "Vacuum cleaners to ensure clean houses are praise-worthy and essential in our standard of living. Street cleaners to ensure clean streets are an unfortunate expense. Partly as a result, our houses are generally clean and our streets generally filthy."
   
   Galbraith's philosophical arguments against extreme wealth inequality are both increasingly unfashionable and increasingly urgent; the trend he identifies - "few things are more evident in modern social history than the decline of interest in inequality as an economic issue" - has hardly been arrested as the world has globalized. Galbraith quotes Tawney as noting that people who think they should have unfettered enjoyment of their inherited money do not generally think that others should have unfettered enjoyment of their inherited physical strength or cunning - "Those who dread a dead-level of income or wealth... do not, it seems, dread a dead-level of law and order, and of security of life and property" - an observation that's highly applicable to inequality considered on the scale of the modern global economy.
   
   Galbraith's pithy and wryly amused writing style has stood the test of time as well as the arguments. Perhaps my favourite example comes when Galbraith is commenting on the concern that social security makes poor people idle: the "ancient art of evading work", he says, is not the preserve of any particular class or occupation, and "the art of genteel and elaborately concealed idleness may well reach its highest development in the upper executive reaches of the modern corporation."

5 comments about Capital Ideas Evolving.

1. I have recommended this and his previous book for finance graduate students at the University of Maryland.



2. In the early 1950s, graduate student Harry Markowitz presented his Ph.D. dissertation to the University of Chicago economics department. The response was less than encouraging. "This isn't a dissertation in economics," Milton Friedman told Markowitz. "It's not math, it's not economics, it's not even business administration." Whatever it was, Markowitz's heterodox theory of portfolio selection changed finance forever and earned a Nobel Prize. Financial historian and investment manager Peter L. Bernstein humanizes his saga of great shifts in financial theory by organizing it around eminent thinkers (Markowitz, Myron Scholes, Franco Modigliani, Robert Merton, Bill Sharpe and others, if you ever want to look up a finance guru). Deepening his analysis with insights from "behavioral finance," Bernstein describes how these innovators generated and extended the now-orthodox "capital ideas" of portfolio selection, capital structure, the Capital Asset Pricing Model, the efficient market hypothesis and the Black-Scholes-Merton theory of option pricing. Bernstein's erudition is dazzling, his explanations pellucid and his narrative filled with scintillating characters. getAbstract doesn't need to hedge: you'll find this overview of current finance theory and practice brilliant, even if you don't know your alpha from alfalfa.



3. Maybe this is a great intro to classic theory, but then there is something wrong with classical thinking.
   
   My one-star rating is for his "forgiveness" of the Long Term Capital Management gang, since no one could have predicted what actually happened.
   
   LTCM managers (inducing Merton and Sholes, subjects of chapters) had excessive confidence in models based on theories that have not been even come close to being validated.
   
   It is ironic that Amazon pairs this book with "The Black Swan" in their "Buy Two" promotion since Bernstein has clearly been "fooled by randomness".



4. This was not an easy read, but it was worth it. I received my MBA in 1976. Much of this book was an explanation of the effects of the Capital Asset Pricing Model (CAPM) on current investment practices. He assumes that the reader is well versed with the intricacies of CAPM. I had to go back to other sources to review CAPM, but once I did, the book was a great explanation of how CAPM and other academic innovations have had a practical effect on portfolio management. When I finished the book, I had to admit that I was not able to apply much to my personal portfolio management, but I have a much better understanding of what my pension plan administrator is thinking about as well as what certain mutual funds managers are doing. The book is more beneficial for the professional investor than the individual investor.



5. I have a lot of respect for finance professors. To quote a felicitous expression, they perform "mathematics in flesh and blood". They are the surgeons of the modern economy, cutting through inefficiencies and making sure the blood of capital flows into the arteries of corporate accounts or personal savings. And like surgeons, society gratifies them with generous pay and social prestige: the time is over when finance specialists were snubbed by their economist colleagues and kept on the margins of the discipline. Some may even get a Nobel prize in economics, while many may complement their academic salary with management consulting or hands-on investment.
   
   All these pursuits are perfectly legitimate, and finance professors are usually nice individuals endowed with a sharp mind. But Bernstein overemphasizes their worth and gets way too far in praising their accomplishments. The chronicler turns into a sycophant when he writes that "the vigor, the freshness, and the extraordinary clarity of Samuelson's mind would be stunning to encounter in a man of any age". Or that Robert Shiller's "ingenious and restless mind seems never to come to sleep".
   
   But leaving excessive praise aside, the book makes several strong claims that I found worth considering. The first is that the era of financial theory is over. Finance as an academic discipline is based on theories--the Capital Ideas of the title, described in the prequel volume-- that were developed from 1954 to 1972, starting from Markowitz's essay on portfolio selection ("Markowitz came along, and there was light"). The consequence is that most finance academics have now left theory behind, either to launch attacks on neoclassical assumptions based on behavioral observations, or to adopt an institutional perspective on how markets work in order to design better rules and instruments for managing risk. Others have left academia altogether and have moved to the dark side of portfolio investing, where they have created structures surprisingly close to the university setting: "we conduct research; we discuss it and improve it; and we build models and empirically test them. And in some sense we publish them and verify them when we test them in the market", says Myron Scholes, a Nobel prize laureate turned investor.
   
   The concentration of discoveries in a short time span and among a small group of innovators is by no means unique in the history of science. But past experience also shows us that well-established paradigms can be radically challenged and overcome by new ideas coming from the fringe of the discipline that put past theories into oblivion. Nothing stands still. The Capital Ideas are nor written in stone. And a new theory of finance may very well emerge that will match Markowitz's approach to portfolio selection, Modigliani and Miller's insights into corporate finance, the Efficient Market Hypothesis, the Capital Asset Pricing Model, and options pricing theory.
   
   The second claim made by the author is that the Capital Ideas are not vulnerable to empirical challenge. Behavioral Finance has pointed out many situations in which the axioms of neoclassical theory do not apply, but as Andrew Lo notes, these findings are only "a collection of anomalies, not a real theory. You need a theory to beat a theory". The same applies to statistical tests, which have repeatedly failed to confirm the validity of theoretical models. For Fisher Black, another Nobel prize laureate, you should put your trust only in logic and theory, and forget about statistical empirical results.
   
   But aren't the financial models designed by theorists repeatedly proven wrong by market crashes and financial crisis, at the cost of staggering financial loss and dire economic consequences? What worth is a theory that fails to foresee those crises, or worse seems to contribute to their occurence through unfettered innovation and mismanagement of risk? Bernstein responds that the creators of modern finance were not taken by surprise by difficulties in the implementation of their models. The academics knew as well as anyone that the real world was different from what they were defining, and that the models were an approximation to reality and a guide to strategy rather than a precise replication of the world. Perhaps, but the technicians of finance went way beyond their academic masters and really believed in their models, without the necessary dose of skepticism that only a familiarity with academic research can cultivate.
   
   The third idea that I would like to comment upon is what social scientists call the performativity of economics: the idea that reality looks increasingly like the theory, that "powerful forces are constantly at work in the markets to bring the resemblance between theory and reality closer with the passage of time." The real world itself is on a path toward an increasing resemblance to the theoretical world described in Capital Ideas. Even research that focusses on the distance between theory and reality actually contribute to the convergence between the two. Behavioral Finance, Bernstein notes, is by nature self-disfulfilling, and it has become the driving force toward the Efficient Market Hypothesis that it so vigorously attacks. The CAPM may be outdated as a theoretical model, but its influence has never been so great, as it has been transformed into a powerful real-world tool for managing money and for calibrating investors' performance. Theory creates a world of our own making.
   
   But here we should stop and ask ourselves whether we really want a world shaped by financial theory. A world that has gone quant is a world unintelligible to most mortals, a world without moral compass and where things regularly get out of control. Bernstein was right in pointing toward the world-making quality of financial theory; but he fails to consider the moral and political implications of this basic intuition.

5 comments about The Cluetrain Manifesto: The End of Business as Usual.

1. Why review the Cluetrain after so much time has elapsed? Because we tend to get too caught up with the here and now and forget that we have only been on this journey a very short period of time. When we look back 10, 20, 30 years from now we (the collective we) will look back and point to the Cluetrain as marking a time when a major inflection point occurred. The Cluetrain did not cause the inflection point, it simply captured its essence.
   
   Yeah, everyone now repeats the "markets are conversations" meme, but I suspect that few really understand what that means. Why? Because it is not a done deal. We are still trying to figure it out. It is early in Web years. We are still at the base of the mountain and nowhere near the summit. It pays to go back and revisit one of the earlier maps.



2. This book is a bit dated, but remains more relevant than ever! Talks about the market shift from top-down consumer culture, to having market 'conversations.' You'll have to read the rest for yourself! I've recommended it to friends/coworkers, who all have thanked me as it is an eye-opener, if not the unheard cry they've been making all their life.



3. This book is a wake-up call for organizations that want to embrace the internet. It advocates an authentic approach toward communication, helping employees and customers find their "voice" so that we can all talk to each other in a more trustworthy manner.
   
   Author, "Trust is Everything: Become the leader others will follow"



4. While there are some interesting points in this book, it seems that the authors have spent more energy on "sounding cool and fresh" than on writing a book that can give interesting thoughts and insights. It is very annoying when sometimes, page after page is filled with text that would fit more in a poem than in a book about business.
   
   Furthermore, while the authors do have some interesting points, there is no valid research behind their thoughts. Basically, they have sat together and brainstormed some ideas, which they have then put in this book.



5. I just finished reading this book, having checked it out from the library. I am glad I didn't buy it. I voraciously read business books, but this one was a chore, at best.
   
   The first 105 pages could be easily condensed down into 1 page at most, and perhaps even a single paragraph or a few bullet points that explain the basic premise:
   
   * The Internet will bypass any attempts at controlling your corporate message, so you might as well plan to talk to customers and allow them to talk with you.
   
   * "The Market" is "Conversations", so you need to participate in the "conversation".
   
   * Speak to customers in a "natural" voice, not corporate-speak.
   
   That was the first half of the book, in a nutshell. The remainder basically reinforced this, with continued exhortations on how one must "join the conversation", speak in a "natural voice" because that's what "markets" demand.
   
   I guess if you were the CEO or other top executive of a large firm, this book might be applicable. However, I am not. I am a sole proprietor who runs an internet retail operation. Perhaps I got so little out of it because I've already done what they're telling/advising folks to do, so much of it seems like a series of "well, duh!" internal comments.
   
   The other thing I don't like about the book is that examples are very few, IMO. Where are the success stories, apart from a notable example of Saturn or United Airlines (I think that's the airline involved...could be wrong).
   
   Overall, I'd say if you don't spend / haven't spent a lot of time on the Internet "conversing" (Internet forums, chat rooms, Usenet, etc.), then perhaps this book would be helpful. But I would advise to borrow it from your local library rather than buy it.

5 comments about The Battle for the Soul of Capitalism.

1. This book is a work of genius and integrity, with the potential to catalyze Wall Street into fulfilling the promise of moral capitalism and community ownership.
   
   Here are some highlights from my flyleaf notes:
   
   + America is no longer an ownership society--financial intermediaries "own" everyting and the individual owners are passive
   
   + We can find the wisdom and will to restore moral capitalism
   
   + Earnings have been manipulated and misrepresented.
   
   + Executive compensation plus lax accounting and the fiction of quarterly earnings versus actual cash flow have hollowed industry out.
   
   + Profound conflict of interest exist across all fronts
   
   + Fund managers have siphoned off one fifth of the gross value of the funds.
   
   + Our business world chose the wrong bottom line, and ignored the importance of sustaining human, social, and community capital
   
   + Stock options aqre out of control.
   
   Seven specific Conference Board suggestions:
   
   1) Corporate citizenship
   
   2) Separate ownership from management
   
   3) Fix the stock option mess
   
   4) Pay on performance not peers
   
   5) Return to long-term focus
   
   6) Let sunlight shine on accounting
   
   7) New mindset for Board (aggresive stewardship)
   
   Page 103: "Investment America went wrong, then, because in the contagious enthusiasm of the day, financial engineering and manufactured earnings became the coin of the valuation realm, accepted by corporate managers and investment managers alike. What is more, the emphasis on short-term price came to overwhelm the reality of long-term value, as investors failed to honor the distinction between investment and speculation drawn by John Maynard Keynes six decades earlier."
   
   In my view, this book, and three others, should comprise the Christmas reading list for all adults:
   Independents Day: Awakening the American Spirit
   Day of Reckoning: How Hubris, Ideology, and Greed Are Tearing America Apart
   A Power Governments Cannot Suppress
   
   I am personally committed to the non-violent legal ethical overthrow of the existing pathologically inept federal government and its politcal leaders in both Congress and the Executive who lack morality, intelligence, integrity, or conscience. Dick Cheney, not George Bush (a village idiot) is their poster child. I find it truly gratifying that a man of such financial stature as John Bogle now articulates and inspires the remorse that Wall Street must feel for running the Earth into the ground.
   
   Below are other books I recommend as a reading list toward November, five about the bad, five about the promise:
   
   The Bad (see my reviews):
   Vice: Dick Cheney and the Hijacking of the American Presidency
   The Broken Branch: How Congress Is Failing America and How to Get It Back on Track (Institutions of American Democracy)
   Legacy of Ashes: The History of the CIA
   Fog Facts: Searching for Truth in the Land of Spin
   
   The Good (see my reviews):
   The Politics of Fortune: A New Agenda For Business Leaders
   The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Wharton School Publishing Paperbacks)
   The Wealth of Networks: How Social Production Transforms Markets and Freedom
   
   
   God Bless America. We can unite and fix this. Check out Reuniting America (Unity 08 is a fraud, the last gasp of the spoils system).



2. The first half of Bogle's volume gives a detailed explanation of the problems with our stock market; the second half gives his solution proposals. And if John Bogle doesn't know what is going on both openly and behind closed doors (read his qualifications), then no one does.
   
   This book describes how stock (mutual fund and corporate) managers are not "honest, competent and fair-minded...[or] doing the right thing." (p. 89) And just how the "managers' interest [are placed] ahead of the owners' interest." (p. 90) The recurrent theme is that corporate America has moved from owners' capitalism to managers' capitalism.
   
   Bogle describes "the pervasive...'happy conspiracy' among corporate managers, CEOs, CFOs, directors, auditors, lawyers, Wall Street investment brokers, sell-side security analysts, buy-side portfolio managers, and indeed investors themselves--individual and institutional alike." (p. 98)
   
   "More than one-fifth of...growth returns...during the past two decades has been siphoned off by fund managers.... More than three-fourths of the cumulative financial wealth produced...over an investment lifetime will be consumed by fund managers, leaving less than 25 percent for the investors. Yet it is the [95 million] investors ['individuals of modest means--often via retirement plans'] who put up 100 percent of the capital and assume 100 percent of the risk." (p.xxii)
   
   Not only does the author write about the "Captains of Industry" (or robber barons)--Rockefeller, J.P. Morgan and Carnegie--he deals with the current "casino mentality of so many institutional investors..." (p. 98) Yes, you will read of "the conspiracy between corporate money managers and institutional money managers. [We have] a gambler's market instead of an investor's market," declares Bogle. (p. 118)
   
   Bogle explains why "institutional investors [should] move away from their present obsession with short-term earnings of dubious validity and towards a new obsession focused on the creation of intrinsic value over the long term." (p. 114)
   
   Finally, Bogle does not let we individual investors off easy, either, by explaining "the failure of investment America to exercise its ownership rights over corporate America.
   
   As stated earlier, Bogle has solutions which you will read about in the second half of the book.



3. Today's financial situation is the result of the battle the suthor so clearly describes. Why can't we listen?



4. Loved the feel of this book and there is tons of great information here about the inner workings of investments, funds and financial shenanigans. Some of the info was over my head but where I could digest it, it was great.



5. This book should be taught in a college class. This details exactly what has happened and what needs to be done to correct what has happened the last 20 years.

5 comments about Revolutionary Wealth: How it will be created and how it will change our lives.

1. For readers who are not familiar with Alvin Toffler, this is not another one of those "how to get rich" titles. Alvin Toffler is known for writing about social and economic trends. In one sentence, this book tells us what is happening in the world, what the future will bring and what won't work anymore.
   
   In this ambitious book, the Tofflers provide numerous examples of how institutions like governments, regulatory bodies, trade unions, schools and courts fail to handle disasters and social, economic changes because they have not evolved fast enough to catch up with the little revolutions that have been going on.
   
   The concept of "prosumer is revisited and expanded. Apparently, recently developments have provided more support for their concept of consumers producing what they and other potential consumers consume - often without pay. An interesting concept.
   
   Though there is plenty of competition in every industry, the authors seem to believe that in a knowledge-based economy, opportunities to attain wealth are limitless as one person who uses his knowledge to derive wealth does not deprive another person of the ability to use his knowledge to obtain wealth.
   
   That seems to be the basic theme of the book, but the Tofflers didn't stop there. There are 50 chapters full of examples of institutions that screwed up, unlikely success stories, experts who were wrong and so on. It's a brilliant book, but Revolutionary Wealth is a little complicated and certainly not something you can read for relaxation.



2. Alvin and Heidi Toffler have added their best book yet to their impressive repertoire of futuristic books. This book is a must read for anyone interested in thriving in the 21st century. It is not about getting rich. It is about understanding the mega changes that are happening in the world and about to happen. Very informative!



3. We are on the edge of an amazing future. What changes lay ahead? What skills will you need to be successful and happy? Will you be ready?
   
   Alvin and Heidi Toffler are futurists. They have studied and written predictions of the future for decades.
   
   Their first book, Future Shock was released back in 1970. It was thoroughly researched and critically thought through. Many of their predictions came true.
   
   Revolutionary Wealth also makes predictions about the future. Since their past books were proven to be accurate on many topics, it's fair to assume that their latest book will provide many insightful thoughts about the future.
   
   Here are just a few of the topics: Waves of wealth, the edge of knowledge, the gospel of change, implosion, capitalism's end game, running tomorrow's money and much more.
   
   The book is a page turner and provides a peek into what can and probably will happen depending on the paths that we as society take.
   
   Here are some key excerpts from their work.
   
   The Wealth System
   
   "If the First Wave wealth system was chiefly based on growing things, and the Second Wave on making things, the Third Wave wealth system is increasingly based on serving, thinking, knowing and experiencing...The new wealth system demands a complete shake-up in the way increasingly temporary skill sets are organized for increasingly temporary purposes throughout the economy. Nothing is more deeply fundamental to the creation of wealth."
   
   Knowledge
   
   "In each of us there is a crowded, invisible warehouse full of knowledge and its precursor data and information. But unlike a warehouse, it is also a workshop in which we--or, more accurately, the electrochemicals in our brains--continually shift, add, subtract, combine and rearrange numbers, symbols, words, images, and memories, combining them with emotions to form new thoughts."
   
   Cross Disciplinary Knowledge Required
   
   "More and more jobs require cross-disciplinary knowledge, so that we find increasing need for hyphenated backgrounds--"Astro-biologist," "bio-physicist," "environmental-engineer," "forensic-accountant.""
   
   A New Dawn
   
   "Living at the dawn of this century, we are direct or indirect participants in the design of a new civilization with a revolutionary wealth system at its core. Will this process complete itself--or will the still incomplete wealth revolution come to a crashing halt?" 1
   
   The message is clear. Those who will succeed and prosper in the coming years will have the following skills and backgrounds:
   
   * Decision making
   * Knowledge
   * Schooling
   * Experience
   * Reasoning
   * Intuition
   * Common sense
   * Confidence
   
   These skills and background can be boiled down to three words: Critical Thinking Skills. With these skills you will be prepared for whatever challenges the future presents.
   
   As with his book Future Shock and other books he has written, Toffler has an amazing ability to look at the very beginning of trends and then extrapolate a future out of those trends. His predications come from interviews with many world experts. Toffler then uses his critical thinking skills to integrating everything he has learned. From this knowledge he constructs a vision of the future. Not only that, he provides options we should consider to create a positive future for ourselves.
   
   Knowledge is power:
   This is a must read book to gain a glance into what tomorrow brings! It can be positive if we take the right steps...there is hope!
   
   
   
   
   The Re-Discovery of Common Sense: A Guide to: The Lost Art of Critical Thinking



4. It is thanks to this book that I am writing reviews at Amazon. I was more or less reluctant to "surf" on the web for leisure, all I wanted was to close the computer after work! I do not know if the author coined the term "prosumption" but it was the first time that I saw it (it means a combination between production and consumption). The book contains some examples, not only but mainly from the web, in which people make contributions and add up to what other people already did, so the prosumer community benefits from the other's contributions. I decided to rely on The Wisdom of Crowds and start looking for advise for good reading and I must say, I could already benefit from it.
   
   The interesting part of prosumption is that it's value is difficult to measure, so how wealthy is each individual country? Wealth as it is measured now, shows less correlation with happiness levels as could be expected (Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment). Maybe prosumption would need to be included in the calculation of wealth.
   
   This book consists of two parts, first you will find the theory, which is based on the same foundations as "The third wave" (the analogy of the evolution of the means of production seen as subsequent waves, the wavelength of each period being shorter as the previous one). The author gives a perfect account of the changes we are undergoing, specially in the ways of generating wealth (during the third wave period this is done through knowledge). The second part is more present day economics and international policy with an attempt to extrapolate this situation to the near future to "predict" scenarios and the probable "distribution of wealth" for the leading and emerging countries, like US, China, India, etc.
   
   It's quite some time since I have read The Third Wave, so I do not remember a lot of things clearly. However, I think I liked it better than this book. It seemed more futuristic and insightful to me at that time. Since the authors' basic ideas have not changed and considering that "the Third Wave" must be around 20 years older, it must have been more futuristic. It also covered several aspects of our lives, whereas this book is a bit more limited to economics.



5. The Toffler's purpose in writing the book is clearly to continue their observations & insights into what changes are occurring in the world & build on their previous collection of work related to change. In this book they particularly focus on how wealth is changing and it implications on individuals, corporations & countries. The book is written as a narrative that is easy to read and is sprinkled with facts, observations, and interpretations.
   It places the reader in a position in which they can gain new information about a new topic that draws from the vast array of daily changes happening all around the world and puts it neatly into a concise format. The genre could be described as either futurology, business or global trends depending how you approach the book.
   
   The intended audience of the book is those interested in their futures, individuals, business owners, teachers, managers, parents, and those who want to keep up with what's going on in the world.
   
   It looks at different countries and reveals examples of how a new type of wealth is shaping their futures. Wealth is shown to be more than money but rather a "craving" or a state of being, not a fixed item but a relative item. The way viewed wealth, made wealth and perceived wealth has changed and a new type of wealth is emerging. An intangible wealth is presented that is hard to see, define, measure and hold but is nonetheless a powerful force that challenges our existing thinking, rules, models and facts.
   
   I read the book from the Japanese customers perspective and what it might mean to them.
   
   One of the major themes in the book is the "great wealth shift toward Asia" from Western countries. Japanese customers traditional view of wealth has been money. Earning it, saving it & trying to reduce wastage which is different from a traditional western view of money. As the change from industrialization to digitalization occurs the tradition models of wealth are changing whether it be in media, manufacturing or services. Change has different speeds in different countries and each country is at a different phase of change compared to others. For Example:, page 58 "Things already move faster in Tokyo, Seoul and Shanghai than in Paris, London or Berlin"
   
   The book suggests that the challenge for all countries is to indentify the change that is occurring and how they can draw on their unique skills to adapt, change and thrive under the new conditions that are rapidly presenting themselves.
   
   Chapters introduce a range of ideas, themes and focuses, for example: spatial reach and surplus complexity stood out.
   
   The book for me presented a range of new ideas, observations and insights that built on the authors previous works but this time concentrated on a more focused theme.
   
   Revolutionary Wealth presents the reader with a snapshot of the present, compares it to the past and shares what it might mean for the future. I would recommend the book to those forward thinkers who want a glimpse of the future now.
   
   Peter Hanami, CEO, [...]
   
   Revolutionary Wealth: How it will be created and how it will change our lives

5 comments about The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics.

1. I understand that it's a book written to be accessible to people like myself who are not economists and will NEVER be economists, but that does not mean I have to be treated like I am severely unintelligent. The reading level of this book falls far below what any college educated person should be expected to read. I don't think the author of this book is nearly as deserving of the high accolades (not to mention profits) he has been receiving for writing this book. When a book contains the phrase 'I think learning under the right circumstances is a very good thing' you know that the quality of the writing is deficient. It is elementary at best.



2. The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William Easterly is an honest answer to part of the question, "why hasn't the world improved like we thought it would?" Easterly conducts a post-mortem conference on western aid programs since the end of World War II, finding that in many cases we should have known better. The incentives created by some nations' economic environment, or the aid programs themselves led national economies into periods of stagnant or negative growth. Easterly's mantra is "people respond to incentives." Ignoring this truth, a central tenet of economics, has led to several irrational choices in the area of development aid, and many failures to achieve our objectives.
   
   While pessimistic at times in his evaluation of what we have done in the West, the truth behind the text is that all these problems are preventable. Overall, a valuable and essential piece of information in understanding the state of the world today in regards to differing economic outcomes and how it has come to be that way.



3. Easterly is a brilliant and talented writer, as one would expect from the World Bank. At times, though, the Bank is isolated from the benefits of being subjected to such talent. Individual efforts are certainly reviewed, but at the end of the day, Stiglitz and others have argued that the very points Easterly makes suggests that the Bank is far off the course set by its mandate. We are therefore left with yet another recommended "fine tuning" of WB programming without a serious reflection over whether the WB is the proper mechanism for fiddling with the intricate clockworks that are national economies. I sign off by asking the Americans, Britons, Australians, French, Swiss and others from "developed" countries what it would take to allow an autocratic, bureaucratic and politically un-accountable (and this series of adjectives in no way lessens the tremendous respect I have for nearly every WB staff member I've met) organization tip-toe into THEIR administrative systems. I argue that the problem with economic tinkering in the Pacific is that it is, and looks to remain, the product of bureaucratic meddling on a scale similar to Mao's China, which undermines both the development of governance systems that can curtail corruption (i.e. local acocuntability for performance based on available resources- NOT (!!!!!!) in any way similar to efforts to make local authorities better subsidiaries of the notably corrupt central governments as is currently being pushed in the Pacific and elsewhere) AND legitimate free market systems. This book is a fantastic read, and I highly recommend it be paired with Stiglitz's "Globalization..." and Jeffrey Sach's "End of Poverty..." for a very ponderous but enriching book club series.



4. Watch Video Here: http://www.amazon.com/review/RN4QXC248QBRO Nathan Kirkland's review was made as part of a critical review assignment for the Fall 2008 Honors Colloquium on Creative Destruction at the University of Nebraska at Omaha, taught by Art Diamond. (The course syllabus stated that part of the critical review assignment consisted of the making of a video recording of the review, and the posting of the review to Amazon.)



5. The Elusive Quest for Growth, precisely lists the main reasons why slow or negative growth per capita has plagued emerging economies. Its thesis statement: people respond to incentives, brilliantly proves how many traditional ways of dealing with low growth economies is misapplied by bad government policies. The book is well structured and develops with great ease. The book is perfect for social entrepreneurs and economists.

5 comments about The Cult of Statistical Significance: How the Standard Error Costs Us Jobs, Justice, and Lives (Economics, Cognition, and Society).

1. This book provides strong arguments that scientists often use tests of statistical significance as a ritual that substitutes for thought about how hypotheses should be tested.
   Some of the practices they criticize are clearly foolish, such as treating data which fall slightly short of providing statistically significant evidence for a hypothesis as reason for concluding the hypothesis is false. But for other practices they attack, it's unclear whether we can expect scientists to be reasonable enough to do better.
   Much of the book is a history of how this situation arose. That might be valuable if it provided insights into what rules could have prevented the problems, but it is mainly devoted to identifying heroes and villains. It seems strange that economists would pay so little attention to incentives that might be responsible.
   Instead of blaming the problems primarily on one influential man (R.A. Fisher), I'd suggest asking what distinguishes the areas of science where the problems are common from those where it is largely absent. It appears that the problems are worst in areas where acquiring additional data is hard and where powerful interest groups might benefit from false conclusions. Which leads me to wonder whether scientists are reacting to a risk that they'll be perceived as agents of drug companies, political parties, etc.
   The book sometimes mentions anti-commercial attitudes among the villains, but fails to ask whether that might be a symptom of a desire for "pure" science that is divorced from real world interests. Such a desire might cause many of the beliefs that the authors are fighting.
   The book does not adequately address concerns that if scientists in those fields abandon easily applied rules, scientists are sufficiently vulnerable to corruption that we'd end up with less accurate conclusions.
   The authors claim the problems have been getting worse, and show some measures by which that seems true. But I suspect their measures fail to capture some improvement that has been happening as the increasing pressure to follow the ritual has caused papers that would previously have been purely qualitative to use quantitative tests that reject the worst ideas.
   The book seems somewhat sloppy in its analysis of specific examples. When interpreting data from a study where scientists decided there was no effect because the evidence fell somewhat short of statistical significance, it claims the data show "St. John's-wort is on average twice as helpful as the placebo". But the data would provide evidence for that only if there were data showing that the remission rate with no treatment was zero. It's likely that some or all of the alleged placebo effect was due to effects that are unrelated to treatment. And their use of the word "show" suggests stronger evidence than is provided by the data.
   I'll close with two quotes that I liked from the book:
   "The goal of an empirical economist should not be to determine the truthfulness of a model but rather the domain of its usefulness" - Edward E. Leamer
   "The probability that an experimental design will be replicated becomes very small once such an experiment appears in print." - Thomas D. Sterling



2. Tests of statistical significance are a particular tool which is appropriate in particular situations, basically to prevent you from jumping to conclusions based on too little data. Because this topic lends itself to definite rules which can be mechanically implemented, it has been prominently featured in introductory statistics courses and textbooks for 80 years. But according to the principle "if all you have is a hammer, then everything starts to look like a nail", it has become a ritual requirement for academic papers in fields such as economics, psychology and medicine to include tests of significance. As the book argues at length, this is a misplaced focus; instead of asking "can we be sure beyond reasonable doubt that the size of a certain effect is not zero" one should think about "how can we estimate the size of the effect and its real world significance". A nice touch is the authors' use of the word oomph for "size of effect".
   
   Misplaced emphasis on tests of significance is indeed arguably one of the greatest "wrong turns" in twentieth century science. This point is widely accepted amongst academics who use statistics, but perversely the innate conservatism of authors and academic journals causes them to continue a bad tradition. All this makes a great topic for a book, which in the hands of an inspired author like Steven Jay Gould might have become highly influential. The book under review is perfectly correct in its central logical points, and I hope it does succeed in having influence, but to my taste it's handicapped by several stylistic features.
   
   (1) The overall combative style rapidly becomes grating.
   
   (2) A little history -- how did this state of affairs arise? -- is reasonable, but this book has too much, with a curious emphasis on the personalities of the individuals involved, which is just distracting in a book about errors in statistical logic.
   
   (3) The authors don't seem to have thought carefully about their target audience. For a nonspecialist audience, a lighter How to Lie With Statistics style would surely work better. For an academic audience, a more focused [logical point/example of misuse/what authors should have done] format would surely be more effective.
   
   (4) Their analysis of the number of papers making logical errors (e.g. confusing statistical significance with real-world importance) is wonderfully convincing that this problem hasn't yet gone away. But on the point "is this just an academic game being played badly, or does it have harmful real world consequences" they assert the latter but merely give scattered examples, which are not completely convincing. If people fudge data in the traditional paradigm then surely they would fudge data in any alternate paradigm; if one researcher concludes an important real effect is "statistically insignificant" just because they didn't collect enough data, then won't another researcher be able to collect more data and thereby get the credit for proving it important? Ironically, they demonstrate the harmful real world effect is of the cult is non-zero but not how large it is ......



3. I attended a seminar by McCloskey when she announced she was working on this then-upcoming book. So I knew beforehand that its style would be more like a victim-tells-all revenge than a fun-seeking discovery typical of most popular science books. The first half of the book (up to Chapter 13) did turn out to be bitter. However, at least that part was largely based on facts, such as a comprehensive count of academic papers failing to meet certain standards. The second half of the book was devoted to the biographies of key persons who led to the rise of what the authors called the "cult of statistical significance". The book lost any pretense of integrity at that point, and just started slinging muds. Gosset was portrayed as a good-natured figure who worked hard like a bee; and Fisher, a mad scientist who stole the labor of others and would attack people by any means to defend his status. At one point the authors didn't even bother to call Fisher by his name, and just referred to him as the Wasp. They also dragged Fisher's mother into the ordeal by making suggestions that she was responsible for turning Fisher into a cold-hearted person that they claimed.
   
   I was not only disgusted by this kind of tabloid sensationalism, but was also disappointed by how little useful information I got out of this long-awaited book. The authors "irrationalized" the popularization of statistical significance by framing it as the work of a cult. To further illegitimatize the use of statistical significance, they argued that it is wrong to rely on it to evaluate scientific hypotheses because (1) what we really want is how likely for a hypothesis to be true given the data, not the other way around; and (2) there are other clues just as, if not more, important, especially the effect size. These could have been reasonable positions if they did not make statistical significance a scapegoat for being a "fallacy" just because it is defined on the likelihoods of observing data given the hypotheses. As the way it is defined, statistical significance provides a measure of precision. That's all. Just because it doesn't answer all the questions of scientific interest doesn't mean it provides no useful information and certainly doesn't automatically make it a fallacy. Furthermore, many hypothesis tests used in academic researches are based on likelihood "ratios" rather than just the conditionals. At least there would be NO fallacy for the believers of the Likelihood Principle. It is quite regrettable that they fail to elaborate on such crucial information to make other people look stupid, whether it was their intention or not. As for the second point, I agree that researchers should have paid more attention to other factors, such as statistical power and sample size, IN ADDITION TO statistical significance. But I think it is misguided to hail any ban on reporting statistical significance as a heroic act of revolt as the authors did in the book. One can report all the effect sizes he wants. But it all means nothing if his inferences are what they appear to be mostly due to "bad luck" in sampling the wrong subjects.
   
   If my views above are on the right track, then this book would serve the research community no good by martyrizing Gosset and demonizing Fisher. There has been no cult all along. If we are justified in believing that some vested interests overemphasized statistical significance to divert our attention away from the more important issues, then we should encourage people (authors and readers alike) to focus on those more important issues instead of treating statistical significance as if it were irrelevant. For a more serious and more informative discussion on this topics, I would recommend Chow's Statistical Significance: Rationale, Validity and Utility (Introducing Statistical Methods) . His first chapter explains the key issues in 12 pages with more varieties of arguments and more intellectually stimulating details than what Ziliak and McClosky attempted in 251 pages.
   
   I give 3 stars for this book's good intent but average quality, and, on top of that, took 1 star off for its mean-spirited rhetorics.



4. The message that I took from this book was two fold:
   1) Queries into existence (does a relationship exist?) are metaphysical, not scientific.
   2) Looking to the statistical significance of a relationship must be coupled with a look at the magnitude of the effect/correlation and the "big picture" of the problem being investigated.
   
   The authors set the scene well, write lucidly, and provide illuminating examples. I would think this book would be "must-read" for anyone preparing to engage the social-science literature.



5. This is a rather poorly written and overwrought summary of how statistical significance testing is misused in many areas of science. The authors are economists, not statisticians, and have a idiosyncratic understanding of the subject matter, regularly confusing different aspects of hypothesis testing and selectively quoting Fisher.
   
   If you are interested in the subject, Jacob Cohen, Gerald Dallal, and others have written clearer summaries. Wikipedia also has some useful pointers. Keep Nasim Taleeb's (the Black Swan) comments about economists and statistics in mind.

5 comments about Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment.

1. This book has very little to teach you and it's virtually unreadable. Make sure you read one or two pages before you buy in case you are like me and you can't stand his style.



2. This is an excellent book about the workings of an institutional portfolio and the various influences pulling at investment decisions.
   
   Lots of good anecdotal stories of mis-steps by *other* institutions. I would love to hear about some mistakes that DS has made during his tenure.
   
   He deals implicitly w/ agency issues that exist in most money management situations. For a more detailed explication of agency conflicts, read, "Unconventional Success".
   
   He attributes a lot of manager success to luck. However, how much of DS's and Yale's success is due to luck? He does not subject his own performance (that of managing the managers) to any sort of benchmark.
   
   Finally, he gives very short shrift to the back-office and operational issues (1 page at the end of the book). This is the achilles heel of 80% of management firms. They cannot scale, control, and maintain quality as they grow. This is the same, "Its all in the front office" mentality that presages so many other stumbles into mediocrity (not blow ups - just a benign drift downwards in rankings). I hope this same fate does not befall DS and Yale.



3. The marketing/techno-speak of the investment management industry sometimes gets to be overwhelming, this book can be an antidote. Swensen focuses on policy objectives, manager incentives, relative market (in)efficiencies and fundamental asset class characteristics to write a valuable resource for anyone considering the plethora of modern-day investment vehicles. Practically every concept is explained in language that is intelligible to someone with a basic understanding of the current investment markets. Absolutely worth the purchase.



4. I have recommended this book to numerous colleagues at work. We use it as a great summary of our investment philosophy and as a touchstone for investment values and sanity checks. We have purchased mutiple copies which we give to stakeholders to spread the word and bring them up to speed with these investment truths.
   
   I've been a professional f.m. for 25 years and I wish I'd read this book closer to year 1 than year 25.
   
   BTW we got far less incremental value out of Swensen's second book



5. David Swensen has written a commendable book. Perhaps most commendable is his focus on ethical money management with a focus on fiduciary responsibility to the investor--a Birkshirean theme worth reiterating over and over.
   
   The principal value of this book derives from its discussion on the use of alternative investments--such as private equity, market neutral strategies, and venture capital. Indeed, in the first paragraph of the books cover it is noted that "Largely focusing on nonconventional strategies, including a heavy allocation to private equity, Swensen has achieved an annualized return of 17.4%." Ironically, however, within the book Swensen writes in detail how and why private equity investing provides inferior risk adjusted returns vs. investment in plain vanilla marketable securities (e.g. S and P 500 index). This information is especially interesting given the recent investment by the Chinese government (purported disciples of David Swensen) in the Blackstone group IPO!!!!
   
   Swenson's discussion about inferior risk adjusted returns provided by venture capital funds, his discussion about market neutral strategy returns, and his discussion about the importance of long term treasuries vs. other bond alternatives are equally interesting.
   
   Overall, this book is good and differentiated, but somewhat inferior to other classics (e.g. One up on wall street by Peter Lynch, A Random Walk Down Wall Street by Malkiel, etc.). I would suggest waiting for the new edition of Pioneering Portfolio Management to come out instead of buying this older edition (2000)