Broyhill's Best Books of the Year

Broyhill Asset Management is back again with its yearly free Book Club featuring the best books of the year.  Perfect timing with summer vacation right around the corner.  You can check out their list of top recommendations here. 

We featured their picks last year too and this time around their list spans a myriad of topics apart from just investing.  After all, numerous successful investors have talked about how it's important to read across various subjects. 

While we occasionally highlight a book in our "What We're Reading" posts, this is a large compilation of recommendations from another trusted source.  Broyhill also provides a quick blurb on why a specific book was worth reading or what insights were gleaned from it.

Click here to check out Broyhill's favorite books

Marc Andreessen's Recommended Reading List 2018

If you're looking for some good summer reads, here you go.  Marc Andreessen, founder of venture capital firm Andreessen Horowitz recently tweeted a list of books he's read and recommends. 

It's a diverse list and isn't filled with finance books like so many other recommended reading lists we post, so this will certainly broaden your horizons.  Here's the list with his tweeted comments about each book.


Marc Andreessen's Recommended Reading List 2018


Expert Political Judgment: How Good Is It?  How Can We Know? by Phil Tetlock:  "Is the future knowable, and by whom?  All pundits and commentators should publish their prediction track records, yet don't.  What to pay attention to and what to ignore."


Thinking, Fast and Slow by Daniel Kahneman:  "Captivating dive into human decision making, marred by inclusion of several/many? psychology studies that fail to replicate.  Will stand as a cautionary tale?"


Thinking in Bets by Annie Duke:  "Compact guide to probabilistic domains like poker, or venture capital.  Best articulation of 'resulting', drawing bad conclusions from confusing process and outcome.  Recommend for people operating in the real world."


The Spider Network by David Enrich: " 'Billions'-esque saga of global financial market manipulation, at mind-boggling scale and hiding in plain sight, by a small cabal of bankers in London."


A Guide to the Good Life: The Ancient Art of Stoic Joy by William B. Irvine: "Best (?) walk through the ancient/current philosophy of Stoicism.  You can't control other people but you can control yourself, so do that."


The Courage to Be Disliked by Ichiro Kishimi & Fumitake Koga:  "Smash hit in Japan, and easy to see why.  Adlerian psychology meets Stoic philosophy in Socratic dialogue.  Compelling from front to back.   Highly recommended."


All Out War: The Full Story of How Brexit Sank Britain's Political Class by Tim Shipman:  "Inside story of how Britain decided to exit the EU.  Economic self-destruction or national liberation?  Repercussions to play out for decades."


When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle by Scott Wapner.  " 'Wall Street'-esque battle between Bill Ackman and Carl Icahn over unlikely target Herbalife.  Sip a delicious Herbal Aloe Shake while reading."


But What If We're Wrong?: Thinking About the Present As If It Were the Past by Chuck Klosterman:  "Wide-ranging meditation on how to think about the reality that we're probably wrong about most things we believe.  Hard to read and not emerge humbled."


Chasing Hillary:  Ten Years, Two Presidential Campaigns, and One Intact Glass Ceiling by Amy Chozick:  "On the bus/in the plane with the Hillary campaign.  Revealing in many dimensions at once, and highly entertaining.  Best book on the 2016 campaign so far?"


The Strange Death of Europe by Douglas Murray: "One perspective on the politics of immigration in Europe, playing out in real time, e.g. Merkel almost getting deposed days ago.  Confusing on multiple levels from US perspective."


A Higher Loyalty: Truth, Lies and Leadership by James Comey:  "Certainly the story is well known, but given author's propensity to post photos of himself wearing running shoes in Iowa, potentially relevant again starting next year?"


Conspiracy:  Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue by Ryan Holiday: "Startlingly deep cultural history of conspiracies, examined through the lens of the brutally effective Gawker takedown, with full access to the main players."


Skin in the Game by Nicholas Taleb:  "Skin in the game as conflict of interest, or as attaching one's livelihood to one's speech?  Who to listen to, and why.  Ideal counterpart to Phil Tetlock's Expert Political Judgment."


12 Rules for Life: An Antidote to Chaos by Jordan Peterson: "A bracing disassembly and reconstruction of a theory of individual progress in the modern world.  Fascinating compare and contrast with The Courage To Be Disliked."


Slugfest: Inside the Epic, 50-year Battle between Marvel and DC by Reed Tucker: "Spellbinding creative and business history of the incredibly imaginative comic book industry in the decades before it ate Hollywood."


Hacks: The Inside Story of the Break-ins and Breakdowns That Put Donald Trump in the White House by Donna Brazile: "Visceral, raw, you-are-there recounting of living through the hack attacks and resulting meltdown of the DNC in 2016."


Days of Rage: America's Radical Underground, the FBI, and the Forgotten Age of Revolutionary Violence by Bryan Burrough: "How 1960s racial politics descended into 1970s terrorist bombings, thanks to privileged college students breaking very bad."


Civilian Warriors: The Inside Story of Blackwater by Erik Prince: "The founding and growth of military contractor Blackwater as told by its founder and CEO; newly relevant due to the Mueller investigation."


The Rise of Superman: Decoding the Science of Ultimate Human Performance by Steve Kotler: "Startling walk through a series of domains where peak human performance is rising at remarkable rates due to 'flow state'.  Thought provoking and then some."


Devil's Bargain: Steve Bannon, Donald Trump, and the Storming of the Presidency by Joshua Green: "Best (?) book so far on the Republican side of the 2016 race, and a deep dive into the intellectual origins of Bannonism and to some extent Trumpism."


Shattered: Inside Hillary Clinton's Doomed Campaign by Jonathan Allen & Amie Parnes: "Best (?) book so far on the Democratic side of the 2016 race, most provocatively on the impact of the press coverage of the email hacks on the last stages of the race."


Living with a SEAL: 31 Days Training with the Toughest Man on the Planet by Jesse Itzler: "What's it like to train with a Navy SEAL in winter in New York for a whole month?  Featuring the truly remarkable American hero David Goggins."


The Myth of the Rational Voter by Bryan Caplan: "The median American is a moderate national socialist - statist to the core on both economic and social policy.  Given public opinion, the policies of First World democracies are surprisingly libertarian."


A Very Expensive Poison: The Assassination of Alexander Litvinenko by Luke Harding: "The astonishing story of the Litvinenko and Perepilichnyy assassinations in the UK; reads like a Lee Child thriller; plenty topical now."


Lone Survivor: The Eyewitness Account of Operation Redwing and the Lost Heroes of SEAL Team 10 by Marcus Luttrell: "The film was fine but the book is unreal; incredibly vivid story of superlative American heroes."


How to Live: A Life of Montaigne in One Question and Twenty Attempts at an Answer by Sarah Blakewell: " 'How to get along with people, how to deal with violence, how to adjust to losing someone you love - All versions of a bigger question: How do you live?' "



If you're looking for even more books, be sure to also check out Ray Dalio's recommended reading list, as well as Mohnish Pabrai's recommended reading list, or any of the others we've linked on the right sidebar of the MarketFolly homepage.

Charlie Munger's Recommended Reading List

If you haven't noticed before, we've compiled a list of books recommended by top investors like Seth Klarman, Warren Buffett and many others on the right sidebar of the website.  This time around we'll look at picks from Charlie Munger, Warren Buffett's business partner at Berkshire Hathaway.

One quote from Munger always sticks out: "In my whole life, I have known no wise people who didn't read all the time - none, zero."  With that in mind, here's some of Charlie Munger's favorite books:


Charlie Munger's Recommended Reading List

  Influence: The Psychology of Persuasion by Robert Cialdini
Probably the most frequent recommendation from Munger

   The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy by Robert Hagstrom
Has actually been recommended by both Munger & Warren Buffett

   Getting to Yes: Negotiating Agreement Without Giving In 
by Roger Fisher & William Ury
Learn how to negotiate and resolve conflict

   Judgment in Managerial Decision Making by Max Bazerman
Learn how to recognize and overcome your biases

   Getting It Done: How to Lead When You're Not In Charge by Roger Fisher
You need an edge in order to reach solutions and effectively work with others

  Deep Simplicity: Bringing Order to Chaos and Complexity by John Gribbin
A look at the study of complex systems

  Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company by Andrew Grove
Reveals his strategy at Intel

  Andrew Carnegie by Joseph Frazier Wall
Biography of an industrialist genius, philanthropist, and enigma

  Titan: The Life of John D. Rockefeller by Ron Chernow
Story of history's first billionaire

  In The Plex: How Google Thinks, Works, and Shapes Our Lives
by Steven Levy
Recommended at the 2011 Berkshire Hathaway annual meeting

  Barbarians at the Gate: The Fall of RJR Nabisco 
by Bryan Burrough & John Helyar
"One of the finest, most compelling accounts of what happened to corporate America and Wall Street in the 1980's" ~ New York Times Book Review

  Hard Drive: Bill Gates and the Making of the Microsoft Empire
by James Wallace & Jim Erickson
The title says it all

  Conspiracy of Fools: A True Story by Kurt Eichenwald
The mind-boggling story of Enron

  Master of the Game  by Connie Bruck
Biography of a media mogul

  Models of My Life by Herbert Simon
Autobiography of a Nobel laureate looking at whether what he learned as a scientist helps explain other aspects of life

  Fiasco: The Inside Story of a Wall Street Trader by Frank Partnoy
A fascinating (and kind of crazy) look at the derivatives trading industry

  The Wealth and Poverty of Nations by David Landes
Why some nations achieve success and others don't


This isn't a comprehensive list (after all, Munger reads a ton).  But we've tried to focus on the most relevant business/finance books as a good starting point.


Books About Charlie Munger

And if you want to read up on Munger himself, there are a few great books in that regard as well.  Be sure to check out:

Poor Charlie's Almanack Edited by Peter Kaufman

Seeking Wisdom: From Darwin to Munger by Peter Bevelin

Charlie Munger: The Complete Investor by Tren Griffin

Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger
by Janet Lowe



And if you still want even more reading material, head to Seth Klarman's favorite books and Warren Buffett's recommended reading list.  Or, simply check out the right sidebar on the website for picks from other top investors.

Mauboussin's Talk at Google: The Success Equation: Untangling Skill & Luck

This week, we're posting up the various "Talks at Google" that focus on investing.  These typically feature authors of well known investment books.  Next up is Michael Mauboussin who talked about his book The Success Equation: Untangling Skill and Luck in Business, Sports and Investing.

Mauboussin is well known for his work on the more psychological/behavioral aspects of investing.  We've previously featured his talk about developing an investment process.

His talk touches on the concepts of the roles luck and skill play in success and failure and how you can provide a framework to analyze their contributions.

Embedded below is the video of Mauboussin's talk at Google:



Be sure to check out Mauboussin's book The Success Equation as well as his past work, Think Twice: Harnessing the Power of Counterintuition.

Jason Zweig's Talk at Google: The Intelligent Investor & The Devil's Financial Dictionary

This week, we're posting up the various "Talks at Google" that focus on investing.  These typically feature authors of well known investment books.  Next up is Jason Zweig who talked about The Intelligent Investor and his latest book, The Devil's Financial Dictionary.

The latter basically sums up his learnings across three decades as an investment journalist.  Yale professor Robert Shiller said of the book: "This is the most amusing presentation of the principles of finance that I have ever seen."

Embedded below is the video of Jason Zweig's Talk at Google:



If you haven't read his newest book yet, check it out: The Devil's Financial Dictionary.  And don't forget the instant classic as well: The Intelligent Investor.

Howard Marks' Talk at Google: The Most Important Thing

This week, we're posting up the various "Talks at Google" that focus on investing.  These typically feature authors of well known investment books.  Next up is Oaktree Capital's Howard Marks.  He is the author of The Most Important Thing: Uncommon Sense for the Thoughtful Investor.

Marks often shares wisdom in periodic memos that we always post on the site (you can scroll through his past letters here).  His thoughts are widely read (even by the likes of Warren Buffett) as they constantly feature enlightenment on various investing topics.

He is known for his belief of investing as part psychology and part finance.    In this talk he shares his wisdom as well as origins and inspirations for the book.

Embedded below is the video of Howard Marks' Talk at Google:



You can read Howard Marks' book The Most Important Thing here.

William Thorndike's Talk at Google: The Outsiders

This week, we're posting up the various "Talks at Google" that focus on investing.  These typically feature authors of well known investment books.  Next up is William Thorndike who talks about his popular book, The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success.

This book was recommended by Warren Buffett in his 2012 annual letter. The Outsiders basically looks at 8 CEO's that have excelled at capital allocation and shareholder value creation.

The book almost has a cult-like following in that investors have latched onto the fact that management is a critical part of any investment.  As such, investors are always trying to find the next 'Outsider.'  This book has also been referenced in numerous hedge fund letters over the years.

In his talk, Thorndike talked about certain CEOs who might potentially fit the mold in today's markets.

- Jeff Bezos (Amazon.com ~ AMZN): Though he admits to not studying the company too terribly in-depth, he believes Bezos is probably the best CEO example in tech given his 5-10 year focus on per share value.

- Nick Howley (TransDigm Group ~ TDG): Specialized aircraft components roll-up.

- Rales Brothers (Colfax ~ CFX): This is a re-up of the playbook they ran at Danaher, but with more cyclical businesses to start.

- Mark Leonard (Constellation Software ~ CSU.TO): Software

- Mike Pearson (Valeant Pharmaceuticals): He said it was still 'early days' in assessing this one, but obviously this one has kind of blown up.  It should be noted that Thorndike's talk was published on October 2015.

- ArchRe

- Mini Berkshire insurance companies: WhiteMountain, Allegheny, Fairfax, Markel

- NVR: Homebuilder


Embedded below is the video of William Thorndike's Talk at Google:



If you haven't already, be sure to pickup a copy of The Outsiders.

William Green's Talk at Google: Lessons From the Great Minds of Investing

This week, we're taking a look at some "Talks at Google" that focus on investing and feature authors of popular books on the subject.  Previously in one of our "What We're Reading" posts, we featured William Green's book, The Great Minds of Investing.

If you haven't already, we'd recommend checking it out.  Green has had the chance to interview many well known investors such as Seth Klarman, Howard Marks, Joel Greenblatt, Tom Russo, Mohnish Pabrai, and many more.

But also worth your time is this: the author recently had a talk at Google about Lessons From the Great Minds of Investing.  The video of his talk is embedded below:



And you can read William Green's book The Great Minds of Investing here.

The New House of Money: Jim Chanos' Interview With Steven Drobny

Steven Drobny has released a chapter from his new book, The New House of Money. Chapter 2, The Biggest Short, features an interview with short seller Jim Chanos of hedge fund Kynikos Associates.

Embedded below is the chapter from The New House of Money:



You can find out more about the book here.

Steven Drobny's New House of Money: Interview with Kyle Bass

Steven Drobny, previous author of The Invisible Hands: Hedge Funds Off the Record as well as Inside the House of Money, is coming out with a new book.  His new title, The New House of Money, continues his ongoing series of interviews with top hedge fund managers.

He'll be releasing a new chapter each month and the first chapter features Kyle Bass of Hayman Capital.  We've embedded the chapter below and you can access it at their website:




Be sure to check out Drobny's other great books as well interviewing notable hedge fund managers:

- The Invisible Hands: Hedge Funds Off the Record

- Inside the House of Money

New York Times Business Best Sellers List

As 2013 draws to a close, we wanted to check in on and highlight The New York Times list of business best sellers this year.  While many investors focus on investment books (and rightly so), business books can also help you refine your approach in how you think about businesses.  Numbers 2, 5, 8, and 9 in particular will benefit investors.


New York Times Business Best Sellers List

1. Lean In by Sheryl Sandberg with Nell Scovell.  One of the top sellers for quite some time.  "The chief operating officer of Facebook urges women to pursue their careers without ambivalence."

2. Outliers by Malcolm Gladwell.  This has been read by many in the investment community.  "Why some people succeed - it has to do with luck and opportunities as well as talent."

3.  Extortion by Peter Schweizer. "A Hoover Institution fellow argues that politicians shape legislation in order to extract donations." 

4. The Everything Store by Brad Stone. "The story of Jeff Bezos and Amazon." 

5. Focus by Daniel Goleman. "The author of “Emotional Intelligence” relies on research on attention to argue that high achievement requires three kinds of focus." 

6. Hundred Percenters by Mark Murphy. "Challenging employees to perform at their highest level."

7. Do You Speak Shoe Lover? by Linda Meadow and Kelly Cook. "Stories from customers and employees of the shoe retailer DSW."

8. The Caterpillar Way by Craig T. Bouchard and James V. Koch. "A biography of Caterpillar Inc. as a tale of successful business management."

9. Thinking, Fast and Slow by Daniel Kahneman. Another widely read book in investment circles.  "The winner of the Nobel in economic science discusses how we make choices in business and personal life." 

10. Steve Jobs by Walter Isaacson. After reading this book, hedge fund legend Julian Robertson decided to sell his Apple shares.  "A biography of the entrepreneur, based on 40 interviews with him conducted over two years."


And if you want more investment-specific reading, head to our recommended reading lists.

Howard Marks on Contrarianism: Excerpt From His Book

Today with permission we're posting up thoughts from Oaktree Capital's chairman and founder Howard Marks from his book: The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor.


Contrarianism

"Accepting the broad concept of contrarianism is one thing; putting into practice is another.  On one hand, we never know how far the pendulum will swing, when it will reverse, and how far it will then go in the opposite direction.

On the other hand, we can be sure that, once it reaches an extreme position, the market eventually will swing back toward the midpoint (or beyond).  Investors who believed that the pendulum would move in one direction forever -- or, having reached an extreme, would stay there -- are inevitably disappointed.

On the third hand, however, because of the variability of the many factors that influence markets, no tool -- not even contrarianism -- can be relied on completely.

Contrarianism isn't an approach that will make you money all of the time.  Much of the time there aren't great market excesses to bet against.

Joel Greenblatt: I've put it this way: just because no one else will jump in front of a Mack truck barreling down the highway, doesn't mean that you should!

- Even when an excess does develop, it's important to remember that "overpriced" is incredibly different from "going down tomorrow."

- Markets can be over- or underpriced and stay that way -- or become more so -- for years.

- It can be extremely painful when the trend is going against you.

Seth Klarman: This is where it is particularly important to remember the teachings of Graham and Dodd.  If you look to the markets for a report card, owning a stock that declines every day will make you feel like a failure.  But if you remember that you own a fractional interest in a business and that every day you are able to buy in at a great discount to underlying value, you might just be able to maintain a cheerful disposition.  This is exactly how Warren Buffett describes bargain hunting amid the ravages of the 1973 to 1974 bear market.

- It can appear at times that "everyone" has reached the conclusion that the herd is wrong.  What I mean is that contrarianism itself can appear to have become too popular, and thus contrarianism can be mistaken for herd behavior.

- Finally, it's not enough to bet against the crowd.  Given the difficulties associated with contrarianism just mentioned, the potentially profitable recognition of divergences from consensus thinking must be based on reason and analysis.  You must do things not just because they're the opposite of what the crowd is doing, but because you know why the crowd is wrong.  Only then will you be able to hold firmly to your views and perhaps buy more as your positions take on the appearance of mistakes and as losses accrue rather than gains."


Excerpted from Howard Marks' book: The Most Important Thing Illuminated (you can get a e-book/Kindle version here). Copyright (c) 2012 Howard Marks.  Used by arrangement with Columbia University Press.


P.S. - if you missed it earlier, we posted another excerpt from Marks book too.

Howard Marks' New Book: The Most Important Thing

Oaktree Capital's Howard Marks just released his new book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor. We wanted to highlight this because Marks' market commentary has been some of the most insightful around.

Often quoted for his wisdom, Marks' new book has received some impeccable recommendations:

Baupost Group's Seth Klarman says, "Regular recipients of Howard Marks's investment memos eagerly await their arrival for the essential truths and unique insights they contain. Now the wisdom and experience of this great investor are available to all. The Most Important Thing, Marks's insightful investment philosophy and time-tested approach, is a must read for every investor."

Berkshire Hathaway's Warren Buffett also offered praise by saying, "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."

When two of the greatest investors of all time say something is a must-read, then you quite simply have to read it. We look forward to learning from Marks' book, The Most Important Thing and recommend our readers do the same.

Joel Greenblatt's New Book: The Big Secret for the Small Investor

Just wanted to give everyone a head's up that value investor and hedge fund manager Joel Greenblatt's new book just came out yesterday. It's called The Big Secret for the Small Investor: A New Route to Long-Term Investment Success.

The book details a new approach to investing based on value investing, common sense, and quantitative discipline. Basically, it intertwines his value investing style with an indexing approach. Greenblatt is the founder of Gotham Capital and has seen 40% annualized returns from 1985-2005. He is also an adjunct professor at Columbia Business School.

Greenblatt has authored numerous other books and they each cater to specific investors, including:

You Can Be a Stock Market Genius - Though the title is somewhat cheesy, this book has been recommended by hedge fund legends like Seth Klarman and David Einhorn. It is the definitive text on spin-offs, restructurings, and special situation investing.

The Little Book That Still Beats the Market - Teaches readers how to find good businesses when they're trading at bargain prices.

Greenblatt's newest book, The Big Secret for the Small Investor, is seemingly aimed at the broadest audience since it looks to be a quick read (150 pages) and details value-weighted indexing as an applicable investment style.

David Einhorn's Recommended Reading List

David Einhorn is the manager of hedge fund firm Greenlight Capital. He has returned 21.5% annualized and is well-respected in investing circles. At a recent event, Einhorn interestingly admitted that he did not read books all that often, but he did have a few suggestions for investors. Here is David Einhorn's recommended reading list:

- You Can Be a Stock Market Genius by Joel Greenblatt: Einhorn joins the copious amount of other hedge fund managers that have recommended this book. It takes a look at catalyst-based investing including spin-offs, mergers, risk arbitrage, and more.

- Margin of Safety by Seth Klarman: This hard-to-find and out-of-print book is a must for aspiring investment aficionados. It is written by one of the most successful hedge fund managers of our time and so it's no surprise that Einhorn recommended it.

- Liar's Poker by Michael Lewis: This is an insider's account of what really happens on Wall Street and is one of the most popular financial books out there.

- Fooling Some of the People All of the Time by David Einhorn: While Einhorn did not recommend his own book, we wanted to include it as it details his short selling battle with Allied Capital and features a foreword by Joel Greenblatt. After all, there's only a handful of books out there penned by prominent hedge fund managers.


For recommended reading lists from other top hedge fund managers, be sure to check out these other resources:

- Seth Klarman's recommended reading list

- Books recommended by Dan Loeb

- Hedge Fund Blue Ridge Capital's recommendations

- Warren Buffett's recommended reading list

Seth Klarman's Recommended Reading List

In the past, we've detailed various investment book recommendations from some truly notable investors. This list could quite possibly top them all though. After all, apart from Warren Buffett, Baupost Group's Seth Klarman is widely regarded as one of the most successful investment managers in the game. In fact, Klarman himself has written one of the most coveted books on investing out there, Margin of Safety. Copies are no longer in print and remaining copies sell for exorbitant sums. At the recent CFA Institute Annual Conference in Boston, Klarman provided a list of book recommendations and here are his picks:

- Benjamin Graham's The Intelligent Investor: This should come as no surprise given that Klarman is a fundamental investor and Graham's text is literally *the* testament for value investors.


- Joel Greenblatt's You Can Be A Stock Market Genius: Greenblatt's book examines catalyst based investing such as spin-offs, mergers, risk arbitrage, etc in an effort to exploit market inefficiencies.


- Martin Whitman's The Aggressive Conservative Investor: This one delves into the topics of value investing and is regarded as a great guide for learning how to analyze and evaluate stocks. We've not read this book before and look forward to picking up a copy.


- Klarman also recommends anything by Jim Grant. Some of his books include: Bernard M. Baruch: The Adventures of a Wall Street Legend as well as Money of the Mind and lastly, Mr. Market Miscalculates: The Bubble Years and Beyond.


- The Baupost Group manager also recommends anything by Roger Lowenstein, whose books include:

Buffett: The Making of an American Capitalist: This book's title is self-explanatory.

When Genius Failed: The Rise and Fall of Long-Term Capital Management: Those of you interested in hedge funds would find this book particularly intriguing.

Also, Lowenstein's most recent book: The End of Wall Street which we also look forward to reading in the near future.


- Michael Lewis' classic, Moneyball: The Art of Winning an Unfair Game. Klarman says Lewis hasn't written a bad book yet, so we'll add in his most recent regarding the subprime trade as well, The Big Short.


- Andrew Ross Sorkin's book about the financial crisis, Too Big to Fail


A rousing set of suggestions from an investing legend himself, Seth Klarman. For more great investment reading recommendations, head to some of our other guru picks:

- Warren Buffett's recommended reading
- Dan Loeb's favorites
- Hedge fund Blue Ridge Capital's recommended reading

Confidence Game: How A Hedge Fund Manager Called Wall Street's Bluff by Christine Richard (Book Review)

We've covered hedge fund manager Bill Ackman extensively here on Market Folly so it's always intriguing when a book is released on an investor we've seemingly tracked forever. As such, we were eager to dive into Bloomberg News reporter Christine Richard's new book, Confidence Game: How A Hedge Fund Manager Called Wall Street's Bluff. For those of you unfamiliar with the backstory, it centers on Ackman's short position in bond insurer MBIA and the ensuing battle he waged against the company, regulators, and seemingly anyone who thought he was wrong.

At the time, this was one of his most successful investments as it earned his firm $1.1 billion, a figure few can scoff at. Since then, Ackman has bested his performance with his investment in General Growth Properties which he has labeled the "best investment he's ever made." Still though, we'd argue that he deserves more praise for his work on MBIA because of the endless amount of obstacles he faced in proving his thesis ultimately correct. Not to mention, he dared to question the unquestionable triple A rating. Everyone knows that short selling is a whole different ballgame when it comes to investing. There are more risks involved and you have to cover every possible angle of your assessment. Being short a company is one thing. Publicly voicing your short position is quite another, as you immediately are labeled an enemy. This book details the multitude of trials and tribulations Ackman faced on his quest to prove his thesis and in the process silence his doubters.

Richard's Confidence Game chronicles a six year long epic battle between Ackman and MBIA, the regulators, the media and more. Think about that for a second. While he was ultimately proven correct, this took six years to play out. Buying and holding a stock long is one thing, but going against the crowd week in and week out for over half a decade to prove your point has to be draining. That's the crazy thing here, Ackman didn't get discouraged. He was not only making a contrarian wager, he was going up against the 'holy grail': a company wielding the coveted AAA rating. MBIA apparently thought they were untouchable. They were wrong.

Ackman faced an uphill battle from the start as he was labeled a fraud by the media and was even investigated by Eliot Spitzer and the SEC. This only added fuel to Ackman's fire and it's almost as if he started to take things personally as he worked even harder to prove that his thesis indeed was correct. As we all know, short sellers get a bad rap as they risk ridicule and harassment immediately upon going public with their crusade against a given company. Simply put, this book shows you what it's like to be a short seller. It takes you inside the research process, inside the trials and tribulations, and most importantly, inside the short seller's head. This book sets itself apart with a behind the scenes look at the process and all the baggage that comes with the territory of betting that something will fail.

Some of the more intriguing facets of Confidence Game are the exchanges between Ackman and MBIA's management team. In fact, the book starts immediately with a confrontation between the two where executives essentially try to bully Ackman. Even more impressive though is the book's ability to tell a story of perseverance and determination. This narrative covers all the proverbial bumps in the road as you watch Ackman transform from a perceived 'villain' into a hero. Before beginning the book, we knew he had conviction in his pick. (Let's face it, he stuck with it for so many years). What the book illustrates though is a detailed account of how Ackman first started buying credit default swaps on MBIA at a cost of $16,000 (per each $10 million of MBIA debt insured) and his hedge fund was still buying when the same protection cost upwards of $580,000. He hit many roadblocks along the way and had many opportunities to exit the position entirely. Instead, he upped his conviction and upped his wager.

Richard's book also brings to light a few pertinent issues that still seem to bluff Wall Street itself. Richard does an excellent job underlining just how over-reliant the markets are on financial models. Not to mention, she draws attention to the fact that many individuals on the Street place waaay too much blind faith and trust in credit ratings as if they are the end-all be-all of financial markets. Clearly, that's a recipe for disaster. And as we all know, it was.

One thing that struck us were the vast similarities between Confidence Game and David Einhorn's book, Fooling Some of the People All of the Time. Both detail arduous battles between companies and short sellers. In both cases, the hedge fund managers ultimately emerge victorious. Generally, we prefer to hear the tale direct from the horses mouth (ala how Einhorn wrote his own story). However, that's not to take anything away from Richard at all. There's no denying she did a masterful job chronicling the events and taking you inside Ackman's head and all his past encounters. The level of detail and research in Confidence Game is impeccable.

In the end, this book typifies what a grueling road short selling can be. Christine Richard's Confidence Game shines a light on issues that Wall Street still needs to address further. While the book won't all of a sudden teach you how to be a successful short seller (we'd recommend The Art of Short Selling for that), it does walk you through various steps in the process, all while telling a tale at the exact same time. A tale, we might add, that centers around one of the hedge fund managers we've tracked extensively on the site for some time. As such, it is the perfect combination of recent history, education, and entertainment. If you want to learn more about Bill Ackman as an investor, the strenuous short selling process, and the human trait of unbridled perseverance, then Confidence Game is obviously for you.

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As mentioned above, we've covered hedge fund manager Bill Ackman extensively on the site so for those of you seeking even more information, be sure to check out our profile on his hedge fund Pershing Square Capital, Ackman's recent media appearance, as well as our coverage of Ackman's portfolio.

For more great books, be sure to head to our recommended reading lists.

The Invisible Hands: Hedge Funds Off the Record By Steven Drobny (Book Review)

Today we're reviewing The Invisible Hands: Hedge Funds Off the Record, the latest valuable book from author Steven Drobny. Many of you will already be familiar with Drobny from his popular first book, Inside the House of Money. Drobny heads Drobny Global Advisors, a macroeconomic advisory firm that has many leading global hedge funds as clients. Needless to say, if you want a great book on hedge funds, he's your guy.

Right off the bat we can tell you we wildly enjoyed reading this solely for the vast amount of information and advice divulged. The Invisible Hands is divided into three parts. The first section deals with "real" money management, a.k.a. the institutional investing of endowments, pensions, & family offices and brings up some very prudent questions regarding portfolio construction. This part of the book includes commentary from Jim Leitner of Falcon Management. Those of you who have read Inside the House of Money will recall that the Family Office chapter in that book which focused on Leitner was one of the most popular. This is an extension of their conversation updated to focus on the market crisis and we found it very insightful given the fact that many endowments did not fare well during the downturn. Additionally, the section also details views from Dr. Andres Drobny of Drobny Global Advisors.

The second section of the book is probably the most entertaining as it features interviews with various global macro hedge fund managers. The chapters are divided into various archetypes Drobny has bestowed upon each manager, including: The House, The Philosopher, The Bond Trader, The Professor, The Commodity Trader, The Commodity Investor, The Commodity Hedger, The Equity Trader, The Predator, and The Plasticine Macro Trader. Needless to say, there is something for everyone in this section of the book as all kinds of global macro hedge fund strategies are detailed. The insight divulged in part two of The Invisible Hands is priceless.

One possible pitfall to potential readers could be the fact that each hedge fund manager's identity is hidden. Before reading the book, we were slightly skeptical that this aspect would diminish credibility. For those of you who may be hesitant, we'll go ahead and allay those fears for you right now. We were quickly proven wrong upon sampling the worthwhile words of wisdom each manager had to offer. We also had the chance to ask Drobny himself about this and he highlighted a very prudent point: without anonymity, this book would have never been written. Drobny mentioned to us that, "Normally, people don't get access to sit down and have a chat with managers at this level so the anonymity allowed that to happen."

This just goes to reinforce how secretive and guarded the hedge fund world is. Each bit of information comes at a price, and this time the price you pay is identity. As such, it's a no-brainer to take insight masked by anonymity over no information at all. The book not only contains wisdom from managers who survived the crisis unscathed, but also from those who prospered. As far as personal favorites go, Chapter 13: The Plasticine Macro Trader steals the show. You'll start the book casually wondering who some of these managers are and you'll end the book really wanting to know all their identities. We have a very good guess as to who Chapter 13 is, but we'll wait for that manager to "out" themselves. But if you want a hint: we've covered this eclectic manager on the site numerous times before.

The Invisible Hands concludes with part three and an interview with The Pensioner. This final chapter turns back to "real money" managers and highlights a successful pension fund manager that did not lose money in 2008. Those of you further interested in the topics of risk management and portfolio construction will find this last section compelling.

Many books that have come out of the financial crisis focus on learning from mistakes. Drobny's book, on the other hand, pinpoints managers who fared well in 2008 as they were either able to preserve capital or grow it. The book targets global macro funds because their foundation is anchored by the tenets of risk management rather than returns. This allows readers to learn from those who found success during a time when many others failed.

All in all, we treasured The Invisible Hands: Hedge Funds Off the Record and highly recommend it to anyone looking to learn from top hedge fund managers. We found the book's particular focus on global macro strategies especially intriguing given that the majority of the coverage on our site centers on long/short equity hedge funds. Those of you looking for a peephole into the fast paced world of global macro would find this book advantageous. And if you manage money, then Drobny's new book is simply a must read.


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For more insightful books on markets and investing, be sure to check out our recent reviews of Harry Markopolos' book No One Would Listen and Scott Patterson's The Quants. Additionally, we've assembled quite the compendium of recommended reading lists worth checking out.

No One Would Listen: A True Financial Thriller By Harry Markopolos (Book Review)

If you want the 'straight from the horses mouth' exclusive story regarding Bernie Madoff's $65 billion Ponzi scheme, you'd have to go to Bernie himself. However, there is still a next best alternative that is an insider account of its own. Harry Markopolos' book No One Would Listen: A True Financial Thriller details how he and his team discovered what Madoff was up to long before Madoff's ultimate demise. The problem (obviously enough) was that nobody listened.

The crazy part about this whole scenario is that Markopolos and company had very critical evidence as early as 2000. His "Fox Hounds" team sniffed out the rat and yet the SEC seemed to completely miss the warning signs raised. Undoubtedly the best part of the book is the viewpoint from which it is told. Markopolos saw both Madoff's scam and the SEC's failure, so this chronicle is as direct as it gets.

No One Would Listen's foreword includes a segment written by David Einhorn of hedge fund Greenlight Capital (someone we cover frequently here on Market Folly). He writes that, "Harry Markopolos is a hero... The silver lining in the Madoff collapse, if there could be such a thing, is that for at least one moment in time, the SEC has been exposed. And for his role in making that happen, Harry Markopolos deserves all our thanks."

Markopolos is the definition of a whistleblower and we can only hope others like him exude comparable sleuthing skills within the regulatory bodies. His book helps expose just how vulnerable investors are when things go wrong as the regulatory bodies seemingly have done a poor job of shielding them.

While the storyline itself is telegraphed, there's something about the book that keeps pulling you in. Despite the fact that the book covers a timeline of almost a decade, it flows flawlessly and feels as if you are living it in real-time, unraveling the case alongside Markopolos. You know exactly how the story ends, yet you still want to read every detail. And No One Would Listen's timeline all starts with the intriguing chronicle of how Markopolos deciphered that Madoff's returns were unfeasible in the first place.

While this admittedly is not the best way to describe it, think of the book almost as a movie filled with flashbacks where you re-live past events through the protagonist's eyes. Roughly speaking, half of the book focuses on the recent fall of Madoff while the other half centers on Markopolos' rising conquest and the appalling ignorance on the part of the SEC.

The writing style is generally impressive, however there are a few cliché-laden segments. In the end, you'll finish No One Would Listen impressed with Markopolos' conviction & perseverance and absolutely flabbergasted with the SEC's (lack of) actions. It's definitely a thrilling tale.

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For more insightful books on markets and investing, be sure to check out our other recent book reviews including Scott Patterson's The Quants and Jon Markman's annotated edition of Reminiscences of a Stock Operator. Additionally, we've assembled quite the compendium of recommended reading lists.

Michael Lewis' New Book: The Big Short

Noted author Michael Lewis' newest book entitled The Big Short: Inside the Doomsday Machine was just released. Recently, the television show "60 Minutes" had a feature on this book and interviewed Michael Lewis as well as Scion Capital hedge fund manager Michael Burry, who Lewis profiled in the book for his bet against subprime.

The most fascinating aspect about this story is how Burry saw how subprime was deteriorating even long before the most 'famous' managers who also profited on this play (like John Paulson). If you enjoyed Gregory Zuckerman's book on John Paulson entitled The Greatest Trade Ever, then it seems you would also be fond of Lewis' new book.

Embedded below are two videos from "60 Minutes" on CBS where Steve Kroft interviews both author Michael Lewis and hedgie Michael Burry. Email readers will need to come to the site to watch the videos:

Video 1

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Video 2

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It definitely sounds like a captivating story as Lewis writes about how Wall Street outsiders figured out what was going on and then won big. It's definitely worth checking out Michael Lewis' new book, The Big Short. We'll certainly be reading it and will post up a review when finished.