2018: The books that got our attention

Emma Rapaport, from Morningstar’s Sydney office, compiled a selection of books that engrossed colleagues over the year.
By Morningstar |  28-12-18 | 
 

This year’s list is diverse, spanning books that cover the spectacular downfall of a Silicon Valley darling to a sci-fi thriller that delves into the search for extra-terrestrial intelligence. Each, amazingly enough, is applicable to investing.

Here’s what we’ve been reading:

  • Bad Blood: Secrets and Lies in a Silicon Valley Startup
  • Author: John Carreyrou
  • Recommended by: Managing Director Jamie Wickham

The book shines a light the rise and fall of Silicon Valley healthcare darling Theranos, the multibillion-dollar biotech fraud start-up headed by Elizabeth Holmes. Wickham says the story is more about what not to do. "But it is a great read and reveals how people can get swept up in the euphoria," he says.

  • The Wisdom of Finance: Discovering the Humanity in the World of Risk and Return
  • Author: Mihir Desai
  • Recommended by: Content Editor Lex Hall

Desai, a Harvard Business School professor, has produced a penetrating look at how classics of literature and film can illustrate and explain financial principles.

  • The Three-Body Problem: Remembrance of Earth’s Past 1
  • Author: Liu Cixin
  • Recommended by: Portfolio Manager Nimalan Govender

When we put the call out for publications, we didn't expect to receive a science-fiction thriller with a Proustian-sounding title. But Govender insists that the book by China’s most popular science-fiction author should be mandatory reading for investors. The 3-body problem is loosely based on the problem of determining the motion of three bodies in space, moving under no influence other than their shared gravity. From Govender's understanding, there is no general solution for this problem. But he assures us there is a financial takeaway from this esoteric, and multi-award-winning – and at times, gruesome – tome. "We face a similar problem in markets as we try to find the ideal model to explain returns and volatility," he says. "We always work on the basis that our reactions are rational and can therefore be explained. If, however, and in reality response to both financial and non-financial information is to some degree irrational, then you have a three-body problem."

  • Mastering the Market Cycle: Getting the Odds on Your Side
  • Author: Howard Marks
  • Recommended by: Head of Performance Analytics and Investment Risk, Iain Perry

This book received several nominations from Morningstar staff. This new book from legendary American investor Howard Marks reveals how to track and react to the ups and downs of the stock market. It hits the shops next week, and there is an audiobook version, although you’re probably better served digesting this kind of fare in print and before the turkey arrives.

  • Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts
  • Author: Annie Duke
An interview with former World Series of Poker champion Annie Duke recently captured my attention. This book draws on real examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. I couldn't put this book down and I believe it's enormously applicable to the world of investing.
  • Millennial Money: How Young Investors Build a Fortune
  • Author: James O’Shaughnessy

For Morningstar’s newest readers, this book is a compelling read. O’Shaughnessy argues that the millennial generation – that enigmatic species born roughly between 1980 and 2004 – will not be able to rely on pensions and social security in retirement. Instead, they’ll have to save and invest in the global stock market to reach their goals.

  • The Price of Fortune: The Untold Story of Being James Packer
  • Author: Damon Kitney
  • Recommended by: Equity Analyst Daniel Ragonese

Daniel is looking forward to reading the new biography of James Packer by award-winning journalist Kitney. The book is a fascinating, and at times harrowing, glimpse into Packer's life, his battle with alcohol and his tumultuous relationships, and how they affected his empire.

  • China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans and the End of the Chinese Miracle
  • Author: Dinny McMahon
  • Recommended by: Senior Editor Glenn Freeman

The world is watching China's rise as a global economic power. Freeman says this book is filled with insights into China's economy and the intrinsic role debt has played in its success to date. "McMahon lived in China for several years, and his first-hand experience shows," he says. "He has a solid understanding of the cultural mores that underpin phenomena such as shadow-banking and corporate corruption."

  • 100 Year Life: Living and Working in an Age of Longevity
  • Authors: Lynda Gratton and Andrew Scott
  • Recommended by: Regional Manager Samantha Woodham

Living beyond 100 is historically rare, but more than half of children born in developed countries today have a life expectancy greater than 100 years. This book examines how a traditional three-stage approach to society – education, work and retirement – will respond to the proposition of more and more people reaching a century of life. Samantha says this book made her take a step back and her open her eyes to the bigger picture.

  • Skin in the Game: Hidden Asymmetries in Daily Life
  • Author: Nassim Nicholas Taleb
  • Recommended by: Senior Product Manager Jason Prowd

Skin in the game is necessary for fairness, commercial efficiency, and risk management, Taleb argues, as well as being necessary to understand the world. Jason acknowledges that Taleb can be "needlessly caustic", but urges readers to look past that and read the book anyway. "Here Taleb focuses on an often-forgotten truth: incentives really matter – both at an individual and society level."

  • The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life
  • Author: Mark Manson
  • Recommended by: Senior International Editor Emma Wall

And for the thick-skinned, this book comes with a colourful language warning. "It's a self-help book for people who hate self-help books," says Emma. While not technically about investing, she says it's full of useful and interesting techniques for living your best life.

This post initially appeared on Morningstar.co.uk

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