As a marketer of technology products to the financial services industry, I found this text extremely useful in developing a go to market strategy for Asia.Excellent qualitative analysis and suprising amount of quantitative detail.The best (only) overview for anyone wanting to understand financial services in the countries of the Asia Pacific region.
While Lowenstein's account of the Long-Term Capital Management debacle is more fascinating, Dunbar's book provides more "meat" for those interested in the backdrop of the historical event.Starting with a brief history of speculation and progressing to finance theory, "Inventing Money" places the Long-Term saga in a historical context.Indeed, almost half of the text has nothing to do with Long-Term directly, but Long-Term was not created in isolation.People from academia and "the Street" made its existence possible, and this book chronicles its development very well.A bit more technical than "When Genius Failed," this book gives the reader lots of background material on the theory behind what Long-Term was supposed to do: namely, arbitrage.As a Ph.D. student of financial economics, I found Dunbar's explanations easy to understand, but I can also see that they will be quite obfuscating to non-specialists in this area.The second part, about Long-Term's dealings, is easier to understand for everyone.While his account of what transpired to Long-Term is not as vivid as Lowenstein's, I think Dunbar does a laudable job at keeping the story flowing.BTW, the paperback addition has a thoroughly updated last chapter, "Aftermath."
If you are interested in the Long-Term story, both books are worth keeping.If you have to choose, go with "Inventing Money" if you are also interested in the history of finance theory and financial engineering; if you prefer an "insider's view," "When Genius Failed" would be a better choice.
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The definitive book on Warren Buffett has yet to be written.Perhaps only Mr. Buffett can do so, and he has no incentive in this direction.Interestingly, the more Mr. Buffett's performance weakens versus the market, the more books come out focusing on his methods.Mr. Buffett writes about his thinking in his annual reports of Berkshire Hathaway, speaks about it at his annual meetings, and occasionally shares ideas with reporters.Conclusions about his methods then are a distillation of these sources, much like the CIA used to interpret what the Soviet's thought by reviewing Pravda.The results are probably about as accurate.My main complaint about this book is that Mr. Buffett does not and probably will not invest in the new economy.And for good reasons.It doesn't fit his investing standards.So a book that takes the principles and applies them in that direction is misleading at best, and I suggest you decide what you want to call it at worst.If you want to read a good book about Mr. Buffett, I suggest that you read How to Think Like Benjamin Grapham and Invest Like Warren Buffett.That volume covers much of the same ground as here, but does so better.It also is more accurate in characterizing Mr. Buffett's philosophy, as I understand it.You can read my review of that book.
If you have read Mr. Hagstrom's book, The Warren Buffett Way, you probably don't need to read this one as well.Let me summarize some of the key points so you can decide.Here are the principles in the book, as I have paraphrased them:
(1)Think about a stock investment like you are buying the whole business.
(2)Give yourself a large margin of safety when you buy, picking a time when a stock is depressed well below its economic value.
(3)Hold few stocks and think about their current and future fundamentals constantly to see if your assumptions are holding.
(4)Avoid speculation at all costs.
The tenets of The Warren Buffett Way are repeated here:
Business Tenets
(a)"Is the business simple and understandable?"
(b)"Does the business have a consistent operating history?"
(c)"Does the business have favorable long-term prospects?"
Management Tenets
(a)"Is the management rational?"
(b)"Is management candid with shareholders?"
(c)"Does management resist the institutional imperative?"
Financial Tenets
(a)"Focus on return on equity, not earnings per share."
(b)"Calculate owner earnings."This is essentially free cash flow.
(c)"Look for companies with high profit margins."
The reported reason Mr. Buffett does not buy technology stocks is because he feels the long-term prospects are too murky.He is probably right in most circumstances.Technology companies are usually about as successful as their new products.How can you know how good they will be versus the competition 10 years from now?
The fundamental premise of a book like this is also questionable in another way.If you want to get Warren Buffett's results, you can simply own Berkshire Hathaway stock while Mr. Buffett is alive.
For most people, indexed mutual funds are a better choice.I suggest that you read John Bogle's Common Sense on Mutual Funds to learn the argument for that approach.If 90 percent of the pros cannot beat the market, can you expect to do better?
After you read this book, also think about where modeling of a famous person's behavior might not capture what you want to learn.For example, can an actor distill her or his approach into a few principles and tenets?Yes, but that distillation wouldn't allow you to duplicate the results.
Take your money seriously, and keep focusing on how to keep it safe as your first investment priority.Avoiding losses is a key Buffett principle that has served him and his investors well.
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Everything was perfect. But the book said that a problem solving guide included and I didn't receive anything.
Bernstein has written a thorough book that traces the linear progression of man's understanding of probability and risk.This is a journey that begins with the importatioin of the arabic numbering system to the West andends with super-computer crunched chaos theory.In between lie the fathers(all men) of mathamatical understanding.These individuals are the storyof AGAINST THE GODS.Bernstein survey's the intellectual contrubutions ofeach as man strives to understood basic probability, the law of largenumbers, bell curves, regression analysis, uncertainty theory andeverything else you dimly remember from college statistics classes.Hespends the latter quarter of the book on risk and probability theory in thefinancial world, where theorists have developed portfolio analysis,volitility studies, hedging and sidebets and otherquantatative marketplays.
Credit to the author for balancing his story against the very highprobability that much of what these thinkers sought may be unattainable. He frequently mentions the humanity that these people try to explain withlaws formulated from observations in the natural world.Although rightlyimpressed with his intellectual frontiersmen, Bernstein has no problemrecognizing that the uncertainty that has always eluded explanation is usand that it helps make life worth living and progress possible.
This bookis interesting for what it is.A story of the development of theories.Iwould have enjoyed more of a focus on the applications of this intellectualprogression that led to the development of insurance and financial markets. Though these elements are mentioned often, they provide the backdrop forBernsteins survey of theory.I suspect another book awaits someone whowill reverse the order and use theory as a backdrop forthe mechanismsthat have allowed the modern economy to flourish and develop.The story ofinsurance, speculation, the beginning of capital markets, a monied economyand the like spring from the intellectual movements so well chronicled byBernstein.However, they are not the focus, which has the habit of makingthe reading dry and sometimes uninteresting to those not captivated by theactual numeric analyses and proofs which are amply offerred over the courseof the book.
If you like intellectual history and are looking to tie thebuilding blocks of probability and risk analysis together over the lastfour centuries than this book may well captivate you.If you are seekingan understanding of how these discoveries were applied to forge the moderneconomy we now take for granted you will find parts interesting but maywell feel that the story is incomplete.
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This book is a concise summary of an implementable process that will help any business, especially in the financial industry, identify key clients, focus more effectively on what matters to them, and service them to the point that you replicate these top clients/customers and grow your business in a way that makes both your and your clients' lives better.Your key customers benefit from receiving a higher level of service and you benefit as you focus more effort on fewer relationships with those you most enjoy and who benefit your business the most.
Rebonato covers the material on different levels, providing not only full mathematical formulations, but also the English version of the math along with explanations of significance of the topics covered.This book is excellent for those with the mathematical background to understand the math, and is easy to follow for those with less than rigorous mathematical background.I would recommend a good foundation in general option pricing (at least an introduction to Black-Scholes and lattice modeling) prior to reading this book.Futures, Options, and Swaps by Kolb and Options, Futures, and Other Derivatives by Hull would be good preliminary readings.Rebonato does a good job in discussing the various modeling techniques, along with the strengths and weaknesses of each.
Buying a home is the biggest financial deal many people will ever make. If you're about to buy your first home it pays to learn the ins-and-outs of mortgages. Structuring your mortgage properly can save you thousands or even tens of thousands of dollars over the life of the mortgage. "Mortgages For Dummies" explains how mortgages work and how to get a great deal on your mortgage."Mortgages For Dummies" begins by asking the reader to evaluate how large of a mortgage he/she can afford. Tyson and Brown discuss budgeting, which is something many people will already know. The authors point out that in addition to covering your basic expenses, such as food and water, you must also allow for your other financial goals, such as retirement planning. Only through budgeting will you get a handle on how large of a mortgage you really can afford. Obviously, you don't want to wind up with mortgage payments you can't pay!
Lenders have separate evaluations of how much you can afford. Tyson and Brown suggest that lenders will expect your monthly housing expenses and repayment of non-housing debt to total no more than about 36% of your monthly income. And, your total housing expense probably shouldn't exceed 28% of your monthly, pretax income.
Tyson and Brown suggest not making an overly large down payment, "if it depletes your emergency financial cushion." And, don't accept a bigger mortgage than you think you can afford just because the banks say you can afford it!
If possible, you probably want at least a 20% down payment on your home. Lenders borrowing to people with less than 20% equity have found that there is an increased risk of default. Because of this, Tyson and Brown explain new homeowners with less than 20% equity in their homes will need to pay Private Mortgage Insurance (PMI). PMI can cost hundreds of dollars a year. PMI benefits the borrower, not the homeowner. Tyson and Brown suggest that as soon as you have 20% or more equity in your home, you should eliminate PMI.
Another option is to have the government insure or guarantee your loan. Mortgages For DummiesTM mentions FHA, VA, and FmHA government-guaranteed loans.
Chapter 3, Fathoming the Fundamentals, was one of my favorite chapters. The chapter does a good job explaining the secondary loan market and the purpose of the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac).
"Mortgages For Dummies" discusses the difference between conforming and non-conforming mortages. Tyson and Brown write: "This delicious tidbit of information can save you big bucks. Conventional mortgages that fall within Fannie Mae's and Freddie Mac's loan limits are referred to as conforming mortgages. Mortgages that exceed the maximum permissible loan amounts are either called jumbo loans or nonconforming loans. ... You pay dearly for nonconformity."
"Mortgages For Dummies" goes on to give the money-saving tip: "If you find yourself slightly over Fannie Mae's and Freddie Mac's limit, don't despair. You can either buy a slightly less expensive home or increase your cash down payment juuuuuuuust enough to bring your mortgage amount under the conforming loan limit."The "juuuuuuust enough" isn't my typo, although I probably got the number of u's wrong. It's Dummies' humor.
Today, "Mortgages For Dummies" Chapter 9, Refinancing Your Mortgage, will be popular. Tyson and Brown provide an example showing how quickly your refinancing will breakeven. They give us "Refinancing's Magic Formula" to calculate if you should refinance.
"Mortgages For Dummies" doesn't formally introduce the annual percentage rate or APR, and I believe this is a critical oversight. (The book does mention APR in its glossary). So, you might be quoted 7.2% and not realize this rate doesn't take into consideration points and fees you will pay, i.e. it's not the APR. Suppose your current mortgage rate is 8% (APR), you might quickly calculate that you save (neglecting tax effects)8 - 7.2 = 0.8% on the principal loan amount. This would be incorrect, because your actual APR would likely be higher than 7.2% due to the added fees. You really need to distinguish between the fee-inclusive rate and the fee-exclusive rate you might be quoted.
Overall, I think reading "Mortgages For Dummies" is useful for people who are buying their first home or considering refinancing an existing home. Enough dollars at stake that you should pursue all information on the topic and become an informed consumer, even if you need to tolerate some siiiiily jokes.
Peter Hupalo, Author of "Becoming An Investor"
Click Here to see more reviews about: Mortgages For Dummies, 3rd Edition (Paperback)
