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Book Review: Investor Behavior

Thursday, August 21st, 2014

Investor-BehaviorOrdinarily, I read all of the books that I review, but when I don’t, I tell my readers. This book I started to read, but I found it so dry that I started skimming it. It’s not that I don’t know the material; it is that I do know it.

The book covers most areas of behavioral finance, however, it does it in an academic way.  The book would be ideal for academics and those that appreciate an academic approach to finance, that want to have a taste of many different areas of behavioral finance.

There are more engaging books for practitioners and average investors to read — you would even do better reading articles like this from a leading blogger.  (Those at Amazon, please come to Aleph Blog if you want the links.)

Summary

 When I review books, I try to say who it would be good for — in this case, it is academics.  Let average market participants seek elsewhere for more engaging content.  If you still want to buy it, you can buy it here: Investor Behavior: The Psychology of Financial Planning and Investing.

Full disclosure: The PR flack asked me if I would like a copy and I said “yes.”

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

Book Review: Surveillance Nation

Wednesday, July 30th, 2014

Surveillance NationAfter I married my wife, I met her cousin and his wife, who was a Marxist.  Oddly, I found we had a lot of areas of agreement, because we both distrusted the powers that be.  In the same manner, what does a libertarian like me have to do with liberals like those who write for “The Nation?”

The answer is a lot.  There is a tendency for the political middle of the US to simply trust the politicians, assuming they are doing good. It is more accurate to assume that they are pursuing the goals of the ek=lite in the US.   The Wealthy will do well; the rest of us, meh.

We  need to be concerned about what data the government gathers on us, because it may infringe upon our constitutional rights.  Personally, I would end the CIA, NSA, and FBI.  Let chaos pursue us, and after that, let’s figure out what security we need.

I do not trust our government.  There is too much power, and too little transparency.

As for this book, it was prescient with respect to the US government collecting data on average citizens.  We live in an era when our actions are no longer private, unless we are rich enough and clever enough to conceal it.

I highly recommend this book.  It points out the errors of the US government as it aims toward secrecy, when it should disclose the information.

Quibbles

As time goes on the arguments verge from arguing for the common man, to arguing for the different man.

Summary

Many people would benefit from this book.  It will teach you about how we are all losing our freedom of speech bit-by-bit.  If you want to, you can buy it here: Surveillance Nation.

Full disclosure: The PR flack asked me if I would like a copy and I said “yes.”

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

 

Book Review: Panic, Prosperity, and Progress

Friday, July 25th, 2014

PPP I love economic history books, and I believe that most investors should read economic history.  History offers a broader paradigm for analyzing investment situations than mathematical models do.

Mark Twain is overquoted on this, but only because he deserves to be quoted:
“History doesn’t repeat itself, but it does rhyme.”

You can get a lot of insights into the present by reading this book.  So many disasters occurred because people presumed that the future would be much like the past, and they ended up being the ones that took the large losses.

Further, this book will point out that how an asset is held will make a difference in its future performance.  When there is not a lot of debt behind an asset, there may be good prospects.  But when there is a lot of debt behind an asset, prospects are not so good because those that own the asset are relying on the asset to perform.  Those who own an asset free and clear may get hurt if the price falls, but they won’t be ruined like the guy who has borrowed to own it.

This book takes on every major systemic crisis from the Tulip Bubble to the recent Housing/Banking crisis.  This is my bread & butter, but I learned things in many of the chapters regarding things I thought I knew well.  Truly, a great book.

What Could Have Made the Book Better

Financial crises don’t appear out of nowhere.  Leaving aside war on your home soil, plague, famine, communism, etc., there is usually a boom that gives way to a bust.  In some of his chapters, he could have spent more time describing the boom that led to the bust.  This is important, because readers need to learn intuitively that the boom-bust cycle is normal. NORMAL!

Ignore the economists who think they can control the economy.  They can’t do it, and this book helps to say that.  Economists are always behind the curve.  Politicians are even further behind the curve.  Regulators are still further behind the curve, and usually do the wrong thing during crises as a result.

The author could have done more to suggest how individuals and policymakers should respond to financial crises.  Better to have a book that advises us, than one that just reports.

Quibbles

On pages 421-422, he shows that he doesn’t get securitization, and blames the rating agencies, who were forced to rate novel debt for which they did not have a good model because the regulators outsourced credit risk measurement to them.

Summary

Most people would benefit from this book.  It will teach you about financial crises and their aftermath.  If you want to, you can buy it here: Panic, Prosperity, and Progress: Five Centuries of History and the Markets (Wiley Trading) (Hardback) – Common.

Full disclosure: The PR flack asked me if I would like a copy and I said “yes.”

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

 

Book Review: The Risk Wise Investor

Wednesday, July 16th, 2014

00001 What do you think about first when you look at an investment? Do you think of how much you might make, or how much you might lose?

Most successful investors think about how much they could lose, which makes this book a very good one to read, versus many investment books that spend little time on risk, but try to sell you on likely returns.

We win by not losing, while taking moderate and prudent risks.  This book encourages you in that direction.

Broadminded Wisdom

By broadminded, I don’t mean someone who is not willing to call some things right and wrong, but rather, someone who is willing to consider many facets of the problem as he suggests his advice.

He considers (chapter-by-chapter):

1) The modern problem of data overload, and how it distorts our decisions.

2) How good investment risk control is very much like the way we control non-investing risks in our own daily lives.

3) The long-term history of how financial risk management emerged, and how it has sharpened in the present era.

4) What level of risk are we trying to deal with?  Those that want to have no risk against extreme contingencies set themselves up for losses if society remains intact.  On the other hand, if you are only attempting to smooth out small setbacks, what happens when you face a true market crisis?

5) Should you consider risk to be a quantitative or qualitative matter?  The author opts for both.  I would argue you are better off with the qualitative, and a businessman’s instinct on the quantitative, as opposed to that of an academic.

6) Learn to train you emotions.  Do not give into fear or greed.

7) As a result, add to risk assets in bad times, lighten up in good times.

8 ) Think for yourself, and don’t follow the crowd.

9) Control what you can control, hedge what you can’t control, if it makes sense

10) Realize that not all risks are the same size — focus on the big ones that are within your capacity to minimize.

11) Risk management is a process.  Identify the outcomes you want to avoid and avoid them, considering what you might give up in the process.

12) Consider what great risk management looks like outside of finance, and use the analogies to aid your investing.

13) How good financial advice can help, and what that looks and feels like.  The book gives many good questions to ask those who might advise you.

14)  Dealing with financial panics and crises.  There are no easy answers here, but if you can invest more when things are at their worst, or when things stop getting worse, you can do well.

The book has a summary, where it draws all of the stands of thought together.  If after reading the book, you follow the summary, you will have a useful way of managing your investment portfolio.  Now that said, managing investment risk is not easy, because markets are not stable.  You need to be ready to not do so well during booms, while being willing to take risk when things look really bad.  (But maybe wait until prices cross the 10-month moving average…)

Quibbles

None.

Summary

This is a very good book on risk control in investment management, and most investors, retail and professional, could benefit from it.  If you want to, you can buy it here: The Risk-Wise Investor: How to Better Understand and Manage Risk.

Full disclosure: The author asked me if I would like a copy and I said “yes.”

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

Book Review: The Secret Club that Runs the World

Tuesday, July 15th, 2014

la_ca_0506_the_secret_club_that_runs This is a very good book; I learned a lot as I read it, and you will too.

In this book, Kate Kelly takes on the economic sector of commodities.  This involves production, distribution, trading, hedging, and ultimate use.

There are many players trying to profit in many different ways.  There are hedge funds, commodity trading advisers, investment banks, producers, refiners.  Some do just one facet of the commodities sector; some do everything.

This book is replete with stories from the run-up in commodity prices, and all of the games that went on.   It tells of those who made a lot of money, and those that want  broke working in a very volatile part of the economy.

It is a book that gives a testimony that information is king, and those that understand future supply, demand, and transportation costs can make a great deal of money by buying cheap, transporting, and selling high.

That said, the math can get overly precise versus the real world… the book gives examples of hedging programs that were too clever by half, ending in disaster when prices moved too aggressively.

With hedging, simplicity is beauty.  But after some success in trading well, companies think that instead of hedging, let trading become a profit center of its own .  Far from reducing risk, risks rise beyond measure, until the scheme blows up.

The book also considers non-market players like politicians and regulators, and how they are almost always a few steps behind those they regulate.  A key theme of the book is whether market participants can manipulate prices or not.  I would invite all market participants to consider my writings on penny stocks.  Can the price be manipulated?  Yes.  For how long?  Maybe a month or two at best.  In bigger markets like commodities, I suspect the ability to manipulate prices is less, because there are more players trading, and the power is equal between buyers and sellers.  There are powerful parties on both sides seeking their advantage.

The Glencore/Xtsrata merger and Delta Airlines hedging program/buying a refinery occupy a decent amount of the book.  Glencore/Xstrata illustrates the desire for scale and control in owning production in trading assets in commodities.  Delta Airlines illustrates the difficulties involve in being a heavy energy user in a cyclical, capital-intensive business that carries a lot of debt.  It’s too early to tell whether owning their own oil refining operation was the right decision or not, though typically companies do better to specialize, rather than vertically integrate.

One you have read this book, you will have a good top-level view of how the commodities sector operates, and thus I recommend the book.

Quibbles

The book title is vastly overstated.  There is no secret.  Just becuse many people don’t know about them doesn’t mean they are secret.  There is adequate data about them if you look.

There is no club.  Yes, some move from one position in one firm to a position in another.  Some even become regulators.  That is common to most industries.

They don’t run the world.  At most, they have a weak hold over commodities markets, because the traders have better data on global supply and demand than most large producers and consumers do.  That information allows them to profit on spreads, but it doesn’t let them move markets.

Summary

Given my quibbles, I thought it was a great book.  A marketing guy probably wrote the title, so I give the author a pass on that.  If you want a readable high-level view of the commodities markets, you can get it in this book.  If you want to, you can buy it here: The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders.

Full disclosure: The PR flack asked me if I would like a copy and I said “yes.”

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

Book Review: Taking Down the Lion

Tuesday, July 8th, 2014

taking down the lion This is a tough book for me to review.  The credit distress of Tyco caused me considerable stress, and let me explain to you how that was.

I was the leading corporate bond manager at the fastest growing life insurance company 2001-2003.  We had a significant position in Tyco bonds, and as thy fell, we were concerned.  As a new corporate bond manager, I drew upon all of my analysts and portfolio managers, and asked them, “Who can give me the bear case here?”  I did my own analysis as well.  No one could come up with a way that Tyco could go broke.

So I asked the next question: Is there anyone on Wall who thinks Tyco could go broke?  We found one.  We read the analysis.  We thought the argument was ridiculous, and so we wanted to buy more.  We had a problem: our client was under pressure from the rating agencies to decrease our exposure to Tyco.

We had a large block of two-year Tyco bonds that were trading near par, and I sold them, and reinvested into a smaller market value of 30-year Tyco bonds.  Problem solved, but we were now taking more risk in Tyco debt, a bet that we would win.

The Book

Taking Down the Lion takes the view that Kozlowski had a subpar legal team which made many blunders in representing him.  It also notes how the informal management culture played against Kozlowski as things that were formal at many other corporations, and thus could not be argued, were not so at Tyco.

If the book is correct, this was a perfect storm for Kozlowski, leading to an unjust conviction and sentence.  Having worked at firms that were informal, I can believe that Kozlowski was framed during a witch-hunt era that produced the dreadful Sarbox law.  Few legislators think of what the side-effects will be from their legislation.

My Thoughts

Tyco as a corporation was not a fraud.  Yes, Kozlowski was tone-deaf regarding some conspicuous consumption that he did, or was done on his behalf.  There is no crime for being a vulgar consumer.  Supposedly Kozlowski paid for it all, but still he got judged for it in court.

Truth,  don’t know whether Kozlowski was guilty or not, but the company was well-run, and what company could you not find a few things that have some taint?

Summary

I think it is a good book, and I lean toward the idea that Kozlowski should not have been convicted,  If you want to, you can buy it here:Taking Down the Lion: The Triumphant Rise and Tragic Fall of Tyco’s Dennis Kozlowski.

Full disclosure: The PR flack asked me if I would like a copy, and I said yes.

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

Book Review: Investing in India

Wednesday, July 2nd, 2014

51rdhXWu3BL I learned a lot from this book. India is an amalgam of nations inside one country. It is difficult to generalize about investing in India but there are a few themes to follow.

Most companies in India have a dominant shareholder, or family of shareholders.  As such, though there are some companies like this in the US, the first prism you view any Indian company through is how they treat outside passive minority shareholders, particularly foreign ones.  If they constantly give minority shareholders the short end of the stick, no matter how attractive the investment, avoid them.

Analysis of corporate governance is paramount, because it is very difficult to take a company over in a hostile manner.  Assume that the present management will never be changed.  Does the company still look cheap if the value -destroying management team will remain there?

Analyze capital allocation as well.  If management acts like value maximizing businessmen, it could be a good company to invest in.  If not, avoid.

Structure of the Book

The book is a slow ramp up as far as business goes, talking about culture, politics, economy, and financial structure, before really digging into investing.  These are good things to learn about, but the amount of time the book dedicates to making practical investment decisions in India is maybe 25% of the book.

The Main Problem

After you read this book, you will realize that without detailed local knowledge, you don’t stand a chance of investing in public Indian companies directly.  As such, the book is of limited value to most people.  So, though it is a good book, you probably would not benefit from reading it, aside from learning about Indian culture and government.  You would have to build up a lot of knowledge about the Indian families who run public corporations in India — which ones are favorable to outside passive minority investors, and which are not.

Aside from that, they mention the website for the book, but it is just a collection of documents for the companies mentioned in the book.

Summary

India is an unusual country with many challenges.  You will learn a lot about it and its economy reading this book.  When you are done reading this book, you will likely conclude that investing in Indian companies is best left to local experts like the author.  The book gives a good framework, but one embarking upon investing in India will need to develop knowledge of which Indian families treat minority shareholders fairly and who do not.  If you want to, you can buy it here: Investing in India, + Website: A Value Investor’s Guide to the Biggest Untapped Opportunity in the World (Wiley Finance).

Full disclosure: The PR flack asked me if I would like a copy, and I said yes.

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

Book Review: The Big Con

Sunday, June 29th, 2014

9780385495387This is an unusual book for me to review.  This is a book about Confidence Men, first published in 1940, and recently republished in 1999.  It was written by David W. Maurer, who was a professor of linguistics, and used his skills to analyze the slang of the underworld.

This book deals with Con Men — men who try to gain the confidence of another man in order to get him to hand over money to them.

I have often said, and many grifters would agree, that it is very hard to cheat an honest man.  Honest men know that there are no easy pickings in life, and if there are some holes in the system, no one will share them with you for free.  Grifters trick those who think that the world is unfair, and want to be cut in on the inside action.

Sam Israel was tricked in that way in the book “Octopus.”  Clever actors convinced him that there was easy money to be made, and they milked him and his hedge fund clients, while he lost it all.

This book takes you through the human systems that con men create in order to convince their targets that they can make easy money, until the con men fleece them.  The two key characters are ropers, who attract victims, and the insiderman, who is the boss and is the one who directs the whole scam.

They design a system that delivers a few small wins to the victim, who gets greedy and puts up a lot of money, and then the rigged system delivers a loss, cheating him of his money.  Mot often, since the victim was an willing participant in an illegal scheme, even though he was cheated, he will not be willing to press charges, even though was cheated, because he wants to protect his reputation.

The book describes the many players involved as actors, to make the enterprise look legitimate.   It also describes the games that they played, and how they would entice a victim into an unfair scheme in which they would profit off others, but end up cheating the victim.  The book talks about how the justice system was often bought by the insiderman, thus protecting the activities of those he employed.

It also describes how the ropers would figure out whether a victim would go along with a scam or not.  It gives the history of confidence games — how they developed, and how some faded, and others grew, at least for a time.

Along with all of that, it describes the lives of the grifters, and how few of them truly prospered.  Most wasted the money that they earned in riotous living. As Proverbs 13:11 says, “Wealth obtained by fraud dwindles, But the one who gathers by labor increases it.” [NASB]

To the Modern Era

Breaking from the book review, is our era so much different, or do we have the same problems in different ways?

I’ve been down enough roads in the investing world to know that there are a lot of parties who try to get people to take bad deals.  It can be as simple as guys who use the “straight-line” pitch to get people to invest with them.  It can be institutional investors who try to trick naive institutions.

It can be seminars with shills and other accomplices like Rich Dad and their ilk.  We still have Nigerian Scams and other Scams on the Internet, many of which involve identity theft.  We have promoted penny stocks, structured notes, and Ponzi schemes.  I have written about all of these.  Is the current era less prone to con men than the era from 1890-1940?

I would argue no, though it was more colorful and personal in the past.  Today’s scams are more virtual and anonymous, leaving aside Madoff’s Ponzi Scheme which was highly personal, and psychologically design to harvest money from those that wanted a high yield with safety.

Why you should consider this book

By reading about all of the ways that people get cheated, you will be deterred from greed, and distrust those who incite greed.  These problems are alive and well today.  Can you learn that there are no free lunches, and no free money?  If you can learn that, you are well on the way to not being cheated.

Quibbles

The book is repetitive.  It does not condemn the grifters for the sins they commit against others.  The book is almost amoral.  At least, it posits a human morality, where there is a code of honor among thieves, but thievery is not in itself wrong if the victim is a greedy person.

Summary

This is a classic book that if you read it should make you more skeptical about “sure things,” and “get-rich-quick schemes.”  Away from that, it is a commentary on the human condition, showing how many men are willing to compromise their ethics in order to make a lot of money.  Anyway, if you want to, you can buy it here: The Big Con: The Story of the Confidence Man.  It’s not expensive for what you get, and it is a colorful book.

Full disclosure: I bought a copy with my own money.

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

 

Q&A with The Forbidden Game Author Dan Washburn

Sunday, June 22nd, 2014

For anyone interested in learning more about Dan Washburn, author of The Forbidden Game,  you can consult his blog here.  Aside from that, you can read my Q&A with him here.  Hey, thanks for reading — I’m not a golfer, though I did it as a child, and was a caddy for some years.  It is a phenomenon is society, and should be understood.

Anyway, here is the Q&A.  In general, I say to authors that they don’t have to take all of my questions, and thus, you will see gaps in the numbers.  Here it goes:

1.       From the book Prisoner of the State, Zhao Ziyang, even while in captivity was allowed to go golfing.  Now, many in the Party distrusted Zhao because he had adopted too many Western habits and modes of thought.  Has golf been legitimized for Party members to partake in, so long as they aren’t too flamboyant about it? 

I don’t think so. Golf remains a taboo topic for China’s political elite, perhaps even more so now than in years past thanks to Xi Jinping’s ongoing crackdown on government corruption. Simply put, Chinese officials shouldn’t be able to afford to play golf in China. Their salaries are modest (last year, it was reported that President Xi’s annual salary is just $19,000) and golf in China is extremely expensive (it can cost $150, often more, to play 18 holes). So, while most Chinese assume that all government officials have other sources of income, playing golf on a regular basis would be a rather conspicuous admission of double-dealing. We all know some Chinese officials are filthy rich, and some indeed do play golf — but they still need to do so on the sly.

 

4.       In the US, golf is usually thought of as a rich man’s game.  Your book seems to indicate that it is also true in China, but is it more so, or less so than in the US?

Golf on average is much more expensive in China than in the United States. There are no public courses, per se, so you’re stuck having the pay a hefty fee to get on a so-called “private” course. Those on a budget usually stick to the driving ranges, which are often quite crowded.

 

5.       You got me to root for each of your main characters, Zhou Xunshu, Wang Libo, and Martin Moore.  It’s a much more interesting book as a result, than say a straight golf history of China book.  How did you settle on this structure of the book?  How many other characters did you try out before settling on these three?

That’s great to hear, David. I always envisioned this as a character-driven book, narrative non-fiction that keeps you turning pages like a novel. Originally, the book was going to focus solely on Zhou, with other stories related to golf’s development in China branching off from his underdog narrative. But eventually my editor and I decided, I think wisely, to add two more characters that readers could become invested in. The first people who came to mind were Martin and Wang. They were good people with very interesting stories to tell, and they allowed us to explore aspects of golf’s rise in China that Zhou on his own did not.

 

6.       Why did the Chus, running Mission Hills in China insist that they had to build the largest golf course complex in the world, not just once but twice?  Were they that way in all of their business dealings?

I’m not quite sure where the drive to be the biggest and best at everything stemmed from, but the Chus certainly weren’t alone. I recall at one point during my time in China that Shanghai had plans to be home to the world’s fastest train, the world’s tallest building, even the world’s largest ferris wheel. As China has emerged in recent decades, it has become a nation of superlatives. Mission Hills fits right in.

 

8.       As you wrote the book, what thing or things surprised you the most?

When I started covering golf tournaments in China in 2005, I knew little about the issues surrounding the development of the game there. But the more I dug, the more I realized that golf, and the complex world that surrounds it, is really a microcosm of China at the moment. The story touches on everything: the booming economy, the widening gap between rich and poor, rural land rights, environmental concerns, wild west development, and political intrigue. Golf, surprisingly, seemed to be perfect lens through which to view China during the first decade of this new millennium.

 

9.       Why did the book’s title change from Par for China, to The Forbidden Game?

It was a natural evolution. Par for China was always my working title, but the publisher really fell in love with The Forbidden Game, which was the title of a related story I wrote for Slate a few years ago. And it works on many levels. Golf was, in fact, forbidden in China for some 35 years after the Communists came to power (2014 marks the 30-year anniversary of the opening of modern China’s first golf course). Playing golf was also forbidden for Zhou when he worked as a golf course security guard. And today, building new golf courses is supposedly forbidden in China — and we all know how well that’s working.

 

10.   How long were you at work on the book?  6-8 years?

Yes, it’s been a labor of love. I first met Zhou late in the summer of 2006, and I found his story so fascinating I immediately started formulating a book in my mind. Of course, it took me another four years to actually sell the book, and a few more after that to write it. Those extra years allowed be to add a lot more depth to the story, though, so it all worked out in the end.

 

11.   How avid of a golfer are you?

I’m not. So, it’s a good thing this isn’t a how-to book. I took some lessons while in China, but quite honestly couldn’t afford to be an avid golfer there. Once I moved back to the U.S., all of my free time was spent writing. So, now that I have completed my golf book, now maybe I can finally take up golf!

Book Review: Bulls, Birdies, Bogeys & Bears

Sunday, June 22nd, 2014

51RMd9Gll+L This is a clever book with a simple insight.  When good times are expected to continue, golf does well, as a competitive professional sport, as a recreation (it’s expensive), and the markets do well as well.  Vice-versa when bad times are expected to continue.

There is a second insight, in how business gets done on the golf course, as relatively well-off people connect in person over something they enjoy.

The book describes these connections in many ways through history, over different nations, etc.  It spends time on two of the greats of the game, Jack Nicklaus, and Tiger Woods, comparing them and the economic environments they lived in.

This book surprised me… I liked it better than I expected.  That said:

Quibbles

A lot of the correlations he describes could very well be spurious.  When I look at the graphs, I am on the borderline between being convinced and not.  I give him the benefit of the doubt.

Summary

This is a well-written and entertaining book, and maybe it would make a good gift for a friend that likes golfing and investing.  Anyway, if you want to, you can buy it here: Bulls, Birdies, Bogeys & Bears: The remarkable & revealing relationship between golf & investment markets.

Full disclosure: The author asked me if I would like a copy and I said yes.

If you enter Amazon through my site, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.

Disclaimer


David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures.


Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions.


Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.

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