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I'm a sucker for all of his financial books, and this is the best non-fiction* book I've read in 2009.
He's edited this anthology of over 50 articles chosen from the last 22 years. He included seven of his own as well as financial writers like Roger Lowenstein, Paul Krugman, Lester Thurow, and … Dave Barry.
Lewis starts off with commentary on how Black-Scholes has led millions astray through its assumptions on orderly markets and accurate performance under all market conditions, but didn't reveal those flaws until it was pounded by Black Monday. (Taleb says that Black-Scholes and Black Monday account for 97% of his lifetime trading profits.) In forewords to the book's sections, Lewis develops the theme that traders and investment bankers begin to believe ever-more complicated models telling them everything they need to know about risk (volatility) and leverage. He then moves on from 1987 to dot.coms, Long Term Capital Management, and the subprime fiasco. Each section has articles from a few months before, during, and a few months after their respective crises.
It's a great retrospective. Spouse and I were in our 20s when Black Monday hit, and it left a big impression on both us and our newlywed equity portfolio. I hugely enjoyed Jack Willoughby's "Burning Up", published in Barron's on the day the NASDAQ peaked and widely believed to be the trigger of the tech meltdown. If you've been investing through any of this book's events then you'll appreciate the article's themes of "It's the next new thing!", "Yes, but we have the risk under control", and "This time it's really different". This book will make you a better investor, albeit a much more cynical and skeptical one.
The most eyebrow-raising article is Kate Kelly's Nov 2007 profile of Bear Sterns' 73-year-old pot-smoking bridge-playing CEO and his subordinates. The most gratifying article is the profile of John Paulson (no relation to the Treasury Secretary) who personally made over $3B figuring out how to short subprime mortgages and then having the guts to follow through.
If you can't find a library copy, Lewis writes: "All proceeds from this anthology go to 826 National and a fund inside the Greater New Orleans Foundation dedicated to the rebuilding of the city." He says he donated his time.
*Fiction? Jim Butcher: "Turn Coat" and "Princeps Fury".
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