by Scott Pape - December 17th 2011
Like many pre-retirees, Santa is feeling the strain of the ongoing financial crisis:
“I’ve got a self-managed super fund that’s looking pretty shaky after I bought shares in Harvey Norman right before the tinsel came off the share price.
“I’ve told the elves that Gerry is definitely on my naughty list. There’ll be no imported GST-free goods for him this year!
“It could be worse though I suppose – the Reindeer Industry Super Fund invested heavily in Greek bonds after they got on the eggnog at their Christmas party in Mykonos last year.
“What a bloody disaster.”
Yet while he talks a tough game, the reality is that the image of the Father Christmas we know today is a consumerist creation of the Coca-Cola marketing department. That’s why the fat man is always dressed in their corporate colours.
But you don’t need to slug it out in a in a suburban shopping centre this silly season. Instead make a beeline to your local bookstore and give your loved ones the gift of knowledge. And to give you a helping hand, here are my four favourites:
Steve Jobs
I’ve learned through experience that rich and powerful men have the ability to ‘mould’ their persona in the media. And they don’t come much richer or more powerful than the late Steve Jobs.
So I was pleased when I picked up Walter Isaacson’s biography that he showed Jobs for what he was: a manipulative bastard, a terrible bully and, when it suited him, a liar. Yet he was also one of the true visionaries of our times who created the most valuable company on Earth – from scratch.
Like his rival Bill Gates, Jobs wasn’t an inventor so much as a tweaker who could take an existing piece of technology (mobile phone, portable music player, personal computer) and transform it into something that people would sleep on a sidewalk to buy – at sometimes twice the price of its rivals.
But you’ve already got an iPod, so you understand the genius of Apple, and to some extent the megalomaniac that ran it. The reason you should read this book is that it tells the story, in gripping detail, of a young man who was determined to leave his mark on the world.
His natural mother abandoned him when he was born, he dropped out of university, he was fired as Apple CEO, and he battled cancer. But throughout it all, or perhaps because of it all, he’s left a lasting legacy that we can all learn something from.
Only Yesterday: An Informal History of the 1920s
Written by historian Frederick Lewis Allen, this book was originally published in 1931. It chronicles the roaring twenties up to the Wall Street Crash of 29 October 1929, which preceded the Great Depression.
Of course Allen didn’t know the world was about to plunge into a deep depression for a decade, but that’s what makes this book all the more fascinating – it’s not written with the benefit of hindsight.
Despite being written eighty years ago, large slabs of it could have been written about today’s financial crisis – the greed and excess of traders, everyday people believing they were getting rich by buying dud investments, bumbling politicians making things worse, and the boom-time belief that “everything will work out”.
Another reason to read the book is that it shows just how far we’ve come. Allen talks about the introduction of the radio, the growth of the automobile industry and (gulp) the prohibition of alcohol.
You’re left with the feeling that, despite the fact that the world looks completely different today, it’s essentially the same. Or, as legendary investor Sir John Templeton said, “The four most expensive words in the English language are ‘This time it’s different’.”
Future Babble
In this book, author Dan Gardner explains scientifically why most of the economic predictions made about the economy end up being wrong (and that “the more famous an expert is, the less accurate they are”).
It’s an important book that throws some much-needed cold water on the media’s preoccupation with crystal ball gazing, which some people invariably use as a substitute for financial planning.
The book centres around a University of California study, conducted in the 1980s, on the accuracy of experts. The researchers gathered almost 300 experts and asked them to predict interest rates, the economy and growth rates. All up, they collected 28,000 predictions.
Then they waited to see how accurate they were. “The results couldn’t have been clearer”, says Gardner. “The average expert was about as accurate as a dart-throwing chimpanzee.”
Boomerang: Travels in the New Third World
In Boomerang, author Michael Lewis explains how we got ourselves into the mess we’re in. He takes us around the world to survey the financial wreckage caused by too much debt:
To Greece, where the people have a culture of lying about their financial position – both the politicians who fudged their budgets and the citizens who dodged paying taxes.
To Iceland, where a bunch of blokes (and it was blokes – part of the problem) decided to branch out from fishing to finance, which, it turns out, they knew very little about.
To the real-estate-bubble-debt-fuelled parts of Europe (and particularly Ireland), where, like Australia, people thought they could get rich by buying and selling bricks to one another.
And finally to Germany, whose politicians assured the people that on joining the Euro they’d never have to bail out other countries, and yet are now doing just that.
Lewis is scathing about the villains of the crisis – Goldman Sachs (and other investment banks) who acted like subprime borrowers to various European countries which, like a single mother with no job and no assets, shouldn’t have been given the dough. Many on Wall Street saw it coming but they had more to gain by making huge bets than doing anything about it – so that’s precisely what they did.
Essentially the financial crisis ended, and our superannuation balances went back up, because governments around the world stepped in and bailed out their banks. But they borrowed huge sums of money to do it. Now the stage is set for the second act – who will bail out the governments?
We constantly hear that the book business is going the way of the CD shop. Maybe that’s true, but I’ve learned that a book is the ultimate present: it’s something your family or friends can take with them, and it has great screen resolution and excellent battery life. What’s more, the books I’ve chosen today (along with The Barefoot Investor of course) can introduce them to new ways of thinking, doing and profiting in 2012.
Tread Your Own Path!
All of these books are available from Scott’s favourite book store: The Educated Investor
Photo: http://www.flickr.com/photos/stuckincustoms/332446838/
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1 comment
Hi Scott, I received a Readings book voucher for Christmas and I’d just like to know which book on Buffet would be the best one to buy?
Many thanks!
Regards,
Adrian!