Financial Risk Management for Dummies. 2016. By Aaron Brown. John Wiley & Sons, Ltd., www.wiley.com. 384 pages, $26.99.
The dummies to whom Financial Risk Management for Dummies is addressed are not outright novices. Rather, they exemplify the maxim that a little bit of knowledge is a dangerous thing. Aaron Brown, chief risk officer of AQR Capital Management, devotes much of the book to dispelling mistaken notions about his subject.
“Risk management is not about predicting or preventing disaster,” he writes. Neither, says Brown, is it about estimating probabilities or outcomes. The “frequentist” approach, with its analogies to casino games, has only limited application. “If all risks were playing roulette or drawing cards,” Brown states, “we wouldn’t need risk managers.” There is little in the book about measuring risk because generally speaking, risk that is measurable can be avoided, insured, hedged, or neutralized via diversification. Contrary to the likely expectations of many investment professionals, Value at Risk (VaR) does not enter the discussion until Chapter 6.
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, Patrick O’Shaughnessy encourages millennials to overcome their skepticism and benefit from the process of wealth creation.
is about how to build companies that create new things. It draws on everything I learned directly as a co-founder of PayPal and Palentir and then as an investor in hundreds of startups including Facebook," wrote Peter Thiel at the book's opening. Thiel, as the opening suggests, has lots of insights and lessons for those interested in business startups. The narrative is a mixture of professional and life guidance, the latter of which may not interest financial professionals.
Shaun Rein shares with the readers his knowledge of the rapidly changing Chinese economy, and how businesses and investors are adapting, and must adapt.
has detailed, sophisticated analysis of the Chinese companies that are expanding outward, and of what this can involve. It is a realistic picture rather than just a trend forecast.
may be the best of the recent books on China. Author Evan Osnos was the Beijing correspondent for The New Yorker there, and his book is the record of an active journalist, "based on eight years of conversations." The resulting picture is of a large, dynamic country in the midst of rapid change, often in different directions. Osnos told the stories of individuals: some thriving in the system, others in deep trouble with political opposition, which gives a graphic feel for what it's like to strive and survive in China. We see practical realities ranging from how to bribe judges, to starting a Internet dating service.
focuses on the issue by looking at the role of the Chinese Communist party. The authors are well qualified to evaluate China's future as a potential world leader: William C. Kirby and F. Warren McFarlan are on the faculty of Harvard Business School, which has done many case studies of Chinese companies (sixty-six are listed in the book's Appendix). Regina Abrami is at the Wharton School, and Director of the Global Program of the Lauder Institute. PMc Farlan is a guest professor at Tsinghua University, and codirector of the HBS China Business Case Center. Kirby is Chairman of the Harvard China Fund, and a honorary professor at several Chinese universities.
tells the stories of eight young Wall Streeters who were hired after the Crash. Author Kevin Roose, New York magazine business writer, shadowed each subject for more than three years. They started their jobs in 2009- 2010, and most, but not all, are from elite ivy universities. Their identities are not revealed, and understandably so, since they could be fired for unauthorized media contacts. While Roose says some of the personal details and events have been changed; the stories are true, and read as candid and revealing.
is that this dependency is "unbalanced," and is starting to change dramatically. We are facing a "realignment of the world's two largest economies." Both countries are viewed as "on the cusp of important transformations."
, Larry Doyle is analyzing the relationship between Wall Street, the regulators, and Washington. Using his experience in Wall Street, Larry’s goal in writing this book was the pursuit of “truth” and “desire to help people.” These are noble goals and Larry was brave enough to ask questions many people were afraid to ask. Who regulates the regulators? How do we know that regulators didn’t collude with Wall Street firms?
. Kimble is a lawyer who has taught legal writing for 30 years at Thomas Cooley Law School.
is the story of the start up and building of 
, Iain Martin, has written one the best accounts of a bank that rode the credit bubble over the edge. The book is clearly written and organized, and brings in the wider political and cultural context. Martin interviewed over 100 individuals, many of whom were former RBS bankers, all off the record. He concluded this group had "at best a partial understanding of the businesses that made them so much money."
recalls that financial crisis, and how it affected the public.
is corporate history, and the first look at confidential company information. Maurice Greenberg's driving force created what became the world's largest insurance company. When he left AIG, it had $ 1 trillion in assets, and $ 11 billion net income. This is one of the most dramatic success stories in American corporate history.
is the detailed account of what happened—a graphic story of foolish and reckless greed.
is it
expands our view beyond the young and the tech focused. Author Daniel Isenberg is well qualified to be
our guide into the broader view of the entrepreneur. He has been involved in business start-ups, was
a Harvard Business School professor, and authored a host of case studies. Currently, Daniel Isenberg
is the founding executive director of the Babson Entrepreneur Ecosystem Project, and an Adjunct
Professor at Columbia Business School.
a significant asset.
The book, by New York Angels Chairman Brian Cohen, is a systematic step-by-step guide with "Takeaways " at the end of each chapter and real-life examples—which are essential.
concludes, "...at some point you'll need to reinvent yourself professionally..." as this is "a new era of faster-moving professional trajectories, shorter tenures at jobs and the ability to instantly communicate your message across the world."
is "the difficult task of understanding who you are and what interests you," which is in contrast to following along defined traditional career routes, often becoming influenced by what your peers are doing, and what looks like the fastest road to a big bonus. It goes without saying, the self-discovery theme of the book is much different from the traditional career goal of finance professionals, which is to make money, as much and fast as possible. In an industry now characterized by restructuring and new business models, this has obvious dangers.
,
Nobel Prize winner Daniel Kahneman explores exactly how the human mind works. There are two systems that control the way we
think. System 1 allows us to make
split-second decisions and is based on emotion (“fast thinking”), whereas
System 2 is more calculating and logical (“slow thinking”). Be prepared to learn exactly how much of our
thought is based on System 1 (it is much more than you believe) and techniques
that can be used to force our brains into a System 2 environment. By the end of the book, Kahneman may have you
believing that economic actors are not as rational as economic theory assumes.
he uncovers hidden aspects of the field. Readers new to PE will find value in the
book’s frontmatter, which includes a list of key organizations, individuals,
and terms, and a chart illustrating the flow of money. Financial professionals
will appreciate Kelly’s depictions of the major businesses and individuals and his
coverage of trends and challenges.
, covers the euro from its inception and helps to make sense of the turbulence. Mayer was chief economist of Deutsche Bank Group and head of Deutsche Bank Research; today he is a senior advisor to Deutsche Bank’s management.
Mastering ’Metrics: The Path from Cause to Effect
The authors provide an easy-to-read overview of key concepts in econometrics for anyone desiring a strong intuitive description of how to conduct analysis using simple techniques. Covering a limited number of topics with practical examples of each, they offer a useful framework for conducting fundamental econometric analysis. Although the book does not directly discuss financial issues, it provides a good foundational review for the financial empiricist who wishes to better structure econometric tests.
Statistics is second only to accounting among the technical skills necessary for engaging in modern finance and is fundamental for anyone who considers quantitative work a core element of finance. Unfortunately, practitioners’ actual statistical and econometric knowledge and intuition may be more limited than their level of academic exposure would suggest. No one willingly reads a book on econometrics to close this knowledge gap, so technical skills atrophy rather than advance with money management experience.
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