Friday, August 31, 2007

Financial Market Books (Some good but not so light reading)

In light of the current financial market and the end of the summer I have decided to make some reading recommendations. While these books are not light reading they are very interesting and I have read several of them more than once. One is an expensive reference book but I want to reference it. I own all of these books in hardcover but most if not all are available it well priced, large print paperback versions.

The books are listed in historical order.

  1. Liars Poker - Michael Lewis - I first read this book when I got a job offer from Salomon Brothers in the Spring of 1990. While the book is a little dated since Salomon Brothers no longer exists as a standalone company (it is now part of Citigroup) it does describe the creation of the mortgage securities products that are currently in the news today. Michael Lewis was gone from Solly by the time I got there so it does not cronicle the 1991 Treasury Scandal that lead to the Formation of Long-Term Capital Management. This is the first book by author Michael Lewis and is probably one of his best.
  2. When Genius Failed (The Rise and Fall of Long-Term Capital Management) - Roger Lowenstein - After the 1991 Treasury Scandal at Salomon Brothers John Merriweather was forced out of his role at Solly. He moved up to Greenwich Connecticutt and started a hedge fund called Long-Term Capital Management with several Salomon Brothers traders and quants (including two soon to be Noble Prize winners). Prior to 1998 LTCM was a darling in the finacial world. They were on the cover of BusinessWeek and were subject of many articles in other publications. In 1998 they were involved in the near meltdown of the Global Financial Markets. Author Roger Lowenstein does a great job of telling LTCM's story. (Mr. Lowenstein has also written a very good biography of Warren Buffet)
  3. F.I.A.S.C.O - Frank Partnoy - This book was recommended to me by my Reuters' sales rep when I was at NationsBank. Author Frank Partnoy tells the inside story of the Derivatives group at Morgan Stanley during the early 1990s. While this is not a technical book the reader will come away with a good knowledge of the world of derivatives.
  4. The Smartest Guys in the Room - Bethany McLean and Peter Elkind - This book was made into a movie. However, the big screen does not do the book a lot of justice. Authers McLean and Elkind tell the story of the rise and fall of Enron. While Enron had its roots in the relatively slow pace Energy business it eventually became a trading operation similar to Salomon Brothers and Goldman Sachs. In fact one of its former traders was the highest paid person in America last year.
  5. My Life as a Quant (Reflections on Physics and Finance) - Emanuel Derman - This book was recommended to me by Author Derman writes about getting a PHd, working at Bell Labs and then finding his way to Wall Street. While Dr. Derman and I have never met before I was surprised to find that we had some common ground. Dr. Derman worked in the same Department that I worked in at Bell Labs and we both went from Bell Labs to Wall Street. While Dr. Derman spent most of his time at Goldman Sachs he was at Salomon Brothers during the same time I was there as well. I found this book to be fascinating read but could be challenging in some sections since some of concepts are explained in great detail.
  6. Origins of the Crash (The Great Bubble and its Undoing) - Roger Lowenstein - This is another book by Mr. Lowenstein. This book tells the story of Wall Steet and sums up the points made in the other book recommendations. I bought this book while I was travelling and I found it to be a quick read. If you want to get some historical reference to the current financial market crisis this might be the one book to read.
  7. Infectious Greed (How Deceit and Risk Corrupted the Financial Markets) - Frank Partnoy - Another book by F.I.A.S.C.O. author Frank Partnoy. Mr. Partnoy tells the story of Wall Street through the scandals of the last 3 decades starting out with Andy Kreiger from Salomon Brothers. This book is good read but I have to say it took a while to complete. I think it is because the last half of the book covered material that I had already read about or lived through. However, much of the first half covered material that was before I joined Salomon Brothers so I found it very interesting.
  8. The Handbook of Fixed Income Securities - Frank J. Fabozzi and T. Dessa Fabozzi - This book is the reference book and is definitely not light reading. My version is probably over 10 years old and needs updating. However, I used to use the book to look up things that I did not understand when I read about it in the Wall Street journal or was mentioned in CNBC. This is definitely not a book for everyone and I probably would not have my own copy had it not been the textbook for a class I took in the early 90s.

Now that the summer is over I need to find some new books to read. I have not found anything that I have been the interested in but the current Mortgage - Real Estate - Credit market might generate a new list of books.

1 comment:

brettok said...

Way too heavy for my tastes!