Apr 09

The Dangers of Ordering Books Online

Posted by Kristjan Velbri | Posted in Book Reviews, General | Posted on 09-04-2010

One Up on Wall StreetSome time ago I placed an order at my local book supplier for Peter Lynch’s One Up on Wall Street. Since it had pretty good reviews on Amazon and it was also on Jim Puplava’s recommended reading list, I thought it was a sure bet. Every now and then, I order a book that has relatively good reviews but in the end turns out to be a waste of time and money. Since this book was so high in almost every list, I didn’t have doubts about it. Boy, how wrong I was. The book came in today, everything looked fine until I opened the package and discovered that the book was made for little kids, not adults – it was smaller than a pack of cigarettes. What kind of a cruel joke is this? An investment book that you can read in five minutes? What the f***? This isn’t even funny. Click on the thumbnail for a larger view; and yes, the paper clip is of regular size; the numbers of the ruler run in cm (2,5 cm =1 inch).

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Dec 20

Financial Sense Newshour – Best of 2009

Posted by Kristjan Velbri | Posted in Book Reviews, Economy, Energy, Markets | Posted on 20-12-2009

As this year draws to a close, it would be appropriate to take a look at the best of 2009. Since the last months of 2008, I’ve been a follower of Jim Puplava and his excellent weekly financial news talk show. The second hour of each Financial Sense Newshour features an author of a book written about economics or finance. Here’s my top 8 for the year that was. Enjoy!

1. Inflation vs. Deflation debate – 2009 was a year of endless debate for inflationists and deflationists and it seems that neither side has settled down yet. In the previous show Mr. Puplava hinted that there would be another inflation vs. deflation debate in January 2010.

2. Trend of 2009 – interview with Gerald Celente, the trends forecaster.

3. Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG – this is the story of how AIG grew to be such a large institution and what undid the company.

4. Oil 101 – the best guide to the oil industry: from the well to the pump.

5. Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy - if you like Barry’s style, you should check out his blog at www.ritholtz.com

6. Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Busts

7. “The New Market Wizards: Conversations with America’s Top Traders - an excellent interview based on the best-selling book by Jack Schwager

8. “Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse” – another great book by Thomas Woods. There are more interviews and presentations with Thomas Woods at the Mises Institute.

The full list of 2nd hour interviews is available here.

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Sep 15

Book Review: The Great Crash of 1929 by John Kenneth Galbraith

Posted by Kristjan Velbri | Posted in Book Reviews, Markets | Posted on 15-09-2009

the great crash of 1929 by john kenneth galbraithOne of the characteristics of stock market booms and subsequent crashes is that books written about the Great Depression and the preceding stock market boom in particular disappear off the shelves in bookstores and libraries alike. First published in 1955, The Great Crash of 1929 has been in print ever since due to the speculative nature of man. Although the investment landscape and tools used in the trade have changed profoundly since 1929, the underlying drivers behind booms and busts, namely human emotions of greed, fear and hope remain the same. Therefore picking up The Great Crash of 1929 is much more than a walk down memory lane, it offers an insight to booms and busts as a whole to the extent that 1929 shares similar traits to booms and busts before and after 1929.

Anyone who picks up this book, after having read the first few pages, immediately realizes that it is difficult to put it back on the shelf. That is exactly what happened to me when I picked it up at my local bookstore. Needless to say, I bought it. During the pages that followed my initial glance at the bookstore I was glad to see that the book kept up to its praise, something that is not often the case with books these days as they have become consumer items like everything else and are relentlessly hyped by the media.

After having read the first few chapters I could not put the book away until I had finished it. The extravagance of the überconfident man with a margin account who was trading stocks in holding companies that were leveraged into fantasyland was a joy to read and needless to say, it offered great pleasure to compare the madness of crowds witnessed just a few years ago to the one offered by the author. When before reading the book I had only a brief understanding of the euphoria that had captivated the speculating public, after having finished reading it I can see why the numerous warnings put out by economists and professors before the crash were ignored. They were simply proven wrong once too often, that is, until the inevitable happened.

Reading the book also helped me understand the role of the Federal Reserve, which, as it turns out, didn’t want to a stop to the mania in fear of being accused of crashing the stock market. I was surprised to find out that companies which were conducting business in manufacturing were actually loaning out money to speculators for margin trading. This is a perfect illustration of how far the mania captivated the public at large. For the public at large, it seemed like there really was such a thing as a free lunch and that everyone could become rich doing nothing other but speculating on future economic growth, something that was not so uncommon during the heyday of the technology bubble.

Contrary to popular belief, not everyone was a speculator per se in those days and there were actually only a few bankers who thought they could pick up flying as easily as stepping out of the window of their Wall Street high-rise. To prove that, Galbraith offers some sobering statistics about the number of speculators versus long term investors, margin accounts as well as suicide rates across America during and after the crash of 1929. Throughout the book Galbraith uses the same stock index and mostly the same stocks as a reference base, he does not obfuscate the picture by gyrating from one index or stock to another. This very important for the reader as it makes following the rise and fall of the stock market very much more comprehensible in terms of real numbers and the amount of capital that was lost. Unfortunately, Galbraith has not provided the reader with charts, but for anyone who is interested, there are many websites out there whose teams have taken the task of collecting the data and putting it up for the public to use – here is just one of them.

Just so that anyone reading this does not get the wrong impression: the book is only about the stock market, not the ensuing depression. I urge everyone who is interested in stock market booms and crashes to read this book as it is one of the best books available on the topic that has withheld the test of time.

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