Archive for the 'Book Reviews' Category

Book Review: An American Hedge Fund

I was sent a pre-publication copy of Timothy Sykes’ book An American Hedge Fund and found it to be a quick and fairly enjoyable read.

The book recounts the improbable tale of how Sykes turned his Bar Mitzvah money into a multi-million dollar hedge fund, and reads as much like a trading diary as it does either a novel or a personal finance book. As to what it actually is, if you were one of those people offended by the “truthiness” of A Million Little Pieces you may want to steer clear. The book is billed as a memoir, categorized under Business/Personal Finance and described in the cover letter I received as a novel. Not to mention it was published under Sykes’ own “Bullship Press” label, so consider yourself warned if not every fact in the book is verified.

Personally, though, I could care less about whether a story is truth or fiction as long as it reads well. And here the book turns out to be quick and, assuming you are into the stock market, enjoyable. The biggest turnoff was that hardly a page goes by without a clinical description of the gain/loss on some trade that was made. I would have preferred a more general discussion of how Sykes learned from his successes and mistakes, with the trades serving as illustrations rather than the other way around.

Sykes is able to tell the story with the right mix of chutzpah and humility, fessing up to his mistakes – some of which he continued to make even after professing to learn from them. I find it particularly ironic that late in the book Sykes says:

Looking back, I had foolishly gotten into this industry thinking I could easily grow my operation to the $20 to $50 million asset range based on my performance alone. I would’ve saved a great deal of time, energy and money if somebody had written a book like this to warn me about the true nature of the industry.

Four pages later, he says:

I’d read up on the self-publishing industry and thought I’d found another niche market ripe with opportunity. If I went this route, I’d have total control over my book, quadruple profit margins, and I could distribute the truth to the general public within a few months.

Something tells me his next book will be an expose of the publishing industry.

Posted on 1st October 2007
Under: Book Reviews, Investing in Stocks, Technical Analysis | No Comments »

Lifetime Financial Advice

Much of financial planning fails to account for the investor’s human capital, and how that interacts with financial capital. Ibbotson et. al. address the issue in depth in a recent CFA Institute Monograph, Lifetime Financial Advice: Human Capital, Asset Allocation, and Insurance.

Human capital, in the context of the monograph, is simply the present value of a person’s future earnings. When the investor is young, human capital likely far exceeds financial capital. As retirement approaches, financial capital needs to be able to replace the income as human capital dwindles.

The monograph contains a variety of models and case studies, but some of the important considerations include:

  • Security selection should include assets with low correlation to the investor’s income. Too many people, for example, invest too much of their human and financial capital in their employer.
  • Insurance products to protect against premature death (life insurance) and unexpected longevity (annuities) must be a part of the overall plan.
  • The types of plan in which the investor participates must be considered to develop the optimal mix of lifetime income and bequeath.

Posted on 16th July 2007
Under: Book Reviews, FInancial Planning, Personal Finance, Portfolio Management | No Comments »

Book Review: An American Hedge Fund

I was sent a pre-publication copy of Timothy Sykes’ book An American Hedge Fund and found it to be a quick and fairly enjoyable read.

The book recounts the improbable tale of how Sykes turned his Bar Mitzvah money into a multi-million dollar hedge fund, and reads as much like a trading diary as it does either a novel or a personal finance book. As to what it actually is, if you were one of those people offended by the “truthiness” of A Million Little Pieces you may want to steer clear. The book is billed as a memoir, categorized under Business/Personal Finance and described in the cover letter I received as a novel. Not to mention it was published under Sykes’ own “Bullship Press” label, so consider yourself warned if not every fact in the book is verified.

Personally, though, I could care less about whether a story is truth or fiction as long as it reads well. And here the book turns out to be quick and, assuming you are into the stock market, enjoyable. The biggest turnoff was that hardly a page goes by without a clinical description of the gain/loss on some trade that was made. I would have preferred a more general discussion of how Sykes learned from his successes and mistakes, with the trades serving as illustrations rather than the other way around.

Sykes is able to tell the story with the right mix of chutzpah and humility, fessing up to his mistakes – some of which he continued to make even after professing to learn from them.  I find it particularly ironic that late in the book Sykes says:

Looking back, I had foolishly gotten into this industry thinking I could easily grow my operation to the $20 to $50 million asset range based on my performance alone. I would’ve saved a great deal of time, energy and money if somebody had written a book like this to warn me about the true nature of the industry.

Four pages later, he says:

I’d read up on the self-publishing industry and thought I’d found another niche market ripe with opportunity. If I went this route, I’d have total control over my book, quadruple profit margins, and I could distribute the truth to the general public within a few months.

Something tells me his next book will be an expose of the publishing industry.

Posted on 1st July 2007
Under: Book Reviews | No Comments »

Book Review: The Poker Face of Wall Street


Martin Fridson reviews The Poker Face of Wall Street by Aaron Brown in the January/February 2007 issue of the Financial Analysts Journal, saying “Brown’s arguments, although provocative and well supported, seem to express a yearning for respectability.”

Fridson believes the book should focus less on trying to equate gambling and investing and more time “deriving pleasure from his supposed vice.” While many will disagree with the conclusions, Fridson believes the author provides a service by challenging investors to consider familiar issues from new angles.

Posted on 10th March 2007
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Book Review: Neural Networks in Finance


Mark Rzepczynski reviews Neural Networks in Finance: Gaining Predictive Edge in the Markets in the January/February 2007 issue of the Financial Analysts Journal. He says “Any effective book on this topic should address the criticisms and display how the technique can be resurrected to solve forecasting problems. Even with this high hurdle, author Paul D. McNelis, of Fordham University, does an excellent job.”

Rzepczynski describes the book as short and dense, and likely to prove a difficult read for those not already versed in econometric methods. Nonetheless, he describes it as ideal for those who desire the clearest presentation of the technique and who want to gain a predictive edge.

Posted on 6th March 2007
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The Battle for the Soul of Capitalism


John Bogle’s The Battle for the Soul of Capitalism was reviewed by Victor F. Morris, CFA, in the January/February 2007 issue of the Financial Analysts Journal. Morris says “His book should be read by investors, lay and professional, as well as by all citizens concerned about the future of the U.S. economy.”

Morris challenges Bogle’s assertion that the shift from an ownership society to an intermediation society are “unrecognized,” pointing out countless publications on the matter. However, he generally agrees with the author’s general assertion that there is nothing inherently wrong with capitalism – it doesn’t need “saving” so much as enforcement of the law by gatekeepers.

Posted on 5th March 2007
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Kiplinger’s Reviews Finding the Next Starbucks


Kiplinger’s March 2007 issue included a review of “Finding the Next Starbucks” by Michael Moe. They liked the book – after the first 200 pages, which they found to be a boring rehash of the obvious.

Posted on 25th February 2007
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