The five money-related books to read right now
Most money-related books are worthy and informative; some are even interesting. Very, very few of them, however, are real page-turners — the kind of books that keep you up at night rather than sending you to sleep.
Why it matters: These five new money-related books are all really good reads.
1. "Default" by Gregory Makoff
Rarely in modern times has the fate of an entire nation been held in the hands of a cranky octogenarian technocrat sitting in a courtroom 5,000 miles away.
Why it matters: In 2014, that was the position that Argentina found itself in, as Judge Thomas Griesa of a federal court in New York pondered his next move in the case of NML v. Argentina.
- Now, the full story of one of the most consequential court fights the world has ever seen has finally been told, in an erudite yet compulsively readable and deeply informed manner, by former investment banker Gregory Makoff.
The big picture: Courtroom dramas are inherently compelling, especially when they involve a fractious group of hedge funds and bond investors facing off against the imperious president of a sovereign nation — a country boasting an active military and 40 million citizens, most of whom became deeply invested in the day-to-day minutiae of the case.
- Adding to the drama: No single country has had a greater impact on the architecture of international finance than Argentina. It has borrowed prodigious sums, defaulted countless times, and precipitated a whole series of innovations, from Brady bonds to collective action clauses to today's flavor-of-the-month Common Framework.
Where it stands: With "Default," Makoff has produced that rarest of beasts — a book that's both deeply reported and enjoyable to read. At its heart is a sympathetic portrait of Griesa as a judge who tried extraordinarily hard not to punish the Argentine population or the bondholders who had cooperated with the government but who ultimately felt that his hand was forced by the country's intransigence and — glorious legal word alert — contumaciousness.
The bottom line: If you don't remember this case, you'll learn a lot. If you do remember it, you'll almost certainly have a distinct bias toward one side. This book will give you sympathy for the other side.
2. "The Trading Game" by Gary Stevenson
Thirty-five years ago, Michael Lewis published "Liar's Poker," a book about the Salomon Brothers trading floor. Salomon Brothers has long since morphed into Citigroup, but Citigroup still has traders, some of them earning many millions of dollars, and Gary Stevenson was one of them. In some ways, he was one of the best; in others, he was one of the worst.
Why it matters: Stevenson's memoir — he calls it a confession — is much darker than Lewis's, but if anything even more of a rollicking read, especially in its first half.
The big picture: Stevenson is a working-class math whiz with a tenacity and understanding of human psychology that makes him a natural trader. He's recruited onto the rates desk at Citi just as the global financial crisis hits and soon becomes the most profitable trader in the firm.
- He's also, as his subtitle suggests, not a very nice or generous person. Stevenson's unflinching and unremorseful account of his own greed — just for money, not for what it can buy — is what gives this book its spine.
Between the lines: Stevenson gives the clearest account I've ever read of how trading desks really work, how they're lubricated by inter-dealer brokers, and how hard banks make it to quit.
- Stevenson's job ends up destroying his health and his relationships, but he stubbornly holds onto it all the same, for reasons that are ostensibly financial but are obviously much deeper than that.
- Eventually he manages to extricate himself from the beast. He has since become something of an influencer banging the anti-inequality drum.
The bottom line: "Liar's Poker" and Oliver Stone's "Wall Street" were would-be cautionary tales that got taken the wrong way. "The Trading Game," to its credit, is much less seductive.
3. "Private Equity" by Carrie Sun
Carrie Sun's story is superficially similar to Gary Stevenson's — born into a family with little money, Sun excels at college and enters the financial industry. Upon realizing that her occupation is bad for her physical and mental well-being, she leaves the money behind and quits, much to the displeasure of her boss.
Why it matters: The buy-side world Sun describes is worlds away from Stevenson's frenetic trading desk. Instead, it's set in the hushed hallways of a New York hedge fund, where Sun becomes personal assistant to the billionaire founder.
- The main area of overlap: many pages devoted to describing ludicrously expensive Japanese meals barely noticed by the distracted financiers they're served to.
Between the lines: Sun refers to the founder and the fund only by pseudonyms, but anybody who reads the financial press will immediately realize that she was working for Chase Coleman of Tiger Global.
- Coleman is in many ways the polar opposite of the Ray Dalio described in "The Fund," Rob Copeland's recent biography of the founder of Bridgewater. Rather than hiring thousands of people to do ill-defined jobs far from the core functions of the firm, Coleman keeps his staff to a bare minimum and works them tirelessly.
- This turns out badly for support staff like Sun, who suffer all of the downside of the always-on grind while observing the private-jet upside only at one remove.
The bottom line: Sun's book is more literary than Stevenson's and has more self-awareness. The point is to tell her story, not to teach the reader about the inner workings of a successful hedge fund. That said, she ends up doing both extremely well.
- As an indictment of capitalism's excesses, however, Sun's book is much less successful than Stevenson's. The hedge fund world wasn't for her, but it really doesn't seem that bad.
4. "The Counting House" by Gary Sernovitz
The hotshot banker, the hedge-fund manager — these are common tropes in both fiction and nonfiction. The professional limited partner who invests in hedge funds? Not so much. Until now.
Why it matters: The enormous pools of capital at endowments and foundations are managed by very well paid professionals with a confounding job — not to pick the stocks that will beat the market, but to pick the managers that will pick the stocks that will beat the market.
The big picture: "The Counting House," a new novel from Gary Sernovitz, provides an erudite tour of the world of alternative GPs, or general partners — the men (almost exclusively) who run hedge funds and private equity shops. Sernovitz understands these asset classes deeply, showing how difficult it is for anybody to judge their sales pitch.
- The novel also casts its unblinking eye on the class of LPs — the limited partners who invest in alternatives. The protagonist of the story is the chief investment officer of a multibillion-dollar university endowment who prides himself on his century-long time horizon while simultaneously eating himself up over his one-year, one-quarter, or even intraday performance.
Between the lines: As in the memoirs from Stevenson and Sun, Sernovitz ensures that the stresses of the CIO's job manifest both physically and emotionally.
- In this case, however, the tension is alleviated by the CIO's droll sense of humor — at least until it threatens to curdle into nihilism.
Be smart: With GPs, explains the CIO, it's easy to know when they're toast. "It's the anti-two and twenty. For hedge funds, two down years in a row or one year down 20 percent. For private equity and venture, it's two down funds or one fund below a 0.8x net return."
- For LPs, it can be much harder to determine who is earning their seven-figure paycheck and who would be better off replaced by an index fund.
The bottom line: This is the most financially literate campus novel you'll ever read. One surprise: Refreshingly for such a novel, the dean of the university comes out very well.
5. "Get the Picture" by Bianca Bosker
One of the most hermetic and suspicious cultures in the commercial world is that found behind the well-appointed doors of art dealers and collectors. Bianca Bosker decided she was going to try to understand it anyway, notebook out.
Why it matters: The result, "Get the Picture," is a portrait of a broken, dysfunctional market and the misfits who comprise it. It's also a love letter to art, the act of seeing, and the way in which none of those misfits would be doing what they do were it not for something real and important and profound.
The big picture: Art collectors spend billions of dollars every year buying art from other collectors, while the artists and their galleries receive nothing.
- The art world limned by Bosker, on the other hand, might be maddening, but it's also very alive. My great hope is that her readers will find themselves drawn to the primary market and might even start buying art themselves, either from artists or their dealers.
The bottom line: Such purchases are extremely unlikely to turn out to be good financial investments. They don't need to be, given how important they are to the ecosystem — and how much nonfinancial value the buyer ends up receiving.