Summer Reading for the Hurricane Season

16 Book Reviews

by Joseph Dancy, LSGI Advisors, Inc. | June 2, 2009

Hurricane season for the Atlantic officially begins June 1st. Keep in mind one-third of the nation’s refinery capacity is on the Gulf Coast, and roughly 20% of the nation’s crude oil and natural gas are produced from the Gulf. Early forecasts this year are for a ‘normal’ hurricane season.

For some the hurricane season has already arrived. One of our neighbors is Professor of Psychiatry who also practices here in Dallas, a very well known practitioner. It is always interesting to talk with him. Lately his patients, all of which have issues dealing with depression or bipolar disorder or the like, have had a morbid interest in financial matters. In the past these issues were not frequently raised we were told.

But even his wealthy patients – which include quite a large proportion of his practice since most health insurance has limited coverage for mental illness and sessions are expensive - have been very concerned about their ability to persist in what is a very difficult economic environment.

He came to mind after reading an interesting article in the Atlantic magazine last month on a life-long in depth study of Harvard students, and what made them happy and what factors were present in those who had long and productive lives.

We have asked our psychiatrist neighbor the role of genetics and genetic predisposition to the diseases he treats, and in layman's terms his opinion is genetics matter ‘a lot’. Positive personalities, and on the other end issues like depression, tend to run in families—so it is the luck of the genetic draw as to what cards you are dealt.

The Atlantic article, “What Makes Us Happy” by Joshua Wolf Shenk, claimed several personality factors were present in the 60 year study in the subject individuals who were happy with their life and their accomplishments and were in relatively good health as they reached senior status: (1) they got a moderate amount of exercise, (2) they were a reasonable weight, (3) the more education they had the better they tended to fare, (4) they had a happy marriage, (5) they did not abuse alcohol, (6) they did not smoke, and (7) they had a mature ‘coping’ mechanism to deal with the inevitable problems they have faced in life.

Sixteen Books to Read This Summer

Shenk also wrote a New York Times award winning book we read entitled “Lincoln’s Melancholy” - in which he tracked Lincoln’s issues with depression and melancholy and the many problems he faced. From a troubled marriage to Mary Todd, two children who died of childhood disease—one while he was in the White House (not an uncommon event at the time). And what he thought would be a minor conflict turning into one of the bloodiest wars in history at the time, the ineffectiveness of the Union leadership at the start of the war, the loss of several close friends in the conflict, the lack of popularity he had as President for most of his term as the cost and horror of the war progressed, the book is a very interesting read on American history.

And it is a lesson on no matter how bleak things might look in the end Lincoln regained his popularity, won the war, and became one of America’s greatest leaders of all time. All in spite of his melancholic personality and genetic tendency toward despondency.

Shenk’s book on Lincoln was also of interest because several months ago we read a book entitled “Lucky You” by Randall Fitzgerald. It is a summary of strategies people have used to increase their ‘luck’ in different areas - including investments. The book had some interesting parts, but nothing we could apply from an investment standpoint. Fitzgerald included a discussion of precognition and luck—and specifically discussed a re-occurring dream Lincoln had weeks before his death.

According to written accounts of a member of Lincoln’s cabinet Lincoln discussed a dream where he wandered the White House and found it deserted and full of sorrow. In his dream Lincoln found a soldier in one of the White House rooms and asked him what the problem was. The soldier replied that the President had been killed by an assassin. Quite interesting, Lincoln’s dreams in his last days and his discussion of them with friends are also referenced in Shenk’s book.

Another book on luck we have read recently sets out the attributes ‘lucky’ people tend to possess. Entitled ‘The Luck Factor’ by Richard Wiseman, the reviews on the book are mixed, especially on his research methodology. But it was an interesting, easy read, and points out some behavioral attributes of successful and lucky individuals that are easily overlooked.

The four essential principles of luck that are used by ’lucky’ individuals according to Wiseman include (1) an ability to maximize chance opportunities that might be presented, (2) an ability to listen and act on lucky ‘hunches’, (3) a positive attitude and expectation of good fortune, and (4) an ability to turn bad luck and bad situations into good. Obvious, but it makes sense that those who are considered ‘lucky’ most likely have one or more of these behavioral traits.

We ran across the books on luck after reading Carol Dweck’s new book entitled “Mindset—the New Psychology of Success”, a discussion of problem solving and how people cope and solve difficult problems. She noted one of her first professional studies of children given difficult problems to solve. Most are filled with fear and concern when presented with a difficult problem, but a select few of the children are energized by the challenge—and the more difficult problem the better from their standpoint. Personality traits or ‘mindsets’, and how people differ, are the focus of her book and studies.

We have read a number of books on uranium and uranium development over the years, some of which have been excellent. Tom Zoellner’s new book entitled “Uranium” fits into the ‘excellent’ category. It is a very interesting study of the history and development of the nuclear industry—from the early days to present.

He writes well, presents some very interesting facts dealing with how the secrets of the nuclear industry were discovered, and discusses everything from uranium mining, processing, use, and security issues involved with the substance. Uranium will play a major role in the global energy story in the future, possibly the near future, and Zoellner’s book is an interesting and well presented story of where we are at and where we might be going.

“The Volatility Edge in Options Trading” by Jeff Augen is a discussion of equity option strategies and theories, pricing models, volatility, managing option positions, trading and earnings cycles and the like. We do not intend to begin trading options, but found the subject of interest. Augen does a good job discussing many of the issues relating to options pricing and trading, but it is not an easy book to read due to the nature of the subject matter.

“This Republic of Suffering: Death and the American Civil War” is an award winning book by Drew Faust. As one of the first wars that used technology to inflict carnage on a scale never before experienced the conflict—which was initially expected to be a minor event with minimal losses on both sides—the loss of life was staggering, on both sides.

The book dealt with how the military and society handled the dead—or in some cases how they were unable to recover bodies due to the conflict or the fact that some of the participants were literally savaged by the weapons used so were unidentifiable. And how the lack of medicine and medical care created a nightmare for wounded soldiers and civilians—no antibiotics or sterile operating rooms.

The quest to get information on loved ones was also a major problem. How the politicians handled the deaths, and how military changed their policies as a result of the conflict are of interest. The first book on the Civil War we have read in some time, a good picture of American history. And a great book to highlight the horrific sacrifices made by the American volunteers and conscripts so long ago—and how lucky we are as beneficiaries of their actions.

Taylor Kraus published “The New Elite”, a study of wealth in America—who has it, how they earned it, what their mind sets are, what is important to them and what is not. A good survey of wealth and attitudes of the wealthy, and an easy read. The number of wealthy has increased substantially over the last decade—and the author defines those as the top 1%, those with liquid assets of $5 million or more. Most wealth in the U.S. was created during the lifetime of the individual the survey found, many times from a business, and those parties for the most part were married and considered themselves at heart middle class.

One of the most interesting books we have read recently was a historical account of “The Match King”—Ivar Kreuger, the financial genius behind a century of Wall Street scandals. By Frank Partnoy, the book is a great historical account of the economy and society in the roaring twenties, and Kreuger’s quest to raise money for his ventures.

Using a Swedish match company Kreuger leveraged his business by expanding on borrowed money, all the while paying a healthy dividend which attracted investors. International in scope, he leant money to European governments and was one of the most famous businessmen of the times.

The Great Depression led to the unraveling of his empire of companies, an event that stunned the financial world. Kreuger would have fit in well at Enron, with all the off balance sheet entities and incomprehensible financial structures and manipulation of the accountants and auditors—80 years before Enron’s problems.

“The Tipping Point” by Malcolm Gladwell is not a new book, but an interesting analysis of how trends, fashions, and concepts spread. He discusses how minor events or occurrences can create major trend quite unexpectedly as they reach critical mass, and the trend can spread through society like a virus according to the author – to the surprise of many.

Some of the more interesting discussion dealt with how the creators of the children’s show Blue’s Clues and to a lesser extent Sesame Street tested and modified material and how it was presented to create a critical mass of viewers needed to support the program. Also, he includes an interesting discussion of Paul Revere and why he was more successful—and famous—for warning of approaching troops than others who made the same ride the same night to different locales.

Gladwell’s more recent book we read on “Outliers: The Story of Success” is a much more interesting book in our opinion. He examines those who have made incredible achievements and finds that many had hidden advantages that tilted the odds of success in their favor. A fascinating examination of everyone from Mozart to Bill Gates to Tiger Woods, and how they used their unique skills to excel in the favorable environments they encountered.

“The Lost City of Z” is an interesting non-fiction account of how a British explorer named Percy Fawcett made a journey into the Amazon to find a fabled city hidden in the interior. The book is a great historical account of these expeditions, how even Teddy Roosevelt made wilderness explorations in a time where satellite images and mapping of frontier areas was unavailable.

His disappearance, and the dozens of expeditions made in an attempt to find him, are quite incredible—as well as the disgustingly hostile nature of the Amazon and the conditions and disease early explorers of that region had to endure. Fawcett, along with Match King Kreuger, were extremely well known in the 1920’s—but are for the most part unknown today. A true “Indiana Jones” story.

Several other books that we have read so far this year that we don’t want to forget to mention—’Mr. Market Miscalculates‘ by James Grant is a compilation of a number of his financial notes over the last few years, on everything from debt, Greenspan, monetary trends, inflation, real estate, and the like. Grant writes very well, and many of the observations he included in the book are not rendered obsolete by the passage of time. Entertaining, educational, easy to read considering the topic.

‘The Richest Man in Town’ is a summary of some of the most successful business persons in the U.S., and how they obtained their wealth—and the outlook, opinions, and traits that made them successful. Author Randall Jones then prepares a list of ‘12 commandments’ of wealth shared by these individuals. Nothing new or surprising in his findings, an interesting view of some of the more successful businesses and the decisions and traits that made them so.

Ken Fisher’s ‘The Ten Roads to Riches’ examines ten ways to obtain substantial wealth, and examines examples of those who have taken these paths. Nothing new here, but his discussion of California taxes and the impact they are having on wealth creation and migration is of interest, as is his discussion of the wealth that can be generated by those who have been elected officials.

Jeff Rubin’s new book “Your World is About to get a Whole Lot Smaller” - Rubin was the head economist at CIBC and has issued some great notes the last few years on the energy sector. He does a great job at analyzing the global economy—his thesis is that with higher energy costs transportation will make global trade an artifact of history. He also claims that high energy prices caused the credit crunch and the decline in housing values and the economic contraction—not the other way around. He is a Canadian, based in Toronto, and has been around for years in the investment industry.

High transportation costs are like a tariff on trade from China according to Rubin so will reduce the amount of trade as economics dictate more cost effective local production. He also notes higher energy costs will impact the agricultural and food sectors quite severely—we will see much higher inflation, food costs, more local products and locally grown foods. A book well written.

We have read a number of others in the last few months, most of which are not worth discussing. All of those noted above were pleasurable, interesting, informative, educational, or a mixture of all four.

contact information

Joseph Dancy Adjunct Professor, SMU School of Law | Oil & Gas Law, SMU School of Law
Advisor, LSGI Market Letter | Email | Website

The opinions of FSU contributors do not necessarily reflect those of Financial Sense.