I’m spending my summer holidays in Shetland. Earlier this year it was dry; now I’m told the jet stream has moved and things are back to normal. So it’s raining. A lot. With that in mind, I’m packing books and if you are going on a ‘staycation’ this year I suspect you will too.
Top of my list this year is one I mentioned a few weeks ago by John Littlewood. You will think it sounds dull. It’s called The Stock Market: 50 years of Capitalism at Work, and is an amazingly detailed and oddly gripping account of the UK market and its relationship to politics and economics from 1945 to 1995. If you ever wonder where I get some of the odder material you see in this column, you will know by page 200 or so.
I bet, for example, that you had forgotten that in 1970 Rolls-Royce, our current poster company for manufacturing success, so messed up the development of a new engine for the Lockheed Tri-Star that it was nationalised.
I’m also taking two other old books. I’m re-reading Russell Napier’s Anatomy of the Bear. Russell – who I interview in this week’s magazine – is my current favourite financial guru, but even if he wasn’t I would still insist that if you want to understand how bear markets work and to have a hope of getting in somewhere near the bottom of this one, his book is a must-read. Apply its lessons carefully and you should also come away with the happy feeling that our own buying opportunity of a lifetime isn’t too far off.
• The Stock Market: 50 years of Capitalism at Work – John Littlewood
• Anatomy of the Bear – Russell Napier
• Exploring the World of Investment Trusts – Robin Angus
• SWAG – Joe Roseman
• Against Thrift – James Livingstone
• The Cost of Inequality – Stewart Lansley
• 23 Things They Don’t Tell You About Capitalism – Ha-Joon Chang
• Boomerang – Michael Lewis
• How to Worry Less about Money – John Armstrong
The second oldie will sound slightly nuts – Exploring the World of Investment Trusts by Robin Angus, professional gold bug and director of the Edinburgh-based Personal Assets Trust, one of my favourite funds. The title isn’t particularly revealing, but if you can get your hands on a copy you will find yourself dipping in and out of it for months (it is an anthology of articles and speeches). That’s partly because it gives an excellent, if mildly eccentric, insight into the nature of investment in general, but also because you’ll constantly want to nick quotes and jokes from it for your own work. Robin, unlike most financial writers, is very funny.
Moving on to newer books you might pick up, there is SWAG by Joe Roseman. I’m suggesting this one partly because Joe keeps asking me to, but mostly because it makes one of the best cases yet for buying and holding real assets – in particular silver, wine, art and gold. They’re all tangible goods with a finite supply and rising demand, but no cashflow. This makes them hard to value but they should, says Roseman, be considered a bit like a “money supply tracker fund” – their price will rise as global money supply does (something Roseman thinks is a given – as do I).
Regular readers will know that I’m with Roseman and Robin on gold as being the only sound currency there is and hence our insurance against the debasement of other currencies.
Next, I think you should read one of the following – Against Thrift, by James Livingstone, or The Cost of Inequality by Stewart Lansley. You won’t like them; you’ll think they are full of Marxist muck. But they lay out a good argument for the rise of inequality being in large part responsible for the lack of growth in the West (people who don’t have enough money can’t consume and people with too much money consume too little to compensate). That’s worth understanding given that, according to the Congressional Research Service, the bottom 50% of US households now own a mere 1.1% of the nation’s wealth (down from a still-pathetic 3.6% in 1995).
Then you should read another book by a non-free market economist – 23 Things They Don’t Tell You About Capitalism by Ha-Joon Chang. You can skim through it as if it were a bestselling beach read, but it is full of uncomfortable thoughts – think chapter headings such as ‘Making rich people richer doesn’t make the rest of us richer’ and ‘Financial markets need to become less not more efficient’.
Next up, you should read Michael Lewis’s Boomerang. It’s another easy read – a shrewd run through the absurdities of crisis-ridden countries – but if nothing else it will introduce you to Kyle Bass, “an essentially provincial hedge fund manager in Dallas” who has been “more or less” right at every turn in this crisis and made a (big) fortune along the way. Right now, Bass is forecasting a “cluster of sovereign defaults” across Europe and Japan, something you might not want to dwell on if you are on holiday.
Finally, a little book to make you feel better about not being Bass, and indeed about the crisis as a whole. The School of Life has started publishing mini self-help books and I am starting with How to Worry Less about Money by John Armstrong.
I’m guessing that following Armstrong’s path is going to be tougher than it sounds, but I’m planning to spend the next few weeks giving it a go. If you have better book suggestions (and I bet you think you do) add them in the comments below. Here are a few that readers have already suggested.
• This article was first published in the Financial Times