Tag Books

Predictably Irrational

Predictably Irrational by Dan Ariely

In this book, Ariely thoroughly challenges readers’ assumptions about making decisions that are perceived to be based on rational thought. After studying this book (and I have studied a lot of economics), you will fundamentally rethink what makes you and the people around you tick…

Chapter summaries:

Comments on “A Capitalism for the People”

by Luigi Zingales [2012]

Zingales who emigrated from Italy to the U.S., took his Ph.D. at MIT and is now a tenured professor (of finance) at the University of Chicago. He offers in this book an interesting perspective on manifold ills in the American economic system that, left unaddressed, will likely send this nation into a long-term decline not unlike what much of Southern Europe and South America, for example, have experienced. Just to mention a few, these ills include “crony capitalism,” growing corruption, creeping socialism, lessening competition, more rent seeking, greater wealth redistribution, more systemic risk, decreasing global competitiveness, winner-takes-all rewards allocation, diminishing trust, mushrooming regulatory complexity, growing government share of economic activity, etc. Zingales offers suggestions for a new economic framework, or at least an approach for reestablishment of meritocracy and competitiveness that fostered the individual, corporate, and societal success during America’s past. Note: Rep. Paul Ryan is among those who have read this book.

Big government is essential for socialism and crony capitalism to thrive. In 1900, federal government spending equalled 3% of U.S. GDP. Since then, the proportion has grown about eightfold. Power to tax and redistribute trillions is what drives hundreds of millions in election campaign spending. The state enjoys an “ultimate monopoly.” In the past, state monopoly power extended to the likes of the East India Company. More recently, it extended to Fanie Mae and Freddie Mac, for instance.

Elizabeth Warren was right about one thing—the system is rigged. Perception of rigging is enough to undermine the free market system, to discourage participation, risk taking, hard work, etc. Zingales notes that over half of Americans trust government little or not at all, and only about one-sixth trust large corporations. The number and size of taxpayer bailouts of corporations since 2008, LIBOR manipulation, and other developments have further eroded public trust.

This book is informative, entertaining, and instructive. A holistic view of America’s present state is just what the doctor ordered. Chapter 2 is titled “Who Killed Horatio Alger?” Many have said, as with Julius Caesar, many have blood on their hands.

Some good reads…

On the heels of JPM’s $2 bil. [3/17—now $3 bil.] “hedge” snafu (It was a directional bet/trade, not a “hedge,” by the way…), I am reminded of two very good reads regarding situations such as these. The two books are:

  1. The Black Swan
  2. The Quants

If you are interested in Wall Street, and the JPM situation…, you will enjoy reading both books; as both background and as “net-new” information…

Profit from the core

Profit From The Core (2001) is mandatory reading for any senior-level executive. Its ideas and concepts are timeless. The book was updated in 2010—give it a read…

Here are some helpful hints to get you thinking/started:

To identify your core business, first identify the five following assets:

  1. Your most profitable, franchise customers
  2. Your most differentiated and strategic capabilities
  3. Your most critical product offerings
  4. Your most important channels
  5. Any other critical assets that contribute to the above (such as patents, brand names, position at a control point in a network)

And, always begin a consulting [or business] assignment by asking these questions first:

  1. “What is the business definition where you compete?”
  2. “What is your core business and source of potential competitive advantage?”