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Ask HN: Book recommendations for understanding financial systems?

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Re: Ask HN: Book recommendations for understanding financial systems?

#51

Post by Grustaf »

pergadad wrote: post #29
evjan wrote: post #20

Earlier quoted context omitted.

The entire Incerto book series by Taleb (which includes Fooled by Randomness and The Black Swan) are awesome and they are talking about big catastrophic events like the current one. This pandemic is a classic Black Swan event: it's a surprise, it has a major impact and lots of experts will try to say that it was easily foreseeable in hindsight.

It's not a black swan, a pandemic was long on the horizon (think SATS, MERS, Ebola, ...). Just to add: I found taleb pretty opionated and had trouble distinguishing his own opinions from facts/theories.. I'd not recommend his books.

I strongly recommend reading the (relatively few) one-star reviews of his books on Amazon. Very entertaining stuff, with more substance than his books...

Re: Ask HN: Book recommendations for understanding financial systems?

#52

Post by cinquemb »

nabla9 wrote: post #50
cinquemb wrote: post #10

Earlier quoted context omitted.

"Ray Dalio says 'cash is trash' and advises investors hold a global, diversified portfolio" - Jan 21 2020 Had you have listened to him, you would have just been taken out back, shot, and put in one of wuhans finest crematoriums… better off reading "Statistical Consequences of Fat Tails"[0] [0] https://arxiv.org/abs/2001.10488

His advise is still sound if you are an investor and not speculator. The part of your investment that is in stock should be determined your investment horizon. If you don't need to sell your stock in next 15 years, don't hold cash.

Yeah, would have played out very well for those top ticking n225 in 1989, esp with every global CB's trying to follow in the footsteps of the BOJ, while everyone is crowding into "diversification" and searching for yield…

I consider investors to be the same as speculators, just speculators who think their beliefs will remain valid over long time frames… cause that's the gamble.

Re: Ask HN: Book recommendations for understanding financial systems?

#53

Post by nabla9 »

cinquemb wrote: post #52
nabla9 wrote: post #50

Earlier quoted context omitted.

His advise is still sound if you are an investor and not speculator. The part of your investment that is in stock should be determined your investment horizon. If you don't need to sell your stock in next 15 years, don't hold cash.

Yeah, would have played out very well for those top ticking n225 in 1989, esp with every global CB's trying to follow in the footsteps of the BOJ, while everyone is crowding into "diversification" and searching for yield… I consider investors to be the same as speculators, just speculators who think their beliefs will remain valid over long time frames… cause that's the gamble.

investor who does

- dollar cost averaging,

- diversification, small cost investing,

- has sufficiently long time-horizon

has never lost money on 15 year timescale, at least past WWII.

Re: Ask HN: Book recommendations for understanding financial systems?

#55

Post by dave333 »

Elliott Wave Principle by Robert Prechter and A. J Frost

https://epdf.pub/queue/elliott-wave-principle-key-to-market-...

This is the technical analysis method used by many market traders and it both predicted this week's market plunge as well as described its form, and is currently forecasting a further plunge next week.

For economics I would look for any youtube talk by Prof. Steven Keen - he accounts for debt that most mainstream economists ignore.

Re: Ask HN: Book recommendations for understanding financial systems?

#56

Post by cinquemb »

nabla9 wrote: post #53
cinquemb wrote: post #52

Earlier quoted context omitted.

Yeah, would have played out very well for those top ticking n225 in 1989, esp with every global CB's trying to follow in the footsteps of the BOJ, while everyone is crowding into "diversification" and searching for yield… I consider investors to be the same as speculators, just speculators who think their beliefs will remain valid over long time frames… cause that's the gamble.

investor who does - dollar cost averaging, - diversification, small cost investing, - has sufficiently long time-horizon has never lost money on 15 year timescale, at least past WWII.

Even assuming that's true, one can't say the sort of risk and investor took on 15 year look-backs since WWII has been evenly distributed to get some sort of acceptable return, nor can one say that this will continue hold true for the next 15 years. You may believe it hold true though, and many do… but very few will do their homework on the risks to their "diversification" and their own changing liquidity constraints that will occur over the "sufficiently long time-horizon"

Re: Ask HN: Book recommendations for understanding financial systems?

#57

Post by santiagobasulto »

dave333 wrote: post #55

Elliott Wave Principle by Robert Prechter and A. J Frost https://epdf.pub/queue/elliott-wave-principle-key-to-market-... This is the technical analysis method used by many market traders and it both predicted this week's market plunge as well as described its form, and is currently forecasting a further plunge next week. For economics I would look for any youtube talk by Prof. Steven Keen - he accounts for debt that…

Elliot Wave analysis is harmful, do not engage with it. I have friends that have lost a lot of money trying to follow it. It has 0 scientific background, it’s not more than astrology applied to finance. Please don’t spread these things, be responsible.

Re: Ask HN: Book recommendations for understanding financial systems?

#58

Post by IndexPointer »

dave333 wrote: post #55

Elliott Wave Principle by Robert Prechter and A. J Frost https://epdf.pub/queue/elliott-wave-principle-key-to-market-... This is the technical analysis method used by many market traders and it both predicted this week's market plunge as well as described its form, and is currently forecasting a further plunge next week. For economics I would look for any youtube talk by Prof. Steven Keen - he accounts for debt that…

I'll wait for next week to see if that's true before adding it to my list.

Re: Ask HN: Book recommendations for understanding financial systems?

#59

Post by danidiaz »

I'm not knowledgeable enough to properly recommend a book on the subject so take this with a grain of salt, but I thought the historical (and opinionated) overview of the evolution of English money in Christine Desan's "Making Money: Coin, Currency, and the Coming of Capitalism" was interesting https://www.goodreads.com/book/show/21492062-making-money

I like this quote about how financial institutions evolved:

"It happened improvisationally, indeed probably unintentionally. Participants solved one problem and created others; they reacted as often as they acted affirmatively; they moved by experience and intuition, without an overarching theory; and the whole affair took decades, involved many different actors, and coheres largely in retrospect."

Re: Ask HN: Book recommendations for understanding financial systems?

#60

Post by nabla9 »

cinquemb wrote: post #56
nabla9 wrote: post #53

Earlier quoted context omitted.

investor who does - dollar cost averaging, - diversification, small cost investing, - has sufficiently long time-horizon has never lost money on 15 year timescale, at least past WWII.

Even assuming that's true, one can't say the sort of risk and investor took on 15 year look-backs since WWII has been evenly distributed to get some sort of acceptable return, nor can one say that this will continue hold true for the next 15 years. You may believe it hold true though, and many do… but very few will do their homework on the risks to their "diversification" and their own changing liquidity constraints…

> assuming that's true,

Don't assume. You can calculate it in spreadsheet.

> You may believe it hold true though,

In the long run we are all dead. We don't need to believe they hold true. Certainty is not part of this world. Because you never know is just rhetorical argument. Quantifying risk and going on that is good enough.

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