Friday, March 6, 2009

My favorite novels on financial markets

After that last rant, I am ready to get back to matters that are more pleasant. I love reading crime fiction and I consume everything I can get my hands on. Since I love reading about markets as well, a few of my favorite novels combine the best of both genres.

One of my favorite authors is David Liss. For those who have never had the pleasure of reading his novels, I would recommend his first novel, titled "The Conspiracy of Paper". Set in London at the time of the South Sea Bubble, the book is a fascinating period piece, describing the social setting of the city then. What makes it fun to read, though, is its description of the financial markets of the time and how swindlers took advantage of investors. In fact, as you read about the starting of rumors in pubs that then circulated among stock traders, you see the primitive versions of the financial press today. In fact, there are so many parallels that you can draw between then and now, that you realize that the more things change, the more they stay the same.

Almost as good is his third book called "The Coffee Trader", about the very first derivatives markets in coffee and commodities. Again, the close linkage between the development of market and commerce come alive as you read about the antics of traders in Amsterdam. Short squeezes and momentum investing have been around as long as markets have existed.

I must confess that I did not like his most recent book, "The Whiskey Rebels' as much. While it is built around the Whiskey Rebellion of 1794, it weaves in the story of Alexander Hamilton, the first Secretary of the Treasury of the United States, and his attempt to create a central bank... While it is about finance, I think that Liss is much better at describing the chaos of markets than he is in high finance.


Puneet said...

Mr Damodaran,
Whats your take on "The Black Swan"? Can that kind of investment model work on a sustained basis for the longterm?

Aswath Damodaran said...

The post was about novels but I liked Taleb's first book "Fooled by Randomness" more. The Black Swan seems to repeat the same arguments, but it does not offer a solution.

Cristóbal Gevert said...

The novel I liked the most was "Reminiscenes of a Stock Operator" by Edwin Lefevre.

Great book!

ramu said...

Mr Damodaran!

Can you suggest anything similar in Indian context. other than 'The scam'

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Unknown said...

Mr Damodaran,
Is there any book related to real life events of Harshad Mehtha or the scam he was involved in?