While the book’s reliance on statistical analysis may make it too technical for the average reader, it’s likely to be an...
In this contrarian view of the asset pricing model, Falkenstein attempts to debunk the notion that greater risk equals greater reward.
In this detailed statistical study of risk as it applies to financial investments, the author claims that most in the financial world agree with the theory that “the expected return of a financial asset is a function of risk.” However, Falkenstein, who holds a Ph.D. in economics from Northwestern University and has been a risk manager and portfolio manager, contends that there is little evidence supporting the idea that taking risk results in higher returns. In fact, “in practice any measure of risk is at best uncorrelated with average returns and is often negative.” The author, targeting economists, financial analysts and students, expounds on the current asset pricing theory, discusses the “rise and fall of standard models,” and for good measure, adds a bit of psychosocial commentary in chapters entitled “Why Envy Explains More than Greed” and “Why We Take Too Much Financial Risk.” Falkenstein’s perspective is that asset pricing theory “is based on a profound mistake over what is more important to financial decision makers, envy versus greed.” He advocates “the acceptance of what predicts better, and the rejection of what predicts worse.” As evidence that it’s difficult to swim against the tide, the author cites his own experience trying to convince others to buy low-volatility stocks. He writes that his idea “was always dismissed” until he became an equity long-short portfolio manager at a hedge fund, where, he asserts, he personally made $3.5 million over two years. The author’s conclusion is likely to be controversial in some circles, if not downright inflammatory: “Many common investment strategies and tactics are as costly as gambling.”
While the book’s reliance on statistical analysis may make it too technical for the average reader, it’s likely to be an eye-opener for economists and financial analysts willing to consider unconventional alternatives.Pub Date: Aug. 16, 2012
ISBN: 978-1470110970
Page Count: 196
Publisher: CreateSpace
Review Posted Online: Oct. 29, 2012
Review Program: Kirkus Indie
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...
A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.
The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.Pub Date: Nov. 1, 2011
ISBN: 978-0-374-27563-1
Page Count: 512
Publisher: Farrar, Straus and Giroux
Review Posted Online: Sept. 3, 2011
Kirkus Reviews Issue: Sept. 15, 2011
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These are not hard and fast rules, but Meyer delivers important reading for those engaged in international business.
A helpful guide to working effectively with people from other cultures.
“The sad truth is that the vast majority of managers who conduct business internationally have little understanding about how culture is impacting their work,” writes Meyer, a professor at INSEAD, an international business school. Yet they face a wider array of work styles than ever before in dealing with clients, suppliers and colleagues from around the world. When is it best to speak or stay quiet? What is the role of the leader in the room? When working with foreign business people, failing to take cultural differences into account can lead to frustration, misunderstanding or worse. Based on research and her experiences teaching cross-cultural behaviors to executive students, the author examines a handful of key areas. Among others, they include communicating (Anglo-Saxons are explicit; Asians communicate implicitly, requiring listeners to read between the lines), developing a sense of trust (Brazilians do it over long lunches), and decision-making (Germans rely on consensus, Americans on one decider). In each area, the author provides a “culture map scale” that positions behaviors in more than 20 countries along a continuum, allowing readers to anticipate the preferences of individuals from a particular country: Do they like direct or indirect negative feedback? Are they rigid or flexible regarding deadlines? Do they favor verbal or written commitments? And so on. Meyer discusses managers who have faced perplexing situations, such as knowledgeable team members who fail to speak up in meetings or Indians who offer a puzzling half-shake, half-nod of the head. Cultural differences—not personality quirks—are the motivating factors behind many behavioral styles. Depending on our cultures, we understand the world in a particular way, find certain arguments persuasive or lacking merit, and consider some ways of making decisions or measuring time natural and others quite strange.
These are not hard and fast rules, but Meyer delivers important reading for those engaged in international business.Pub Date: May 27, 2014
ISBN: 978-1-61039-250-1
Page Count: 288
Publisher: PublicAffairs
Review Posted Online: April 15, 2014
Kirkus Reviews Issue: May 1, 2014
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