Peter Bernstein was one of this country’s foremost financial historians and writers. Two of his books stand out as fascinating reads on the subject of risk, and the development of capital markets.
I was first introduced to his writing about 13 years ago when a friend of mine, upon learning of my intent to get The Coffeehouse Investor published, tossed me a book “Against The Gods – The Remarkable Story of Risk,” and said, “Here, read this.”
Four days and 400 pages later I came up for air, after devouring a 500 year history lesson on “risk,” and its role in a functioning society.
Bernstein, who died in 2009, wrote another book that was equally enjoyable; “Capital Ideas – The Improbable Origins of Modern Wall Street.”
In this work, Bernstein offers a review of how the curbside trading of Wall Street evolved into a functioning system of pricing discovery on that came about in large part through the study of and application of these theories on capital markets.
Against the Gods was especially interesting in regards to risk management, and the choices one makes when investing in the stock market. In looking at the risks and reward of trying to beat the market, I developed my own little game of risk called “Outfox the Box” to help the reader discover why owning index funds makes so much sense when building a portfolio.
When it comes to writing a novel, Pat Conroy tops my list of authors – that guy can really tell a story. The Prince of Tides is my all-time favorite, a story of a shrimp farming family and all the secrets that are a part of growing up in a coastal Carolina town.
Many years after reading The Prince of Tides, I had the opportunity to listen to Mr. Conroy speak to a packed-house gathering hosted by Seattle’s historic Elliott Bay Bookstore. It was at that event that I gained a little bit of insight into Pat Conroy’s writing psyche – he was telling his own story. I remember him being every bit, if not more animated in person, as he shared his own experiences that allowed him to write his novels. I could have listened to his story for hours.
Whether it is The Prince of Tides, The Great Santini, or Beach Music, Pat Conroy is able to take a a person’s everyday existence, and all the emotions that go with it, and make it come alive in a way that you and I can relate to.
Why? Because there is a good chance we have lived those emotions and experiences in our own life as well.
Reading Conroy’s novels gets me to thinking about my own story, my novel of a wheat farming family in Washington State. Within that ordinary life experience, my novel would be narrated by a character who reveals the not so ordinary details of life in all its wonder and death in all its darkness as the farming seasons unfold.
It would be a tough story to tell, and that is what would make it so meaningful. Are the secrets kept by wheat farmers and secrets shared by a German Catholic community the same secrets they take to their graves? You will have to wait for my first novel to find out.
We all have our own stories of life, of death, and all the emotions in between. The more we can embrace our own stories, the more meaningful are our ordinary experiences, the richer our lives become.
Burton Malkiel’s “A Random Walk Down Wall Street” tops my list of books that reveal the simple concept of index funds.
His book still stands out after all these years, because it was the first one I read that explained the theory behind efficient markets, and why “beating” a benchmark is so difficult to accomplish by mutual fund managers and investment advisors.
In 1993 there weren’t too many books on the bookshelves that highlighted the same philosophy I wanted to write about. This provided additional energy to write The Coffeehouse Investor.
Back then, the idea of investing in index funds was still fairly new to investors. Malkiel’s book gave me the confidence to pursue my project with a conviction that, over time, more and more investors would embrace this method of investing in stocks and bonds.
Tune in to your community – it is the energy of the universe. Some people call it God; others refer to it as a spirituality, and still others, a life force. However you define it, a wonderful energy evolves when we come together in community to enact positive change in this world. This thing called community might take the form of your workplace environment, your church group affiliation, or your weekly golfing buddies. Whatever the relationship might be, this connection is integral to discovering your essential creativity and living a rich life. Step up, step out, and get involved, the world is literally screaming for your creative energies to surface, and the time to start is now.
(From The NEW Coffeehouse Investor, page 179)
It was around 1991 – 1992, and I was in desperate need of a new vision of “God,” even though I didn’t articulate it in that way. It was better expressed by the confusion and emptiness I was feeling inside as I was asking myself, “What the #$%@! am I doing with my life?
This idea of an elderly Anglo-Saxon man, sitting up in the clouds, stroking a long flowing white beard and pulling the strings of humanity, wasn’t working. This notion of an all-powerful creature keeping tally of my good deeds and sins, drilled in to me by the priests and nuns I grew up with, just wasn’t cutting it.
And then I came across a little book by Bill Huebsch, called “The New Look at Grace – A Spirituality of Wholeness.” (The updated version has a new title, “Grace – God’s Greatest Gift”).
I could spend the next three weeks and more revealing my own adventures with spirituality, and how his book impacted me, but I don’t want to bore you. You are reading this blog because you are more interested in learning how to “build wealth, ignore Wall Street and get on with your life.”
But that’s the point.
For many of us, our spiritual journey in life IS all about building & fostering & nurturing (all types of) wealth, tuning in to the truth (by ignoring false prophets) and getting on with your life – a life of families and dreams and failures and sicknesses and death and community and careers and friendships, which, in the end, is where we discover “God” or “Grace” or the “Spirit of the Universe,” or whatever you want to call it, as Bill Huebsch so eloquently shared in his little book.
Huebsch’s work was influential beyond the message; it was the way he presented it, in a “blank verse” style of writing. It was easy to read and explained his vision of spirituality in a captivating sort of way.
I was so taken with his style of writing that I wrote the first draft of The Coffeehouse Investor in the same “blank verse” format, a style my editor at Longstreet Press initially embraced.
Just before The Coffeehouse Investor went to press, we decided to present a more traditional look to the layout of the book. But it was the “blank verse” format that encouraged me to present my thoughts in a simple and succinct manner.
I am convinced that if The Coffeehouse Investor has captures the attention of the reader, it is not only because of its message, but the way it is delivered in print. This is reflected in the countless comments I have received over the years by readers indicating the ease at which they have travelled through my little investing book.
(excerpt from A Spirituality of Wholeness)
I was really struggling. What am I going to do with my life?
It was about 20 years ago; I had been working at Smith Barney for about 9 years and was hating every day of it. Looking back, I am surprised I stuck with it as long as I did. But I had discovered a nice little niche in the business, selling municipal bonds to investors across the nation, and making some pretty good money.
What else was I going to do? Walk away from the business . . . to do nothing?
And then I came across a little book that changed my life forever.
This little book with its simple little words invited me (or boldly challenged me, is a better way to put it) to walk away from the busi-ness of being a stockbroker and do nothing as an essential first step in doing something with my life.
After all, aren’t we all called to do something in our lives?
But it’s not always easy walking away from suits and ties and a good income to nothing; to be idle, especially when you grow up in a small farming community in Eastern Washington of 500 German Catholics, where for the first 18 years of your life you are taught that “idleness is the devil’s workshop.”
This little book was suggesting that “busi-ness is the devil’s workshop as well.”
Along the way this little book stripped away a lot of the other confusing and bewildering messages we were taught in Catholic schools and at home that passed as religious dogma, but really didn’t make much sense at all.
I could write a book on how this little book has changed my life, and someday I will. It will be my story.
But for now, let’s just say this book was the driving force behind my first little book.
In The Coffeehouse Investor, I hope I have stripped away a lot of the confusing and bewildering investment messages that we were taught by Wall Street and others that passed as financial dogma, but really doesn’t make much sense at all.
Tomorrow, the book that changed my life.