Turn the year. Turn the page. It is time for a new set of books.
In a post-crisis, post-ethics world, credit gurus Hyman Minsky, James Grant and Charles Kindleberger have to be switched out. And Warren Buffett, Franklin D. Roosevelt and Ben Graham dialled in. Late in 2007, I wrote in this newspaper about crash books (“Crash course in market mania”, 2 October 2007). It is time to put those away in the library and dust off a more contextual set.
Illustration: Jayachandran / Mint
While I usually prefer time-tested books to help me through extraordinary periods, my favourite is a new book—The Snowball by Alice Schroeder: I know many of you saw this book displayed on shelves around the country last year and resisted picking it up, intimidated by its formidable 935 pages. Since it is a biography, there are many pages devoted to Buffett and the people surrounding him. But the man, his values and his clear vision shine like a beacon through the pages. In investing, as in life itself, Buffett’s homespun wisdom is a lighthouse to confused souls tossed about by a volatile market.
With all the bailouts and government packages, the credit crisis of 2008 has put economics fully back in the realm of politics. And the twain shall remain connected for several years, which leads me to my choice of a political history book. The Coming of the New Deal, 1933-1935, (The Age of Roosevelt, Vol. 2) by Pulitzer Prize-winning historian and biographer Arthur M. Schlesinger Jr, describes Roosevelt’s first tumultuous years in the White House. Along with companion volumes one—The Crisis of the Old Order, 1919-1933—and three—The Politics of Upheaval, 1935-1936—this is imperative reading in these times. To borrow a phrase from a published review of the book, it has a dramatist’s eye for vivid detail and a scholar’s respect for accuracy. Roosevelt told the American people in his inauguration speech that they had nothing to fear but fear itself. His first 100 days (written about in many other books, and considered the origin of the 100-day clock for new leaders) set the tone for recovery from the Great Depression. Drawing a strand from this moment in history, US President Barack Obama in his inauguration speech said, “We must pick ourselves up, dust ourselves off and begin again the work of remaking America.” It was not easy going for Roosevelt, but he held the nation’s confidence for two terms even as he tried a raft of solutions to fix the ills from the Great Depression. Obama’s plans are likely to rekindle memories of the “New Deal”. Roosevelt’s policies only really worked about the time the war ended in the mid-1940s. Let us hope that history will not need to repeat itself for Obama’s new “New Deal” to work.
Unusual moments in history usually ignite a “back to basics” call. Obama spoke eloquently in his inauguration address about the need to “reaffirm our enduring spirit”, and to rediscover old values of “honesty and hard work, courage and fair play, tolerance and curiosity, loyalty and patriotism”. Closer to home, the Satyam fiasco has generated the same need—a return to core values. I choose a simple book by William J. Bennett titled Book of Virtues: A Treasury of Great Moral Stories. The author weaves in a variety of simple tales, from biblical stories to modern political ones, to showcase a plethora of virtues— compassion, work, responsibility, friendship, courage, perseverance, honesty, loyalty and self-discipline. Indian readers could easily substitute a collection of Panchatantra tales from their own children’s libraries. Simple, almost simplistic, but it bears repetition timelessly. The more erudite among you can access the true meaning of the Gita as yet another strong call to a moral order. If ever there was need for “Dharma samsthapanarthaya sambhavami yuge yuge”, it is now.
From the sublime to mere engineering analysis. Security Analysis: Sixth Edition, by Benjamin Graham and David Dodd. Old hands at the investment game will recognize this as the original tome on value investing. The 1940 second edition is considered the definitive edition, but the sixth edition has a helpful foreword by Buffett, the most successful practitioner of this trade. Time-tested, oft-forgotten pearls of wisdom litter this book. If you take nothing else away, just absorb the first sentence of the book: “Analysis connotes the careful study of available facts with the attempt to draw conclusions therefrom based on established principles and sound logic.” Read also a chapter titled “Distinctions Between Investment and Speculation”. As the equity market hovers around its low, this may well be a profitable read.
My final “book” is actually a three-volume DVD set called Commanding Heights—The Battle for the World Economy, based on a book of the same name by Pulitzer Prize-winning authors Daniel Yergin and Joseph Stanislaw. For the iPod-compatible generation, this is the easiest way to access a thorough history of contemporary economists from Friedrich A. Hayek to John Maynard Keynes. The authors examine “the individuals, the ideas, the conflicts, and the turning points”. At a turning point such as the one we are in, it will give you a clear picture from a commanding height.
Come on, get to it.
Narayan Ramachandran is managing director and country head, Morgan Stanley, India. These are his personal views.
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