Morningstar’s manager research analysts are a curious group with broad interests. Here are a few of their current recommended readings--some financial, and others simply good books to lose yourself in.
John Rekenthaler, Vice President of Research
- The Man Who Deciphered Linear B: The Story of Michael Ventris by Andrew Robinson
- Cynical Theories: How Activist Scholarship Made Everything About Race, Gender, and Identity--and Why This Harms Everybody by Helen Pluckrose and James Lindsay
- The Arabs: A History by Eugene Rogan
- The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous by Joseph Henrich
Who doesn’t love codebreaker stories? Well, I do, particularly when the codebreaker is an enthusiastic amateur who outdoes the professionals, as happens in The Man Who Deciphered Linear B. Michael Ventris was that old-fashioned species, a man at leisure, with time on his hands and a brain that needed exercising. He turned translating clay tablets from ancient Crete into his lifetime passion. Of course, his path was far from smooth, involving many false turns and personal jealousies. Nor did breaking the code bring him eternal joy. But, as they say, the journey lies in the adventure.
Don’t understand what modern academia is about? When you hear the term “Critical Race Theory,” do you wonder exactly what is meant? If so, Cynical Theories is a book for you. As you can guess from the book’s title, the authors--who come not from the right, but from a dissenting position within the left--firmly do not approve of today’s trends. But that doesn’t mean that you need to share their views, because they do a fine job of outlining the backdrop and goals of postcolonial, gender, queer, and social-justice studies, among others.
The Arabs is a definitive one-book history of Arab politics, ostensibly beginning in the 16th century but in practice covering the past 200 years--that of colonialism, revolutions, independence, and modern turbulence. As with other former colonial areas, the Arabic world is torn between resentment at its former Western oppressors and various threads of sectarianism, with leaders who ostensibly preach broad, Arab-wide goals often seeking narrower victories. Sometimes their true aim is to advance their country over its neighbors and sometimes narrower yet, to help friends and family. The “Arab world” is often described in the singular, but it is anything but.
A quirky but exhaustively researched socio-history, The WEIRDest People in the World outlines the huge gap between the Western mindset and that of the rest of the world. Consider “The Passenger’s Dilemma.” You were in a car that was driven recklessly by a friend, greatly exceeding the speed limit, and he hit a pedestrian. Should you lie under oath to protect your friend? Fewer than 10% of Americans say they would do so. In most of the world, though, the answer is “Yes.” The author postulates that such cultural differences underlie the West’s economic and technological success. The strength of the book lies in its examples. As with Cynical Theories, one can appreciate the information without sharing the author’s conclusions.
Ben Johnson, Director of Global ETF Research
- Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever by Robin Wigglesworth
- The Three-Body Problem trilogy by Cixin Liu
The asset-management industry is very good at coming up with new ideas, but good ones are rare. Trillions tells the tale of one of the industry’s best ideas ever: the humble index fund. Robin Wigglesworth provides a detailed account of the evolution of indexing from a “folly” to a force that has fundamentally reshaped the way that many of us invest.
Tom Nations, Associate Director, Multi-Asset and Alternatives Strategies
- Lights Out: Pride, Delusion, and the Fall of General Electric by Thomas Gryta and Ted Mann
- The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin
General Electric’s plans to give its conglomerate business model the final death blow follows the trajectory described in Lights Out. GE previously offered investors access to the US economy, swallowing everything from NBC to corporate finance to oil & gas equipment. Yet these vast, disparate business units became increasingly unwieldy, and the firm's storied management program only added to its struggles.
Starting with polarizing former CEO Jack Welch’s questionable use of GE Capital to smooth out earnings reports, the book leans into Jeff Immelt’s wasteful tenure. He used two corporate jets, one of which flew empty in case the other broke down, when crisscrossing the globe, launched an unsuccessful PR campaign around GE’s adoption of agile software development, and desperately pushed one of the most disastrous acquisitions in recent memory. Immelt retired in 2017 and has since embarked on a redemption tour.
The Prize describes world history from the 1850s to 1991 with oil at the center throughout. John D. Rockefeller’s Standard Oil dominates the early pages, but Yergin also discusses other prominent founders and financiers, including the Mellons, Nobels, and Rothschilds. Oil’s rise to prominence over coal comes to bear in between the two world wars, but the strategic importance of the commodity shines through in the captivating chapters on WWII. From there, the focus unsurprisingly turns to OPEC, including its founding and the successful nationalization efforts of its members. The Prize simultaneously makes the reader fascinated by and wary of oil specifically and energy markets broadly and underlines how difficult it will be to wean the global economy off the commodity.
Jack Shannon, Analyst, Equity Strategies
Safe Haven: Investing for Financial Storms by Mark Spitznagel
Empire of Pain: The Secret History of the Sackler Dynasty by Patrick Radden Keefe
Is it possible to increase returns while lowering risk? Through a series of thought experiments, Mark Spitznagel demonstrates that this is not as crazy a notion as it sounds at first blush in Safe Haven: Investing for Financial Storms.
Make no mistake, though--this is not a how-to book. Instead, it lays out the philosophical underpinning of Spitznagel’s tail-risk hedging investment strategy. Still, it does reinforce oft-forgotten investing truths that every investor can use. Namely, the multiplicative, compounding nature of investing means protecting capital is essential to building long-term wealth, as you need a capital base from which to reap future gains.
Second, any risk-mitigation strategy (or “safe haven”) worth its salt must be cost-effective, that is, it must add value above its cost, and its payoff in bad times must eclipse its total drag on the portfolio in good times, so that the compound growth rate is raised. Finally, risk mitigation needs to be a constant process, as no one knows when or why the next market crash will occur. Finding and cost-effectively implementing safe havens is the hard part, though, and Spitznagel leaves the reader to ponder that puzzle.
Radden Keefe’s Empire of Pain documents the rise of the Sacklers, the family behind Purdue Pharmaceuticals and the drug OxyContin, from upstart underdogs to industrialist villains at the center of America’s opioid crisis. Readers get a glimpse behind the curtain at the pharmaceutical industry, but there are plenty of investing lessons to glean. Perhaps the biggest is the importance of independent analysis.
The Sacklers cajoled regulatory bodies to get favorable treatments on their drugs, and even highly-educated doctors and physicians thoughtlessly took Purdue at their word as the company downplayed the addictive properties of OxyContin. Investors (and especially investment analysts) are bombarded with materials and sound bites from fund companies that paint their products in the best light possible. There certainly are good firms and funds out there, but it’s important to maintain a healthy scepticism toward them and conduct due diligence regardless, as you never know what may be hidden inside.
Gregg Wolper, Senior Analyst, Equity Strategies
- Man’s Search for Meaning by Viktor E. Frankl
- There Is Nothing for You Here: Finding Opportunity in the 21st Century by Fiona Hill
- Amazon Unbound: Jeff Bezos and the Invention of a Global Empire by Brad Stone
- Amnesty by Aravind Adiga
- An Artist of the Floating World by Kazuo Ishiguro
Man’s Search for Meaning is a thought-provoking, readable classic by an Austrian psychiatrist who survived Nazi death camps and developed an influential theory based partly on his experiences there. He found that people were most likely to survive--or in more normal conditions, to thrive or at least be content--only if they can focus on meaningful goals, having something to look forward to. These can range from concrete achievements like writing a book to less tangible aims such as spending more time with loved ones or reuniting with good friends.
Russia expert Fiona Hill provides interesting background about working with the Trump White House and testifying at the impeachment trial in 2019, but that period takes up relatively little of the engrossing There Is Nothing for You Here. More space is devoted to the tough road she faced growing up in an impoverished former coal-mining region in northern England. Hill tells how she overcame the hurdles posed by her poverty, gender, accent, and the town’s lack of resources through a combination of private, public, and family support, along with some lucky breaks. She also explores the striking similarities between the struggling former mining and manufacturing centers in the United Kingdom and those in the United States and, less obviously, in post-Soviet Russia.
In the follow-up to his 2013 bestseller The Everything Store, Brad Stone brings the story of Jeff Bezos and Amazon up to date in Amazon Unboundby outlining all the advances and setbacks along the way. Although Stone is suitably critical when appropriate, the book is less harshly critical than I had expected, serving more as a factual review of Bezos’ approach to taking Amazon into new areas such as groceries and filmmaking. One interesting takeaway is how often Bezos’ supposedly-visionary projects have fallen short or completely failed, yet even the failures tended to yield some technology, or an idea, that years later turns out to have value for a different project that does succeed.
A riveting thriller, a murder mystery, and most of all, a well-drawn character study, Amnesty--the latest novel by the author of The White Tiger--tells the story of an enterprising, engaging young man who arrives in Australia from Sri Lanka and builds a solid, rewarding life. But he’s shadowed by an overriding fear of being discovered, for he entered Australia illegally. When he becomes tangentially involved in what may possibly be a murder, he faces potentially life-changing decisions. An interesting exploration of what it’s like to live as an undocumented worker far from the more-familiar American context, told in a gripping manner.
A poignant early novel by the winner of the 2017 Nobel Prize for Literature, An Artist of the Floating World explores themes such as regret over past deeds, the reliability of memory, and how these issues can affect family bonds--themes developed further in his later, more well-known works The Remains of the Day and The Buried Giant. A respected Japanese artist looks back at his life, with core questions revolving around his involvement in and/or support of the prewar and wartime Japanese regime and how those past actions are having subtle and not-so-subtle effects on the life prospects and overall happiness of his adult daughters trying to navigate a much different postwar Japan.
Emory Zink, Associate Director, Multi-Asset and Alternatives Strategies
- The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow
- Lenin’s Tomb: The Last Days of the Soviet Empire by David Remnick
- Dancing on Ropes: Translators and the Balance of History by Anna Aslanyan
A recurring recommendation from colleagues across manager research, The House of Morgan did not disappoint when I finally tackled it. In clean, engaged description, Ron Chernow guides the reader through the many generations associated with the financial powerhouse in its various iterations, all the while surfacing themes and questions that remain relevant today. What should be the relationship between public and private financing? Is globalisation a help or a hindrance to building economies? What do bankers owe society, if anything at all? Thoroughly researched and masterfully presented, this tome provides insight into the characters and attitudes that shaped many of our current financial institutions--for better or for worse.
At first glance, Lenin’s Tomb: The Last Days of the Soviet Empire, which won a Pulitzer Prize in 1994, might seem outdated, but questions that it presents hold up. Stationed as a journalist in Moscow on behalf of The Washington Post as the Soviet Union reached a point of dissolution, David Remnick pulled from first-hand observations, interviews, periodicals, historical fact, and theory to explain the complex character of Russia as it emerged at that point. It isn’t a linear explanation, and many of the contributing elements aren’t simple, but ultimately, what we’re left with is a poetic palimpsest of sorts and the general sense that truth is often stranger and more complex than fiction. After reading this, I couldn’t stop thinking about how history is compiled and what elements topple nations.
Translators rarely rise to the level of name recognition enjoyed by the public figures whose thoughts they make practically accessible, but that’s a shame, because whether intentional or not, translators shape history with their choices. In Dancing on Ropes: Translators and the Balance of History, Anna Aslanyan provides conundrums faced by translators that have ramifications. What’s more important with translation--that it is literal or that it conveys the spirit of the message? How does a translator create a description for a concept that doesn’t exist in the target language? How to translate idioms? Handling polysemy? The list goes on and on, illustrated at times with tales of masterful translators in stressful situations, but the one common theme is that words often seem futile and sometimes it’s best simply to have a sense of humor about the whole process.
