The Wisdom Of Crowds

Author: James Surowiecki
Year: 2004
Pages: 284
Rating: 77/100
Amazon: The Wisdom Of Crowds

The Wisdom of Crowds by James Surowiecki valiantly tries to prove the idea that large groups of people are smarter than a few individuals. The book follows the popular trend of pop/social science books (Blink, Freakanomics, etc.) in trying to overturn popular assumptions with witty insight. His case studies are easy to understand and include the TV show Who Wants to Be A Millionaire, congested traffic in urban centers, wall street markets and open-source programming.

Surowiecki's thesis gets a bit blurry throughout the book and isn't as powerful and thought-provoking as The Long Tail. The main point is somewhat confusing because, in the context of the book, crowds consist of the aggregate of independently-deciding individuals - not groups of people making decisions together. The example I created for myself to keep the framework intact is that of a trial jury. The book is not defending the "wisdom" of a jury in its current form. If a jury's decision consisted of members each casting their vote without any collaboration (and therefore persuasion) from each other than, by Surowiecki logic, the verdict will be incredible accurate (nevermind that it would result in a lot of hung juries - and probably why it doesn't work that way)

Litty's Take

I was a bit disappointed with the book. I was looking for something as juicy and mind-bending as The Long Tail or Freakanomics but I thought this fell short. I struggled to follow along with each section of the book and was constantly trying to figure out how each example fit into the greater idea. This probably would be a great magazine article, but not sure it needs to be a book.

I'm writing this review a few weeks after I finished reading the book and there are very few takeaways that are still in my head. I haven't really incorporated this ideas into my thinking and don't see how I'm going to apply it in real-life situations. I guess the one idea it did enforce is that nobody is always right - and the more opinions, perspectives and ideas you can gather the more ground and scenarios you will cover.

Anyway, if you're still interested in the book I'll be happy giving you my copy.



Parlay Your IRA Into A Family Fortune

Author: Ed Slott
Year: 2005
Pages: 300
Rating: 74/100
Amazon: Parlay Your IRA.....

Individual Retirement Accounts, or IRA's, are investment vehicles that help an individual plan for retirement. By investing money into an IRA each year throughout one's career a person is able to leverage tax benefits and hopefully be financially prepared for retirement. It sounds simple. It isn't.

There are different types of IRA's and various stipulations, clauses and procedures for each kind. The idea behind the value of an IRA is take advantage of compounded interest by growing your money in a tax-deferred environment, Ed Slott, the IRA Expert, who authors this manifesto uses plenty of graphs and charts to drive home the idea of how effective compound interest is to creating value.

IRA's are often passed down to beneficiaries (especially in wealthy estates) upon your physical departure from this planet. This is where things really get tricky. If not properly organized an IRA can't be "stretched" by the beneficiaries therefore losing the awesome growth powers of the stretch. A few missteps and a family can easily lose thousands and even million of dollars of value.

Litty's Take

This book was given to me to read by my father. I'm glad he did. Managing your wealth is as important a job as your career. Much like the book "Rich Dad Poor Dad" there is much more to increasing your wealth than cashing a paycheck every two weeks.

That being said I was amazed at how difficult it is to properly set up IRA's to maximize value. Basically it is impossible. I'm not sure if this is because a cottage industry of IRA Experts (like Mr. Slott) has figured out every which way to manipulate and maneuver through the IRA code to provide maximum benefits or because the government agencies that create these tax shelters are morons. Either way it seems like Average Joe is getting screwed out of his family fortune while the rich get richer.

If your looking to gain some understanding on how this all works Slott's book is decent. He tries to add some color to the mundane and intricate minutia of tax code and retirement planning. I think reading this can help you ask the right questions when planning your own financial affairs.



The Long Tail

Author: Chris Anderson
Year: 2006
Pages: 226. An easy read.
Rating: 91/100. Does a good job to get you thinking.
Amazon: Buy: The Long Tail

The Long Tail, the trendy new business book by Wired editor Chris Anderson, is a fascinating look at how the digital marketplace is transforming both commerce and culture.

"The Long Tail" is a phrase coined to describe the phenomenon that occurs along the demand curve as product variety increases (due to the low cost of digital inventory.) Apparently, it never ends and the tail of the curve is repelled by the horizontal access like it is a magnetic force never allowing the two lines to touch. As more obscure products are offered consumers come out of the woodwork to buy the crap. Although the demand for these individual products is small, when compounded (like tax-free interest on your 401K) the obscure products actually create an astonishingly large piece of pie. Anderson's examples include Amazon, Net Flix, iTunes, Wikipedia and the blogosphere (man, can't believe I used the word blogosphere).

My gibberish summary in the paragraph above may very well lack coherence. If the book seems at all interesting, I would recommend that you give it a read. The examples are enjoyable and illuminate the theories. Anderson does a good job of making sense out of the online economy and explains the trends that you always kind of realized was happening but couldn't put it all together. At times the book might lose a bit of focus and struggles to connect all the dots. Anderson realizes that new technology has shifted the paradigm in many markets (commerce, media, and information) and does a commendable job explaining all the effects and trends that result from this shift.

Litty's Take
I first encountered the idea of the Long Tail in a Wired article by Anderson that the CEO of my last job passed on to me. At first it seemed that the main idea is simply that more is better. The Internet allows more products to be offered and hence a few more products may are sold.

As I try to dig deeper and really understand the "Long Tail" the idea becomes way more interesting and complex. Disruptive technology does more than just make things better/easier/more profitable. It changes the playing field and therefore changes every player, team, strategy and behavior.

A few personal examples and ideas that I will leave up in the air. The reason for this is that I'm still forming my opinions.

The Long Tail of College Basketball
My father is a proud alumnus of Bowling Green State University in Ohio. As a kid I would do anything I could to follow BGSU college sports. Unfortunately I was unable to do t for BGSU. For my favorite local team, St. John's, I watched and attended almost every game. My information typically consisted of mailing a check to buy a yearbook and reading the scores in the newspaper the next day. Even box scores were impossible to obtain. Fast forward 12-15 years. BGSU sports are widely available on television and the internet. I can watch or listen to almost any college football or basketball game.

Now, does this mean that I will watch more college sports since there are more games to choose from? Will I now watch every St. John's and BGSU basketball game in effect doubling my college basketball consumption? Will I decide to root and follow more teams or conferences? How will I make my decision on which teams to root for? Is Gonzaga a school that climbed up the Long Tail and is now a major national power? Could a school like Gonzaga have become as popular as it is in the 70's or 80's?

The Long Tail of News
I'm very interested in Middle Eastern politics. I recently spent a good amount of time in Israel and fell in love with the nation. I have tried to become as educated and informed as possible in regard to Israel's predicament with its Arab neighbors. I'm also quite cynical of mainstream media and don't have the patience to watch news from the traditional media. To do this I read the Israeli newspapers, follow pro-Israel blogs and watch my favorite news commentators. The amount of information is tremendous, even overwhelming. By searching for and seeking out pro-Isreal information (from the long tail) am I closing my self off to understanding both sides of the issue? Am I becoming too polarizing in my beliefs?

The Long Tail of Music
I have a 30 GB iPod with over 2000 songs. That is my music universe. Once in awhile I may hear a song at a friend's house or out at the bar. No radio, no visits to record stores. I'm trying to figure out if this is a good thing. Yes, there are now unlimited songs available to purchase and listen to on the internet. There are services like Pandora.com that will find new songs for me according to my tastes and preferences. But, for whatever reason, I hardly ever add new music to my iPod. I no longer know songs that are radio hits or even best sellers. I wonder how my musical taste will change or evolve or well get "locked in" to whatever is on my iPod for all of eternity. More importantly what will my kids say when I play Sublime, Jack Johnson and Tupac 30 years from now!!!



A Random Walk Down Wall Street

Author: Burton Malkiel
Year: 2003 (8th Edition)
Pages: 432. Slow, slow and slower unless you love reading an dry academic repeat himself.
Rating: 80/100. Gets the point across and gives an overview of wall street.
Amazon: Buy A Random Walk Down Wall Street

Burton Malkiel, a Wall Street cynic, thoroughly explains the financial markets in this investment classic that is considered a "must-read" by those in "the know". He first goes through the history of Wall Street, moves on to analyze different investment theories, and then creates a practical overview on how to invest money. The strength of the book likes in his overview of almost everything concerning investing and his ability to clearly and simply explain financial ideas. For instance, building sandcastles in the air is his term for the mania that characterizes a bubble.

"A Random Walk Down Wall Street" rips apart almost every strategy that tries to beat the market. He debunks the idea that financial analysts are experts and fires academic bullets at many popular investment theories. His "shock the world" statement is that blindfolded monkey's throwing darts have as good a chance at positive results as the guy running your money. Malkiel then proposes his own bland theory on successful investing. His answer - diversify by investing in index funds that track the market.

Litty's Thoughts

I read the book to refresh my knowledge on Wall Street and the different kinds of investment vehicles. Unfortunately, I'm in debt and my investment consist of series EE bonds that were issued 10 years ago as Bar Mitzvah presents and which Malkiel considers one of the most useless investments around.

RWDWS covers all kinds of investments including stocks, tax shelters, mutual funds, and fixed income assets. The first 100 pages are the most interesting. That is when Malkiel explains the history of investing and discusses the factors and psychology behind many landmark events.

The book starts to go downhill when it scrutinizes technical and fundamental analysis and analyzes risk. Malkiel uses academic studies and research to basically kill every idea or investment strategy. At the end he proposes his strategy that seems pretty lame. Perhaps he's a professor that jealous that brainless finance monkey's make exponentially more income than he does. The book serves its purpose on educating the reader and can be a springboard for figuring out where your interests lie. Overall, wasn't sure what all the fuss is about.


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