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There’s something on our list for everyone from market mavens to debt-challenged consumers. (Indranil Mukherjee/AFP/Getty Images/Indranil Mukherjee/AFP/Getty Images)
There’s something on our list for everyone from market mavens to debt-challenged consumers. (Indranil Mukherjee/AFP/Getty Images/Indranil Mukherjee/AFP/Getty Images)

Books

Some holiday-giving ideas to pad an investor's library Add to ...

Looking for something special for the investor in your life? These books represent some of the year’s best writing on personal finance, market behaviour and investing strategies. There’s something here for everyone from market mavens to debt-challenged consumers.

Models. Behaving. Badly.: Why Confusing Illusion with Reality Can Lead to Disaster, on Wall Street and in Life

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(Emanuel Derman, Free Press, hardcover, $29.99)

When you pick up a book penned by a former theoretical physicist and Goldman Sachs strategist who now teaches something called “financial engineering” at Columbia University, you expect a brain workout. You also hope to gain a new perspective on the workings – and failings – of the financial world. This book doesn’t disappoint, on any of those counts. Mr. Derman weaves a tale that is equal parts science, economics, philosophy and memoir. From all these angles, he drills to the heart of why finance is not a science – and why treating it as a science is a dangerous thing. At the heart of his argument is a crucial misunderstanding by the investment community, which doesn’t always grasp that financial models are just that – models. Mere representations of reality, models lack the critical essence of the thing they are meant to represent. That essence? Human frailty. David Parkinson

Santa Claus is Alive and Well and Living on Wall Street

(Bruce Gauthier, iUniverse Inc., paperback, $12.95)

Just in time for Christmas comes a book that says having faith in financial markets to deliver your retirement security is as stupid as believing in Santa Claus. (Read it to the kids. It’ll be a real eye-opener – once they stop crying.) Toronto resident Bruce Gauthier is no financial expert – just another regular Joe whose nest egg has floundered in the hands of the financial industry. Like the kid who found out there’s no Santa, he feels betrayed, lied to. At times he’s paranoid and irrational, seeing conspiracy theories all over the place. But beneath it all, there may be more truth here than most of us are comfortable admitting. His rants about regulatory oversight, stock options and short-selling are over the top, but they address some hard questions that maybe we all ought to be asking. Plus, it’s a strangely cathartic read – I feel like he’s more than angry enough for the both of us. David Parkinson



The Strategic Dividend Investor: Why Slow and Steady Wins the Race

(Daniel Peris, McGraw-Hill, hardcover, $25.95)

Do you “play” the stock market? Are you convinced that the secret to building wealth is to “buy low, sell high and repeat frequently?” U.S. fund manager Daniel Peris makes a strong case that using the casino approach will doom you to a life of sub-par returns. Instead, most investors would be far better off treating the stock market as a mechanism to purchase stakes in companies that reward them with growing cash payments. Dividends are “the acid test of a business’s basic profitability,” he writes, and they account for the vast majority of the stock market’s long-term returns. Plus, they’re a lot more predictable than the day-to-day gyrations of stock prices. The book focuses on U.S. companies, but the theory and practical advice here will be useful to Canadians who want off the market roller coaster. John Heinzl





Crushing Debt: Why Canadians Should Drop Everything and Pay Off Debt

(David Trahair, John Wiley & Sons Canada, paperback, $19.95)

Arriving in timely fashion – right before those ugly post-holiday credit card bills roll in – Toronto accountant David Trahair’s book is a quick read that paints a disturbing picture of the debt monster stalking governments and individuals. It also highlights the risks excessive debt poses to Canada’s supposedly secure chartered banks, which “have a very slim cushion of shareholders’ equity with which to weather a potential storm of payment defaults from consumers saddled with excessive household debt levels.” If that sounds like you, Mr. Trahair lays out options such as credit counselling and bankruptcy, and offers hope in the form of stories from people who wrestled their debts to the ground. Buy this book if you’ve got room on your credit card, or better yet, save the $19.95 and order it from the library. John Heinzl

Money and Power: How Goldman Sachs Came to Rule the World

(William D. Cohan, Doubleday, $34)

Ordinary investors can take away at least two valuable lessons from William Cohan’s monumental history of the “vampire squid” of Wall Street. First, no matter how smart you are, there are armies of even brighter people – many of them at Goldman Sachs – who are working flat out to develop ingenious ways to make money off you. Second, even geniuses screw up, as demonstrated in Goldman’s surprisingly frequent brushes with calamity over the decades. Mr. Cohan does a superb job of depicting the investment bank’s velvet-gloved rapacity, while demonstrating the more admirable qualities that have helped the firm succeed when so many of its rivals have failed. Most important is its staunch belief in recognizing reality, marking assets to market and hedging its risks. Anyone who is attempting to make money in today’s volatile economy should pay heed. Ian McGugan

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