10 business bigwigs suggest must-reads for tough economic times
Doug Porter, Paul Martin and other financial gurus share book and blog recommendations
Assessing the Canadian economy from a global perspective, you could say that 2012 was the best of times and the worst of times.
Against the global economic backdrop of a still unstable eurozone and a barely avoided tumble over the fiscal cliff in the U.S., Canada appeared to be on relatively stable footing in 2012.
The corporate and financial sectors — led by banks, which met and in most cases exceeded analysts' expectations — reported strong results. Canada's tech darling, Research in Motion, seemed to finally get back on track after several stumbles early in the year, managing to generate buzz about one of its products, the Blackberry 10 smartphone (set to launch at the end of January), for the first time in a long while.
At the policy level, Canada focused on strengthening economic ties with India, China and other emerging market economies in 2012.
On the down side, 2012 was the year Canada lost Mark Carney, the central banker credited with helping Canada avoid the pitfalls that plagued most other industrial economies during the 2008 financial crisis.
It was also the year that household debt reached an all-time high — while interest rates remained at record lows.
With such mixed moods muddling the economic ether, we were curious about what kind of reading material the movers and shakers who help influence and interpret economic trends are turning to to help guide their decisions.
We asked several prominent Canadians from the worlds of business, finance and academia to recommend a book or website that made an impact on them in 2012 and might provide useful insight to the rest of us. Their answers were as varied as the ups and downs of the economy itself, ranging in subject from cautionary tales about the 2008 financial crisis to practical strategies for saving and investing.
Bio: Armine Yalnizyan is senior economist at the Canadian Centre for Policy Alternatives.
Pick: Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland (2012).
Reason: "Ms. Freeland is a storied journalist and a superb raconteur. The book is a page-turner, equal parts voyeurism and analytic tour de force. It gives us a glimpse of the folks who make the world turn (or think they do) and explains why their behaviour matters for the rest of us.
"You may celebrate or disdain the Return of the Gilded Age, but Freeland meticulously lays bare the feedback loop between economics and politics that brought us here. Yet she's a clear fan of capitalism and makes no apologies that the world needs capitalists. That's what makes this book so interesting. Reading it is a bit like watching capitalism eat itself and wondering... will it all end with a Cheshire Cat's smile?"
Bio: Gordon Pape is an author and publisher of several newsletters on financial topics such as mutual funds and exchange-traded funds.
Pick: Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay (1841).
Reason: "This is one of the most fascinating and disturbing books you will ever read. It was written back in the mid-19th century, but the folly and avarice which are the author's primary focuses are still prevalent in today's world.
The sections on the Mississippi Scheme, the South Sea Bubble, and Tulipomania are especially relevant in the context of the financial collapse of 2008 and the subsequent revelations of the unscrupulous machinations of New York financiers in foisting off worthless securities on a greedy and unsuspecting public.
"The Tulipomania chapter is a classic object lesson for investors. Dutch speculators became so obsessed with the new flower bulbs from Turkey that they bid up prices to unimaginable levels. At the peak of the frenzy, one root sold for '4,600 florins, a new carriage, two grey horses and a complete set of harness.'
"In the end, of course, it all came crashing down, and the bulbs became virtually worthless. Thousands of people lost their life savings. So, what did they do with all those valueless bulbs? Being practical people, they planted them. Today, the Netherlands reaps the rewards from the thousands of tourists that flock there every year at tulip time."
Bio: Paul Martin was prime minister of Canada from 2003 to 2006 and minister of finance from 1993 to 2002.
Pick: 3D Policy blog by Peter Devries and Scott Clark.
Reason: "As former senior officials at the Department of Finance, Peter Devries and Scott Clark's vantage point provides an unparalleled look at fiscal policy in Canada. Its analysis is accurate, concise and supported by raw data. I regularly follow 3D Policy because it goes beyond reporting the numbers and provides an in-depth look at the effects of fiscal management on public policy. Simply put, its analysis is invaluable for anyone who wants to stay up to date on Canada's economic outlook, as it navigates its way through an uncertain global financial landscape."
Bio: Doug Porter is CFA managing director and deputy chief economist at BMO in Toronto.
Pick: Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System — and Them by Andrew Sorkin (2009).
Reason: "Too Big To Fail provides a comprehensive overview of the 2008 financial crisis, including its lead-up and its aftermath. Considering that the financial crisis may be the most dramatic economic event of this generation, it's important for anyone interested in financial markets, banking, U.S. policymaking and/or the economy to get as full an understanding of what happened last decade and why.
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"Too Big To Fail may be the single best recap of the crisis, at least from the U.S. perspective. While the book may not always be the most gripping reading, it does have some suspense and good pace. It's also thorough and extremely well researched. Sorkin somehow obtained or reconstructed conversations from hundreds of meetings and phone calls among the key players in the crisis and brings alive some occasionally dry material. Finally, Sorkin's writing is readily accessible to those who are even casual observers of financial markets."
Bio: Dezso Horvath is the dean of York University's Schulich School of Business in Toronto.
Pick: Thinking, Fast and Slow by Daniel Kahneman (2011).
Reason: This book by Daniel Kahneman, the recipient of a 2002 Nobel Memorial Prize in Economics, is a must-read for any business leader. Once a professor at the University of British Columbia, Kahneman examines how the brain functions at two levels: fast, intuitive and experiential thinking; and slow, deliberative and calculated reasoning.
Thinking, Fast and Slow sheds new light on how the mind actually processes information to make the decisions that impact our professional and personal lives. The book may leave us doubting the capacity of our intuition and reliance on past experience and more sensitive to situations better served by "slow" thinking. Bottom line: Kahneman makes us more aware of how to apply our mental capacities to affect wiser decisions.
Bio: David Kaufman is the Toronto-based president and CEO of Westcourt Capital Corporation, a portfolio manager providing asset allocation advice to high net worth families, foundations, endowments and pension funds.
Pick: When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein (2000).
Reason: "I've spent a great deal of time studying failed investment funds and have concluded that they are generally the result of a confluence of hubris, ideological intractability and mismanaged leverage. There is no better example of this dangerous mix than the story of Long Term Capital Management (LTCM), one of the most celebrated hedge funds of all time, that grew to a $100-billion juggernaut only to crash spectacularly back to Earth during the Russian debt crisis of 1998.
"Like Icarus, who ignored admonitions not to fly too close to the sun with his wings of wax, the management of LTCM — including Nobel Prize laureates Myron Scholes and Robert Merton — believed so dogmatically in their mathematical infallibility that they were blind to the fact that financial markets, like wild animals, can be trained but never completely tamed.
"The story of LTCM, in addition to being a great read, serves as a cautionary tale to all those who approach investing with the attitude of 'This is what I know' rather than 'What don't I know?' It is a must-read for anyone interested in investing, the financial markets and the human condition."
Bio: Patti Croft is an independent economic analyst with over 30 years of experience on Bay Street in Toronto.
Pick: BrighterLife.ca website, sponsored by Sun Life Financial.
Reason: "It offers information for Canadians on a holistic approach — not just about savings and investing but also about wellness issues around health and family. I like the way it reaches out to various demographics — to retirees but also to new homeowners, new families and young people starting out in the workforce.
"It provides easy to use calculators for everything from how much you need to save for your child's education to a questionnaire about your financial habits. It also has videos explaining RRIFs and RRSPs and how to host a holiday party without breaking the bank!
"I think most Canadians would find it easy to use, providing helpful information. My one knock would be that the solutions offered are, of course, from Sun Life Financial's suite of products. Nothing wrong with their products or advice, but Canadians should remember there are a host of competitive offerings out there — take advantage of the easy to use information on this site. but do your homework before committing to anything!"
Bio: Tsur Somerville is director of the Centre for Urban Economics and Real Estate at the University of British Colombia in Vancouver.
Pick: Bonfire of the Vanities by Tom Wolfe (1987).
Reason: "[Wolfe] does a splendid and incredibly engaging job of skewering the absurdity of and the damage we can do through our elevated sense of self-importance. In general, people interested in finance do not read nearly enough literature, so here's a novel that focuses on the grandiosity that success can bring.
"The lesson for investors in the book is to not let success go to their heads. Hard work, effort, intelligence, research all matter, but life is full of happenstance beyond our control. Preventing hubris is an excellent objective in approaching any investment, and is an even more important factor in maintaining success. Wolfe's novel is about hubris on financial-market speed."
Bio: Robin Taub is a Toronto-based chartered accountant and financial author.
Pick: Planet Money blog and podcast by National Public Radio.
Reason: "Planet Money's blog and podcast examines economic issues in an incredibly entertaining, funny and creative way. One recent episode tackled the arguments for and against replacing the dollar bill in the U.S. with a dollar coin, and another one looked at why the price of Coke didn't change for 70 years. Every topic, including current events, is examined from an economic perspective. And every episode tells a really interesting story, such as the 14-year old girl in Florida who bought two foreclosed homes in her neighbourhood as investments!
"Some of my favourite episodes were about the 2008 financial crisis. In order to explain the complicated mortgage bonds at the centre of the financial crisis, the Planet Money team actually pooled their own money and bought one of these toxic assets to see how it would perform and to illustrate how so many investors lost so much money. 'Toxie' eventually died and a 'funeral' was held on the podcast – it was hilarious but also very informative.
"Listening to the podcast and reading the blog regularly keeps me up to date and knowledgeable about current economic events, which gives me the context in which to make informed financial decisions. It provides financial education and entertainment in one package — what could be better?"
Bio: Moshe Milevsky is an associate professor of finance at the Schulich School of Business at York University in Toronto.
Pick: Debt: The First 5,000 Years by David Graeber (2011).
Reason: "The author, a British anthropologist, is neither an economist nor a practicing financial advisor, which brings a very fresh, outsider's view to the multidimensional aspects of owing money.
"In the year 2012, Canadians continued to pile on mortgages, credit cards and other consumer debt, as politicians and public officials sounded the alarm about family debt-to-income ratios exceeding 160 per cent. [Finance] Minister Flaherty moved to rein in the Canada Mortgage and Housing Corporation, which insures a large portion of our collective debts, while interest rates on debt remained at historically low levels. Indeed, 2012 was the year Canadians took a much closer look at their debts, and David Graeber's book is an excellent backdrop to this collective reckoning.
"Although some of the suggestions in the book are a bit wacky (e.g. a Jubilee for debts), he takes the reader on a fascinating tour of the [debt phenomenon] – which is over 5,000 years old – and raises a number of very important issues. Regardless of whether you are a professor, practitioner, politician or just a member of the public, reading the book will help put your debts in perspective."
Canada's largest bookstore chain stocks a range of general interest books about business and finance. Indigo vice-president Bahram Olfati sent us a list of five of the top-selling books of 2012 in this category:
- The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg (2012).
- The Power of Why by Amanda Lang (2012).
- Strengthsfinder 2.0 by Tom Wrath (2007).
- Redefining Success; Still making Mistakes by Brett Wilson (2012).
- The Magna Man: My Road to Economic Freedom by Frank Stronach (2012).
Books for Business
The Toronto-based bookstore specializing in titles for the corporate and financial sector closed its retail location in March 2012 and now operates strictly online. Brenda Bickram, the store's corporate order specialist, sent us the five top-selling business titles for 2012:
- A Tale of Two Employees & the Person Who Wanted to Lead Them by Chris Bart (2003).
- The Innovator’s Manifesto: Deliberate Disruption for Transformational Growth Michael E. Raynor (2011).
- Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond by Max Bazerman and Deepak Malhotra (2007).
- Raving Fans: A Revolutionary Approach to Customer Service by Ken Blanchard (1993).
Brand: It Ain’t the Logo* It's What People Think of You, new 2nd edition, by Ted Matthews and Andris Pone (2012, 1st edition: 2007).
- A previous version of this story mistakenly said the BrighterLife.ca website is sponsored by Standard Life. It is, in fact, sponsored by Sun Life Financial.Jan 20, 2013 5:45 PM ET