6 Smart Books: Relating to Money

Stock selloffs, continuing foreclosures, cheap dollars: Money remains on all of our minds. Here we have six books chosen by our editors and writers that look at our relationship to money, and our relationships with each other. One is a straight-ahead investing guide, another an examination of how money troubles affect the way we get along with each other. We also have a book of essays by Michael Chabon on fatherhood and family life, essays by Chuck Klosterman on expectations vs. reality, and two novels, one about money and class in England over the last half century, and another about police detectives in contemporary Brooklyn.

Preparing for Prosperity, Armageddon, and Everything in Between

By William J. Bernstein
Review by Jami Makan

The title might echo Karl Marx and Friedrich Engels, but "The Investor’s Manifesto" isn’t exactly revolutionary. Instead, this straightforward handbook by William J. Bernstein offers simple advice about portfolio design, retirement planning, determining your ideal stock/bond split and avoiding unnecessary fund fees.

Bernstein has a number of suggestions for those traumatized by the recent financial collapse. Many of his tips are sound, like “Buy fuddy-duddy, low-cost index funds.” Some are self-evident, such as, “Investors should design their portfolios to minimize the chances of dying poor.” Others are just plain weird: “Learn to recognize the panicked messages from your amygdalae,” he writes, referencing a part of your gray matter that processes emotional reactions. They are “the frantic shrieks of your reptilian brain, which wants nothing more than to make you poor.”

This last bit comes from a chapter on investor psychology, where Bernstein — a trained neurologist — tries to explain how the human brain’s emotional circuitry affects our everyday financial decisions. Another chapter briefly summarizes the evolution of capital markets. Both of these chapters are digressions, but they are welcome ones and should encourage readers to explore “neuroeconomics” and financial history more deeply on their own.

Aside from the occasional scientific term related to brain function, "The Investor’s Manifesto" is a plain-English introduction to investing. At a time when a specter seems to be haunting the markets, the timing seems right: Even the experienced among us could use another introduction to investing. If Bernstein is right, investors have nothing to lose but their chains. They have a world to win.