Reading Pile

1. Loretta Napoleoni. 2015. The Islamist Phoenix: The Islamic State and the Redrawing of the Middle East. New York: Seven Stories Press. PhD supervisor Luke Howie and I have discussed me including a section on ISIS in my study of terrorist organisations as strategic subcultures. Napoleoni contends that ISIS engages in a new form of nation-building in order to re-establish the Caliphate. One of several quickly written books to emerge as ISIS has gained military power projection in Iraq.

 

2. Richard Seymour. 2014. Against Austerity: How We Can Fix The Crisis They Made. New York: Pluto Press. A left-wing polemic that anticipated current political events in Greece, the Queensland state election, and in Australian federal politics. Seymour describes austerity as neoliberal crisis management, and as an elite strategy to change socio-economic foundations. An angry and insightful analysis of the conditions that might lead to oligarchical collectivism (George Orwell, Nineteen Eighty-Four).

 

3. Luke Howie and Peter Kelly. 2015. ‘Sociologies of Terrorism: Holographic Metaphors for Terrorism Research’, Journal of Sociology, 1-15 (online first). The authors propose a ‘holographic theorising’ framework and ‘holographic social scientific imagination‘ [emphasis original] (p. 2) for how terrorism studies researchers can explore, interrogate, and re-evaluate data. A central challenge the authors identify is that terrorism events ‘develop, shift, and change‘ [emphasis original] (p. 3) whilst interview transcripts and other research data can remain ‘forever frozen in time‘ [emphasis original] (p. 3). The article includes insights from an on-going interview research project, theorist Donna Haraway, and popular media including Star Trek: Voyager, and I, Robot.

Lessons from MacArthur Genius Yitang Zhang

Some lessons from The New Yorker‘s profile of MacArthur Fellow and mathematician Yitang Zhang:

 

1. Immerse yourself in the research literature of your discipline. Zhang spent years reading mathematics journals about alegebraic geometry number theory at the University of Kentucky, and keeping a low profile: he had published only one paper, in 2001.

2. Choose a focal point or meta-question for your research program that will have a significant impact. Zhang focused on ‘bound gaps’ about prime numbers.

3. Organise your life’s tasks in order to pursue your individual research program. Zhang worked at a Subway and in New Hampshire in order to have more time to write and pursue his research program on his own terms.

4. Streamline your publication track record to focus on publications in high-ranked journals. Zhang submitted “Bounded Gaps Between Primes” in late 2012 to Annals of Mathematics after years of work.

5. Understand how the referee process works for journal articles. Zhang benefited from reviewers Henryk Iwaniec (Rutgers) and John Friedlander (University of Toronto) who were critical yet sympathetic to Zhang’s study, and Annals of Mathematics editor Nicholas Katz.

Analysing the Hajime Masutani Interview in Haruki Murakami’s Underground

I spent today analysing the Haruki Murakami Underground interview with former Aum Shinrikyo member Hajume Masutani. Some insights:

 

1. Masutani experienced early alienation from his family, initial career aspirations, and university studies.

 

2. Masutani encountered and joined Aum after seeing an Aum book and visiting a dojo. He spent seven years in Aum including working on animation about Aum’s leader Shoko Asahara which now enjoys an afterlife on YouTube.

 

3. Masutani engaged in cycles of work and meditation but did not really progress in Aum. He became suspicious of Asahara after meeting him. His experiences reflected parallel research that psychiatrist Robert Jay Lifton did on Aum.

 

4. In 1993, Masutani noted that Aum adopted a more proto-militant outlook and a greater emphasis on Tibetan Vajrayana teachings.

 

5. Masutani grew more alienated from Aum after leaving and learning of the 20th March 1995 sarin gas attack on the Tokyo subway system. His views to Murakami were similar to United States cultic scholars like Margaret Thaler Singer.

PhD Structure Template

Introduction

 

● Research question and immediate debate.

● How the PhD addresses and resolves the debate.

● The new theory that the PhD develops.

● New causal and/or explanatory variables that are introduced.

● The essential argument that the PhD makes.

● The specific contributions of each PhD chapter.

● The PhD’s overall structure and plan.

 

Chapter 1: New Theory

 

● The chapter’s goal.

● The literature gap and what it reveals for the research question.

● The basic reorientation that the chapter achieves.

● The critical assumptions of existing theories.

● What the chapter will achieve: its original contribution.

 

Overview of the Existing Literature

 

● The major paradigms and causal claims of the major theories.

● Theory Strand 1 and subsequent developments.

● Major theoreticians and contributions for Theory Strand 1.

● The theory-building structure of Theory Strand 1.

● Critics of Theory Strand 1.

● Similar structure for Theory Strand 2, 3 . . . n.

 

Analysis of the Major Theories

 

● The theory-building gap / puzzle in the Theory Strands and what the New Theory resolves.

● Past work that is suggestive of the puzzle that the New Theory resolves.

● Why the theoretical arguments remain underdeveloped.

● Competing theories that fail in explanatory power compared with the New Theory, and why.

 

New Theory

 

● What the New Theory introduces as a new causal and/or explanatory variable.

● The foundations and key assumptions of the New Theory.

● The causal logics of the New Theory.

● Theory-building tensions between the New Theory and existing theories.

 

Theoretical Foundations

 

● The concept at the heart of the New Theory.

● Incomplete notions that the New Theory addresses.

● Deductive or inductive logics of the New Theory.

● The New Theory’s different set of priorities.

● Exogenous conditions that shape the New Theory.

● Primary factors that shape the New Theory.

 

Summary of the Argument and Competing Hypotheses

 

● Summary of the chapter’s original contribution to theory-building and theory-testing.

● Diagrammatic summary of the New Theory’s causal logic.

● Expectations and implications of the New Theory.

● What the case studies will demonstrate about the New Theory.

● What Chapter 2 on methodologies will discuss about the case studies.

● What the case studies will demonstrate about the New Theory versus its alternatives.

● Closing argument on the value of considering the New Theory.

 

Chapter 2: Methodology

 

● What methodology has been used in the major studies to-date in the problem domain.

● What recent studies have demonstrated in terms of methodology selection.

● What the case studies will contribute to a new understanding of methodology.

● Summary of the chapter’s planned contribution to methodology.

 

Contribution of Past Studies

 

● The key variables that the problem domain and major studies revolved around.

● The major studies in the problem domain and the debate around them.

● What new studies in the problem domain have revealed.

● What new possible variables are needed to answer the past debates.

● The major studies that suggest the need for new possible variables.

● What is incomplete about the major studies’ explanations of new possible variables.

● How the major studies have tried to deal with this incompleteness.

● What the New Theory would suggest in dealing with this incompleteness.

● Recent studies which anticipate the New Theory in terms of methodology.

● Findings from recent studies that cause a rethink of prevailing assumptions.

● Conjectures that are partial explanations of the New Theory.

● What has been put forward separately that suggests the New Theory.

● How to interpret the findings of these studies.

● Summary of the main findings of past and recent studies.

 

A New Approach and a Summary of Findings

 

● The limitations of past and recent studies that the new approach will address.

● Causal methods and process tracing of the new approach.

● How selection bias and generalizability will be dealt with.

 

A New Approach to the Study’s Dependent Variable

 

● The deductive logic of the study’s dependent variable.

● Limitations of existing deductive logic to deal with the study’s dependent variable.

● Additional problems that are faced in understanding the study’s dependent variable.

● Defining the study’s factors.

● Explanatory reasons for the study’s factors.

● Endogenous nature of the study’s factors.

● Justification of the study’s chosen method.

● Scoping of the study’s chosen method and required data collection.

● How to evaluate the evidence from the required data collection.

● The larger causal picture that the data collection fits into.

● Summary of the study’s key research questions that the case studies will answer.

 

A Summary of the Findings

 

● Structure of the summary.

● Structure of each selected case study.

● Criterion for case study selection.

● Summary of across-case comparison.

● How the case studies answer the study’s key research questions.

● What the required data collection revealed to answer the study’s key research questions.

● What was novel and / or surprising about the study’s findings.

● How the findings support the New Theory versus existing alternative explanations.

● How the data collection evidence deals with potential criticism of the New Theory.

● Discussion of the case studies and the data collection evidence.

● What the case studies reveal about systematic variables.

● Summary of case study interpretation and New Theory framework.

 

Chapters 3 and 4: Case Studies

 

● What the chapter’s case study is on.

● How the New Theory provides an explanation that existing alternatives do not do.

● Potential complications of the case study.

● How existing alternatives may answer some aspects of the case study versus the New Theory.

 

Origins of the Case Study

 

● The scholarly consensus on the case study.

● The key causal factors that the case study will address.

● What is critical and not so critical in the case study.

● The knowledge gaps that the New Theory will fill in the case study versus existing alternatives.

 

Background of the Case Study

 

● Deep roots of the case study.

● Major events in the causality of the case study.

● Major decisions in the causality of the case study.

● Major strategies of the strategic actors of the case study.

● Re-evaluation of historical periods of the case study.

● Popularity of existing explanations of the case study.

● Limitations in the existing explanations of the case study that the New Theory addresses.

● Reasons for the changes in policy of the strategic actors of the case study.

● Summary of the historical chronology of the case study.

 

Case Study Pivotal Decision and / or Historical Period

 

● Background to the pivotal decision and / or historical period.

● Major pivotal decisions and / or events of the historical period.

● The decisions and reactions of different strategic actors.

● Summary of the key dynamics in the pivotal decision and / or historical period.

 

Thematic Analysis

 

● The main categories that the case study explanations can be grouped into.

● The level of analysis that the different case study explanations function in.

● Key aspects of the original argument that the case study makes.

● What evidence the original argument draws on.

Key events that the original argument uses.

● Key decisions, expectations and priorities that advance the original argument.

● What the above analysis demonstrates.

● Implications of the above analysis.

● How views and aims of the strategic actors evolved over the key events.

● Summary of what the case study explains versus existing alternatives.

 

Analysis of Case Study Strategic Actor and Temporal Period

 

● Existing consensus in the scholarly literature.

● Problems with the existing consensus.

● Weakness of the existing consensus that opens the way for the New Theory.

● Basic facts of the case study milieu.

● Strategic actor priorities and obsessions in their decision calculus.

● Chronology of key events and decisions.

● Systematic causes versus unit-level causes.

● How the above analysis supports the New Theory and challenges existing alternatives.

 

Conclusion

 

● This chapter’s original contribution.

● What the case studies illuminate about the knowledge gap.

● The causal chronology and the case study results.

 

Chapter 5: Implications of the Argument

 

● What the project and the case studies have shown.

● What existing alternatives state about the key research questions.

● How the New Theory addresses the key research questions.

● What new dimensions must be incorporated into the New Theory for explanations.

● What the New Theory builds on in terms of paradigmatic logic.

● How the major strategic actors might reason using awareness of the New Theory.

● Comparative logics of the major strategic actors using awareness of the New Theory.

● The empirical outcomes of the New Theory and the case studies.

● What the rest of the chapter will achieve.

 

Broader Implications of the Theory

 

● What the case study chapters have shown about the New Theory.

● What the methodology chapters have shown about the New Theory.

● Insights of the New Theory about the strategic actors in the case studies.

● How the New Theory helps to understand knowledge gaps in existing alternatives.

● What the case studies have revealed about the study’s dependent variable.

● Implications of the New Theory for unit-level variables.

● Practical implications of the New Theory.

● Further methodological advances that the New Theory might underpin.

 

Epilogue

 

● Explanatory and predictive value of the New Theory and case studies.

● New research that can be undertaken using the New Theory.

● Further theoretical studies that are needed to understand the New Theory.

● Dilemmas and puzzles that can be explored using the study’s findings.

● Final implications for the development of sound theories.

Investment Strategies Reading List

Event Arbitrage

 

Convertible Arbitrage: Insights and Techniques for Successful Hedging by Nick P. Calamos (Hoboken, NJ: John Wiley & Sons, 2003). Convertible bonds as an event arbitrage strategy.

 

The Mental Strategies of Top Traders: The Psychological Determinants of Trading Success by Ari Kiev (Hoboken, NJ: John Wiley & Sons, 2009). The hedge fund SAC’s fusion of a catalyst approach to event arbitrage with performance / trading psychology.

 

Merger Arbitrage: A Fundamental Approach to Event-Driven Investing by Lionel Melka and Amit Shabi (Hoboken, NJ: John Wiley & Sons, 2014). A contemporary primer on merger arbitrage techniques.

 

Merger Arbitrage: How to Profit from Event-Driven Arbitrage (2nd edition) by Thomas Kirchner (Hoboken, NJ: John Wiley & Sons, 2015). A synthesis of global macro and event arbitrage strategies.

 

Trading Catalysts: How Events Move Markets and Create Trading Opportunities by Robert I. Webb (Upper Saddle River, NJ: FT Press, 2006). Event arbitrage strategies used amidst the early part of the 2003-08 speculative bubble.

 

World Event Trading: How to Analyze and Profit from Today’s Headlines by Andy Busch (Hoboken, NJ: John Wiley & Sons, 2007). Presents a series of frameworks that Busch uses for event arbitrage in currencies and equities markets.

 

Momentum

 

Asset Rotation: The Demise of Modern Portfolio Management and the Birth of an Investment Renaissance by Matthew P. Erickson (Hoboken, NJ: John Wiley & Sons, 2014). How exchange traded funds can be used for a momentum strategy that uses a two-asset portfolio.

 

Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk by Gary Antonacci (New York: McGraw-Hill, 2014). A momentum strategy that combines relative strength and trend-following approaches.

 

Unholy Grails: A New Road to Wealth by Nick Radge (Sydney: Radge Publishing, 2012). Radge’s experience using momentum strategies in Australian financial markets.

 

Trend-Following

 

The Complete TurtleTrader: How 23 Novice Investors Became Overnight Millionaires by Michael W. Covel (New York: HarperBusiness, 2009). The definitive account of the TurtleTraders experiment in rules-based trend-following.

 

Following the Trend: Diversified Managed Futures Trading by Andreas Clenow (Hoboken, NJ: John Wiley & Sons, 2013). How trend-following strategies have been profitable in managed futures.

 

Investing With the Trend: A Rules-Based Approach to Money Management by Gregory L. Morris (Hoboken, NJ: John Wiley & Sons, 2013). A rules-based methodology for trend-following.

 

Trend Following: Learn to Make Millions in Up or Down Markets (rev. edition) by Michael W. Covel (Upper Saddle River, NJ: FT Press, 2009). A popular primer on trend-following strategies.

 

The Trend Following Bible: How Professional Traders Compound Wealth and Manage Risk by Andrew Abraham (Hoboken, NJ: John Wiley & Sons, 2012). How commodities trading advisers use trend-following strategies.

 

Trend Following with Managed Futures: The Search for Crisis Alpha by Alex Greyserman and Kathryn Kaminski (Hoboken, NJ: John Wiley & Sons, 2014). How trend-following traders adapted to the financial market volatility of the 2007-09 global financial crisis.

 

Value

 

Accounting for Value by Stephen Penman (New York: Columbia University Press, 2010). The link between value investment, accounting, and equity valuation.

 

Active Value Investing: Making Money in Range-bound Markets by Vitaliy N. Katsenelson (Hoboken, NJ: John Wiley & Sons, 2007). An adaptation of value investing strategies to the 2003-08 speculative bubble.

 

Applied Value Investing: The Practical Applications of Benjamin Graham and Warren Buffett’s Valuation Principles to Acquisitions, Catastrophe Pricing, and Business Execution by Joseph Calandro, Jr (New York: McGraw-Hill, 2009). Value investing applied during the peak of the 2003-08 speculative bubble and the start of the 2007-09 global financial crisis.

 

The Art of Company Valuation and Financial Statement Analysis: A Value Investor’s Guide with Real-Life Case Studies by Nicolas Schmidlin (Hoboken, NJ: John Wiley & Sons, 2014). Contemporary fundamental analysis for value investors.

 

The Art of Value Investing: How the World’s Best Investors Beat the Market by John Heins and Whitney Tilson (Hoboken, NJ: John Wiley & Sons, 2013). A collection of interviews with successful fund managers who are value investors.

 

Brandes on Value: The Independent Investor by Charles Brandes (New York: McGraw-Hill, 2014). Brandes’ value investment experiences at Brandes Investment Partners LP.

 

Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations by Tobias E. Carlisle (Hoboken, NJ: John Wiley & Sons, 2014). A quantitative analysis of how activist investors use value investment strategies in the market for corporate control.

 

The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment (New York: Palgrave Macmillan, 2014). Value investment as a framework for cultivating character and personal growth.

 

Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World by Ronald D. Orol (Hoboken, NJ: John Wiley & Sons, 2008). The experiences of value-oriented hedge fund managers during the 2003-08 speculative bubble.

 

Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns in the Stock Market by Meb Faber (The Idea Farm, 2014). A synthesis of value investing and global macro approaches.

 

The Investment Checklist: The Art of In-Depth Research by Michael Shearn (Hoboken, NJ: John Wiley & Sons, 2011). How value investors undertake fundamental research.

 

The Manual of Ideas: The Proven Framework for Finding the Best Value Investments by John Mihaljevic (Hoboken, NJ: John Wiley & Sons, 2013). Presents the value investing framework of the Value Investors Club.

 

Modern Security Analysis: Understanding Wall Street Fundamentals by Martin J. Whitman and Fernando Diz (Hoboken, NJ: John Wiley & Sons, 2013). The link between fundamental security analysis and value investing.

 

The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor by Howard Marks (New York: Columbia University Press, 2013). The value investment philosophy that Marks implements at Oaktree Capital Management.

 

The Nature of Value: How to Invest in an Adaptive Economy by Nick Gogerty (New York: Columbia University Press, 2014). Presents a value creation model used by the hedge fund Bridgewater.

 

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike (Boston, MA: Harvard Business School Press, 2012). Effective capital allocation as a key value investment strategy.

 

Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors by Wesley R. Gray and Tobias E. Carlisle (Hoboken, NJ: John Wiley & Sons, 2012). A synthesis of value investing, behavioural finance, and quantitative finance.

 

Security Analysis (6th edition) by Benjamin Graham and David Dodd (New York: McGraw-Hill, 2008). The influential primer on value investing.

 

Security Analysis and Business Valuation on Wall Street: A Comprehensive Guide to Today’s Valuation Methods (2nd edition) by Jeffrey C. Hooke (Hoboken, NJ: John Wiley & Sons, 2010). How Wall Street uses fundamental security analysis to value companies.

 

Security Valuation and Risk Analysis: Assessing Value in Investment Decision Making by Kenneth S. Hackel (New York: McGraw-Hill, 2011). The link between the investment process, risk management, and fundamental security valuation.

 

The Snowball: Warren Buffet and the Business of Life by Alice Schroeder (New York: Bantam Books, 2008). The authorised biography of value investor Warren Buffett.

 

Sources of Value: A Practical Guide to the Art and Science of Valuation by Simon Woolley (Cambridge: Cambridge University Press, 2009). BP’s valuation framework for analysing the economic value of companies.

 

Strategic Value Investing: Practical Techniques of Leading Value Investors by Stephen M. Horan, Robert R. Johnson, and Thomas R. Robinson (New York: McGraw-Hill, 2014). A contemporary primer on value investing and its link to corporate strategy.

 

Valuation: The Market Approach by Seth Bernstrom (Hoboken, NJ: John Wiley & Sons, 2014). Valuing firms through comparison with stock exchange and comparator company transactions.

 

Valuation: Measuring and Managing the Value of Companies (5th edition) by Tim Killer, Marc Goedhart, and David Wessels (Hoboken, NJ: John Wiley & Sons, 2010). The McKinsey valuation model for companies.

 

Value: The Four Cornerstones of Corporate Finance by Tim Koller, Richard Dobbs, and Bill Huyett (Hoboken, NJ: John Wiley & Sons, 2011). Growth, return on invested capital, and cashflow analysis in corporate finance as the foundations for valuation of companies.

 

Value Investing: From Graham to Buffett and Beyond by Bruce C.N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema (Hoboken, NJ: John Wiley & Sons, 2004). Greenwald’s value investing framework taught at the Columbia University Graduate School of Business.

 

The Value Investors: Lessons from the World’s Top Fund Managers by Ronald W. Chan (Hoboken, NJ: John Wiley & Sons, 2012). Profiles of leading fund managers who use value investing.

 

Value Maps: Valuation Tools That Unlock Business Wealth by Warren D. Miller (Hoboken, NJ: John Wiley & Sons, 2010). How tools from strategic management, industrial organisation, organisation theory, evolutionary economics, and Austrian economics can inform contemporary valuation of companies.

 

Valueable: How To Value The Best Stocks and Buy Them for Less Than They’re Worth (2nd edition) by Roger Montgomery (My 2 Cents Worth Publishing, 2010). The investment framework and experiences of Australian value investor Roger Montgomery.

 

Why Moats Matter: The Morningstar Approach to Stock Investing by Heather Brilliant and Elizabeth Collins (Hoboken, NJ: John Wiley & Sons, 2014). Morningstar’s ‘economic moats’ framework for value creation.

Active Management Reading List

Asset Management

 

Asset Management: A Systematic Approach to Factor Investing by Andrew Ang (New York: Oxford University Press, 2014). Presents an asset management model including factor risk premiums for different asset classes.

 

Expected Returns: An Investor’s Guide to Harvesting Market Rewards by Antti Ilmanen (Hoboken, NJ: John Wiley & Sons, 2011). The return drivers of the major asset classes.

 

Funds: Private Equity, Hedge, and All Core Structures by Matthew Hudson (Hoboken, NJ: John Wiley & Sons, 2014).  The types and structures of major investment funds.

 

Manias, Panics and Crashes: A History of Financial Crises (6th edition) by Charles P. Kindleberger and Robert Z. Aliber (New York: Palgrave Macmillan, 2011). The historical lessons and structure of speculative bubbles.

 

Hedge Funds

 

The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds by Maneet Ahuja (Hoboken, NJ: John Wiley & Sons, 2012). Profiles of activist and global macro hedge fund managers.

 

The Big Short: Inside the Doomsday Machine by Michael Lewis (New York: W.W. Norton & Company, 2010). How hedge fund managers extracted alpha from the 2007-09 global financial crisis.

 

The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund by Anita Raghavan (New York: Business Plus, 2013). Hedge fund manager Raj Rajaratnam and the demise of the Galleon hedge fund.

 

Confidence Game: How A Hedge Fund Manager Called Wall Street’s Bluff by Christine S. Richard (Hoboken, NJ: John Wiley & Sons, 2010). Hedge fund manager Bill Ackman and the MBIA fraud investigation.

 

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Perdersen (Princeton, NJ: Princeton University Press, 2015). Presents a framework for how hedge funds extract alpha (excess returns above a benchmark) using active management.

 

Fooling Some of the People All of the Time (rev. edition) by David Einhorn (Hoboken, NJ: John Wiley & Sons, 2010). The fallout from hedge fund manager Einhorn’s decision to ‘short’ Allied Capital.

 

The Fundamentals of Hedge Fund Management: How to Successfully Launch and Operate a Hedge Fund (2nd edition) by Daniel A. Strachman (Hoboken, NJ: John Wiley & Sons, 2012). The operational structure of hedge funds.

 

Hedge Fund Market Wizards: How Winning Traders Win by Jack D. Schwager (Hoboken, NJ: John Wiley & Sons, 2012). Interviews with successful hedge fund managers and traders.

 

Hedge Fund Masters: How Top Hedge Fund Traders Set Goals, Overcome Barriers, and Achieve Peak Performance by Ari Kiev (Hoboken, NJ: John Wiley & Sons, 2005). The performance psychology of hedge fund traders.

 

Hedge Funds: An Analytic Perspective by Andrew W. Lo (New Haven, CT: Princeton University Press, 2010). A quantitative finance model of how hedge funds work.

 

Hedge Hogs: The Cowboy Traders Behind Wall Street’s Largest Hedge Fund Disaster by Barbara T. Dreyfuss (New York: Random House, 2013). The demise of the Amaranth hedge fund.

 

Inside The House of Money: Top Hedge Fund Traders on Profiting in the Global Markets (rev. edition) by Steven Drobny (Hoboken, NJ: John Wiley & Sons, 2009). How hedge fund traders profited during the 2003-08 speculative bubble.

 

Investment Strategies of Hedge Funds by Filippo Stefanini (Hoboken, NJ: John Wiley & Sons, 2006). Common investment strategies of major hedge funds.

 

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny (Hoboken, NJ: John Wiley & Sons, 2011). How hedge fund traders risk hedged the 2007-09 global financial crisis.

 

The Little Book of Hedge Funds: What You Need to Know About Hedge Funds but the Managers Won’t Tell You by Anthony Scaramucci (Hoboken, NJ: John Wiley & Sons, 2012). An introduction by a hedge fund manager to hedge funds as an active management vehicle to extract alpha from financial markets.

 

More Money Than God: Hedge Funds and the Making of a New Elite by Sebastian Mallaby (New York: The Penguin Press, 2010). The history of hedge funds as an active management structure and biographies of hedge fund managers.

 

Risk Management in Trading: Techniques to Drive Profitability of Hedge Funds and Trading Desks by Davis W. Edwards (Hoboken, NJ: John Wiley & Sons, 2014). Risk management strategies used by major banks and hedge funds.

 

Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits by James Altucher (Hoboken, NJ: John Wiley & Sons, 2004). The strategies and techniques that Altucher developed whilst trading for Victor Niederhoffer.

 

Visual Guide to Hedge Funds by Richard C. Wilson (Hoboken, NJ: John Wiley & Sons, 2014). An introduction to hedge funds as an active management vehicle.

 

When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein (New York: Random House, 2001). The demise of the hedge fund Long-Term Capital Management.

 

Private Equity

 

Barbarians At The Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar (New York: HarperBusiness, 2008). The market for corporate control of RJR Nabisco and the takeover’s ‘winners curse’.

 

The Fissured Workplace: Why Work Became So Bad For So Many and What Can Be Done to Improve It (Boston, MA: Harvard University Press, 2014). A labour / union critique of the asset management / private equity model and its impact on workers.

 

The Masters of Private Equity and Venture Capital: Management Lessons from the Pioneers of Private Investing by Robert A. Finkel with David Greising (New York: McGraw-Hill, 2010). Anecdotes about private equity and venture capital deals.

 

Private Equity: Fund Types, Risks and Returns, and Regulation edited by Douglas Cumming (Hoboken, NJ: John Wiley & Sons, 2010). Private equity’s investment fund and legal structure as a form of active management.

 

Private Equity At Work: When Wall Street Manages Main Street by Eileen Appellbaum and Rosemary Batt (New York: Russell Sage Foundation, 2014). Presents a justification for and evaluation of private equity as a form of active management.

 

The Private Equity Edge by Arthur B. Laffer, William J. Hass and Shepherd G. Pryor IV (New York: McGraw-Hill, 2009). A justification for private equity as a form of experimental innovation.

 

Private Equity Operational Due Diligence: Tools to Evaluate Liquidity, Valuation, and Documentation by Jason Scharfman (Hoboken, NJ: John Wiley & Sons, 2012). Presents a framework for operational due diligence of private equity as active management.

 

Private Equity Unchained: Strategy Insights for the Institutional Investor by Thomas Meyer (New York: Palgrave Macmillan, 2014). Presents a strategic model for private equity as arbitrage.

 

Sovereign Wealth Funds

 

Sovereign Wealth Funds: Legitimacy, Governance and Global Power by Gordon L. Clark, Adam D. Dixon, and Ashby H.B. Monk (Princeton, NJ: Princeton University Press, 2013). The fund structure and investment strategies of sovereign wealth funds.

 

Value Creation

 

The Alchemy of Finance: Reading the Mind of the Market by George Soros (New York: Simon & Schuster, 1987). Presents Soros’ theory of reflexivity about financial markets, influenced by philosopher Karl Popper.

 

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb (New York: Random House, 2012). An optionality-based philosophy of how to actively deal with luck, risk, and uncertainty.

 

Den of Thieves by James B. Stewart (New York: Touchstone, 1992). How financier Michael Milken helped to create the high yield bond / junk bond trade and caused the downfall of Drexel Burnham Lambert.

 

Learn Or Die: Using Science to Build a Leading-Edge Learning Organization by Edward D. Hess (New York: Columbia University Press, 2014). How the hedge fund Bridgewater creates a Radical Transparency culture for value creation.

 

Moneyball: The Art of Winning an Unfair Game by Michael Lewis (New York: W.W. Norton & Company, 2003). How baseball coach Billy Beane used Bill James’ sabermetrics – the statistical study of baseball performance – to transform the Oakland A’s team.

 

More Than You Know: Finding Financial Wisdom In Unconventional Places (rev. edition) by Michael J. Mauboussin (New York: Columbia University Press, 2008). How to find and extract alpha from financial markets using lessons from psychology and science.

 

The Nature of Value: How to Invest in an Adaptive Economy by Nick Gogerty (New York: Columbia University Press, 2014). Presents a value creation model used by the hedge fund Bridgewater.

 

Plutocrats: The Rise of the Global Rich and the Fall of Everyone Else by Chrystia Freeland (New York: The Free Press, 2012). The geopolitical worldview of contemporary business and financial elites.

 

The Predators’ Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Traders by Connie Bruck (New York: Penguin Books, 1989). How financier Michael Milken’s deal flow enabled him to take control of Drexel Burnham Lambert.

 

Putin’s Kleptocracy: Who Owns Russia? by Karen Dawisha (New York: Simon & Schuster, 2014). How Putin’s regime in Russia dealt with the oligarchs, and engaged in institutional capture and value appropriation of Russian state assets for private gain.

 

The Snowball: Warren Buffet and the Business of Life by Alice Schroeder (New York: Bantam Books, 2008). The authorised biography of value investor Warren Buffett.

 

Security Analysis (6th edition) by Benjamin Graham and David Dodd (New York: McGraw-Hill, 2008). The influential primer on value investing.

 

Steve Jobs by Walter Isaacson (New York: Simon & Schuster, 2011). The authorised biography of Apple’s co-founder Steve Jobs.

 

Why Moats Matter: The Morningstar Approach to Stock Investing by Heather Brilliant and Elizabeth Collins (Hoboken, NJ: John Wiley & Sons, 2014). Morningstar’s ‘economic moats’ framework for value creation.

 

Venture Capital

 

The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies (2nd edition) by Mahendra Ramsinghani (Hoboken, NJ: John Wiley & Sons, 2014). Interviews with venture capital practitioners on deals and term sheets.

 

Deal Terms: The Finer Points of Venture Capital Deal Structures, Valuations, Term Sheets, Stock Options, and Getting Deals Done by Alex Wilmerding (Eagan, MN: Thomson Reuters / Aspatore, 2005). Term sheets, deal structures, raising capital, and legal structures for private equity and venture capital deals.

 

Term Sheets & Valuations: A Line by Line Look at the Intricacies of Term Sheets & Valuations by Alex Wilmerding (Eagan, MN: Thomson Reuters / Aspatore, 2006).

 

Venture Capital: Investment Strategies, Structures, and Policies edited by Douglas Cumming (Hoboken, NJ: John Wiley & Sons, 2010). Venture capital’s investment fund and legal structure as a form of active management.

 

Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist (2nd edition) by Brad Feld and Jason Mendelson (Hoboken, NJ: John Wiley & Sons, 2012). The legal structure and term sheets for venture capital deals.

 

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel with Blake Masters (London: Virgin Books, 2014). The PayPal co-founder and Facebook / SpaceX investor presents a venture capital model of value creation.

Personal Goals for 2015

Some personal goals for 2015:

 

1. Complete a full PhD draft (two chapters plus rewrites). Model the rewrites on the chapter / structure / paragraph format used for the Princeton Studies in International History and Politics and using the methodology insights of the Cambridge Series in Political Science Research Methods. Submit PhD-related presentation proposals to International Studies Association for possible inclusion in the 2016 annual convention.

 

2. Develop an Academic Moneyball framework (one page) for business development / contract management / research management activities. Draw on asset management, hedge fund, private equity, and value creation domains – for active management – in order to develop the Academic Moneyball framework. Note relevant insights in one paragraph (the Aramchek model) from Russia’s Putin regime on leadership and value appropriation in bureaucracies that also face volatility from international capital markets (some potential background reading: Putin vs. Putin; Putin’s KleptocracyHow Russia Really WorksThe Social Construction of Russia’s Resurgence; The Man Without A Face, and Nothing Is True and Everything Is Possible). Distill into a rolling 100-day action plan (one page) and work breakdown structure (Work Breakdown Structures: The Foundation for Project Management Excellence).

 

3. Continue to keep a reflective diary on trading systems development. Develop one-page algorithm pseudo-code for momentum, trend-following, and value-based strategies – decomposed from the relevant academic research and practitioner literature – with awareness of stream-based processing methods (Fundamentals of Stream Processing).

 

4. Complete a personal program of Cognitive Behavioural Therapy and attend a Mindfulness meditation group.

Nazari & Emami Plagiarism on Business Intelligence

Kamran Nazari (Department of Business Intelligence, Payam Noor University, Iran) and Mostafa Emami (Assistant Professor, Payam Noor University, Iran, formerly of Islamic Azad University and Tarbiat Modares University, email) published the article ‘Conceptual and Theoretical Foundations of Business Intelligence’ in Elixir Business Management 46 (2012): 8195-8202 (PDF).

 

The sections ‘Defining Business Intelligence’ (pp. 8196-8197) and ‘The Intelligence Cycle’ (p. 8197) are plagiarised without attribution from a 2003 Masters essay I wrote for Swinburne University’s Strategic Foresight program on business intelligence (PDF).

 

I have informed the publisher and Dr Yaghob Fatollahi, Vice-Chancellor for Research Affairs at Tarbiat Modares University.

On Jim Simons, String Theory, and Quantitative Hedge Funds

Renaissance Technologies founder and mathematics professor Jim Simons is an enigma in quantitative hedge funds.

 

Simons rarely gives interviews. One of the best is an Institutional Investor interview he gave in 2000 (PDF). One insight is that Renaissance makes trades in specific time periods using pattern recognition to model volatility.

 

Simons has done important work in differential geometry and the theoretical physics subdiscipline of string theory. I recently looked at some academic journal articles by Lars Brink (Sweden’s Chalmers University of Technology) and Leonard Susskind (Stanford University) to try and understand how Simons views financial markets.

 

String theory proposes one-dimensional objects called strings as particle-like objects that have quantum states. String theory and cosmology has progressed over the past 35 years to describe this phenomena but still lacks some key insights.

 

How might Simons use string theory to understand financial markets? Two possibilities:

 

(1) The mathematical language of couplings, phase transitions, perturbations, rotational states, and supersymmetries provides a scientific way to describe financial market  data and price time-series. It does so in a different way to fundamental analysis, technical analysis, and behavioural finance: Simons uses string theory to understand the structure of information in financial markets. (Ed Thorp pursued a similar insight with Claude Shannon using probability theory.) String theory-oriented trading may be falsifiable in Karl Popper’s philosophy of science.

 

(2) String theory provides a topological model that can be applied to money flows between mutual funds, hedge funds, and bank trading desks over short periods of time. This might enable Simons’ traders to forecast the likely catalysts for changes in stock prices in the short-term and to trade accordingly. This might involve using string theory to forecast how price trajectories might change if portfolio managers at other funds alter their portfolio weights for a stock. In doing so, Simons is trading in a similar way to SAC’s Steve Cohen (who uses game theory) and D.E. Shaw’s David Shaw but uses different methods of pattern recognition to do so.

 

I have made a list of popular science books and Springer academic monographs to keep an eye on string theory. Simons’ success also illustrates how insights from one knowledge domain (string theory, astrophysics, computational linguistics, and voice recognition) can be transferred to another domain (financial markets trading).