Books about budgeting and investing

Some of the most popular books in Australia right now are those about how to save money or make it stretch further. The funniest hint I’ve read in a book of this type recently was that you shouldn’t buy books, you should borrow them from the library. Except that book. You should buy that one, so that you have a copy of the budgeting worksheets…but generally you shouldn’t buy books about money.

There are a lot of books about the basics of budgeting. Paul Clitheroe, Noel Whittaker and Anita Bell have been putting out books about basic financial management for years. I decided instead to listen to some audiobooks about what to do with money once you have your budget under control and have a bit to spare.

The intelligent investor by Ben Graham is a classic investment text. It was one of the earliest proponents of the idea of value investing. That is, investing in shares based not so much on the expectation they will be popular in the next year or so, but on the underlying soundness of the business. It’s a very attractive sounding style of investment, but a bit time consuming for the average retail punter.

The little book of common sense investing is again, a classic book which was the first to seriously spruik the value of index funds. The idea of an index fund is that, rather than try to pick winners, your fund buys a little bit of everything, in line with the share market’s capitalisation. Then, if the market rises, which it generally does, you make money. The author’s key point is that in an index fund, the fund manager doesn’t need to do research, so it doesn’t need the huge staff that are required for other styles of picking winners, and this means that overheads are lower. It’s quite a convincingly argued thesis, and surprisingly brief.  There are holes to pick with it, or course, but it’s an interesting listen.

The art of war for executives was a bit of a disappointment. You really can’t just take Sun Tzu, swap out the word “general” for the word “executive” and hope for the best.  Sun Tzu’s approach is perpetual war, forever, and although war works as a metaphor for business, actually, no, if you lose a tender for a new customer, no-one is going to cut off your head and burn down your village.  Even in ancient Chinese war there were levels of diplomacy and negotiation of peace.

I’m reading Clausewitz at the moment, and he makes a point which is highly relevant here: armchair generals are driven to extremes. That is, when thinking about war, it seems obvious that war must be pursued to the extinction of the enemy, with all resources available, with no qualm as to the morality of the strategy, because that protects the general’s own forces and nation from harm to the maximum degree. In real life however, people who conduct wars do not behave this way, and they do not behave this way for good reasons which are obvious to people with military experience. The problem in The art of war for executives is that it seems to counsel extremes in business, because Sun Tzu also seems to counsel extremes is war, but Sun Tzu understood that the framework in which wars are fought necessarily drew the general away from extremes, and I’m not sure that the same lesson, that the framework of law and society which surrounds business must draw the entrepreneur from extremes, is acknowledged here.

Whenever librarians mention money, or law, or medicine, or a whole host of other things we like to make a disclaimer like “This is not financial advice.” and so I’m doing it now.  This is just my emotional reaction to some books: don’t use it as financial advice.