Against the Gods: The Remarkable Story of Risk, by Peter L. Bernstein, Wiley, 1998, 383 pages
This is one of those books that I put on my Amazon wish list something like five years ago, ordered about two years ago, and finally got a chance to get through it thanks to some abnormally regular travel over the last couple of months. Picking up a book about the world of finance is not something I normally do, if for no other reason than I buy books to learn about stuff rather than as a homeopathic cure for insomnia.
But author Peter Bernstein, a lifelong “quant” with superb credentials, rises above both his profession and the subject matter with the grace of a historian-storyteller, and makes the history of risk and risk management so powerfully engaging I found myself searching online for the back stories of some of his characters. In fact, at one point, I told Gizmo that as a result of the book, for the first time in my life I was interested in mathematics beyond simple spreadsheet functions.
Against the Gods is that good, and a command of the meaning of “risk” is probably no more important anywhere in the world than right here in China, where we live with uncertainty every day, regardless of your profession. Reading through the book and occasionally staring out my hotel room window at Mt. Fuji in the distance late in December, I realized that in China we are so accustomed to doing business amid great uncertainty that we come to take it for granted.
Which, I guess, is fine if you’re simply turning up the “squelch” knob on your mental radio to drown out the ongoing static and to keep yourself sane. Unfortunately, if you keep drowning out that static you wind up numbed to how bloody risky it is to do business of any kind here. That’s not good, especially if you’re putting your money into China, and arguably even more so if you’ve been charged to watch somebody else’s. Read Tim Clissold’s Mr. China, and you get what I mean.
Meantime, I’ve developed a taste for books about the history of the finance industry, and my order to Amazon last night included a couple of titles along those lines.