. 2024. Laurence B. Siegel. Edited by Wayne Wagner. Montesquieu Press.
Suppose you have got combined in a single person a keen curiosity about his field, first-class intelligence, a long time of skilled experience, a present for clear writing and an irrepressible humorousness. You would get something like Laurence B. Siegel, whose excitingly readable essays make up this volume. They were chosen by Wayne Wagner, founding partner of Wilshire Associates and a person with the breadth of experience to rival Siegel’s.
With two exceptions, the articles are Siegel’s book reviews from 2019 to 2024. The exceptions are a reprint of a Article (co-author of Siegel) and an interview about his book. The topics cover almost every little thing a serious investment skilled should know – not only to investigate securities but in addition to know the economic, technological and political trends that shape them.
Twenty-four articles are divided into five sections: Progress, Investing, Technology, Political Economy, and “Provocative.” The questions they address are as ambitious as their titles suggest: What cultural ingredients stimulate innovation and growth? Which mental tools sharpen insight into investments? What do we want to know about technology to take care of the forces reshaping markets? What principles of political economy illustrate the vortex of politics and beliefs? And finally, how can we simply think higher? has stimulating answers to all of them.
Siegel has the gift of condensing the insights of a book into memorable sentences and vivid images. The volume is plagued by aphorisms, a few of that are his own and others borrowed. From Matt Ridley’s work: “Improbable arrangements of the world, crystallized consequences of energy production, are what both life and technology are about.” Or “It’s the people who reduce costs and simplify the product who make the biggest difference.”
Siegel enjoys such clarifying lines. He notes that the pc in your iPhone “has more processing power than a $30 million Cray 2 supercomputer from the 1980s – and 100,000 times as much as the Apollo 11 spacecraft.” In a review of Andrew McAfee’s work, he puts the argument succinctly: “Making more from less is what human endeavor is largely about.” On environmental priorities: “Everyone wants a clean environment, but poorer people want more other things – like food.” As for advice to investors: “Don’t be lazy. Be very lazy.” (Darwin may need agreed.)
Siegel’s review by Sebastian Mallaby History of enterprise capital sums up the essence of this business with a single biting line: “They are all unreasonable, non-conformist people who get on your nerves.” This also has investment relevance.
In his interpretation of Brad DeLong’s novel: “Everyone was born into a world in which the basic ingredients of a decent life have already been invented. We should reflect on our incredible good fortune so we don’t squander it.” Elsewhere he reminds us, quoting Roger Ibbotson: “Finance seems extraordinarily complicated, but when you simplify it to its essence, two prices are required: the price of risk and the price of time.” Kevin Coldiron adds the sequel: “Without positive real interest rates there can be no capital. Without capital there can be no capitalism.”
The diagrams and tables are also value a glance. A graphic on page 38 shows how global GDP rose like a rocket around 1800. Others show when pollution began to say no, how fertility patterns reversed, and the way industry developed over two centuries of U.S. capitalism. It’s like a visible refresher on economic history – without the teachings.
Siegel never loses sight of his audience. He explains why any book or idea is essential to investment professionals: “Investors must be acutely aware of the sources and barriers to innovation in their search for potential returns.” Looking back at McAfee, he notes, “Some companies and industries will be hurt while others will be helped tremendously. Actively managed portfolios can benefit from this insight.”
From his emphasis: “Most decision makers – pension managers, advisors and portfolio managers – are unaware of the tendency of mean-variance optimization to increase the errors of input assumptions.” A delicate and useful reminder.
Siegel just isn’t a cheerleader. He praises generously, but doesn’t skimp on criticism. In his opinion, McAfee’s book is a couple of narrow aspect of technological advancement, dematerialization, and readers searching for a broader perspective should try McAfee’s earlier co-written book. About DeLong’s book: “He believes his restructuring proposal is liberal, but it is deeply reactionary and throws sand into the gears of mobility and ambition.” On the boundaries of the market to provide happiness: “That’s because it’s not supposed to be that way! The market is an economic system, not (tempo Ayn Rand) a moral one.”
To say that Siegel’s reviews are a pithy substitute for the books themselves can be unfair – to the books. Still, readers searching for sharp, in-depth insights into a few of crucial ideas shaping economics and investing will find an entertaining education of their very own. Some astute readers will little question return to lots of the chapters throughout their careers.
