Fooled by Randomness - Nassim Nicholas Taleb (Random House, 2005)

This critique of our inability to acknowledge randomness explores some of the less obvious ways in which uncertainty affects our situation.  Taleb introduces the notion that an entire path of events in history is only one realization of the many trajectories that might have occurred.  This takes the randomness away from single events and opens a view of a broader way in which contingency affects our lives and fortunes. [123.3]

This book presents a general caution for analysts: do not assume that the underlying models you construct are complete because one may see only one realization of an infinite set of paths of history.  Therefore, it is problematic for a model drawn from historic experience to be generally applicable in describing likelihoods.  Nor should past events be taken as a sufficient guide to  your experience.  It is an elaborate way of warning the reader to not assume that the state of the world (and his position in it) are the necessary outcomes and that there was no alternative.  This rule applies in analysis of technical and financial issues as well as in one's own life.

Taleb is interested in the implications of the ways randomness appears in our lives without announcing itself.  Here he discusses the psychological profile of successful traders compared with the unsuccessful ones.  Too much may be attributed to skill or genius when luck alone might be a satisfactory explanation.  This turns any compensation system that rewards, for example, successful trading as a simple lottery in life.

The author contrasts himself with his colleagues in the financial field because he prefers to use hedges so that his potential gains may be smaller, but he is protected from catastrophic loss.  The idea is to aim for a smaller mean with a much smaller variance.  One tool that he uses frequently in analyzing probabilistic situations is Monte Carlo simulation.  (What he is less clear about is how he selects the probability model that he uses to drive his simulations.)  The author then extends his look into probability by considering a variety of issues such as skewed distributions, such as a logarithmic distribution or survivorship bias and other biases that affect humans ability to accurately assess probabilities.  These are topics that deserve a close look.

It is unfortunate when an author's ego gets in the way of an important message.  (For example, see another particularly insightful book on mathematics of finance that suffered as the author repeatedly pointed out that his brilliance was overlooked by a tenure committee.)  Sadly, this book fails on the same ground: the author injects too much of his personal life into the narrative.  One might even suspect a bit of intellectual "showing off."   There is a tendency to name-drop obscure or thorny philosophers or mathematicians or to offer a gratuitous criticism of their work with little justification.

This book cannot receive an unqualified recommendation.  It may be an enjoyable read, but the author's need to convince the reader of his seriousness as a thinker can be tedious.  It is an acceptable read in a noisy environment, but can disappoint      

The Image or What Happened to the American Dream - Daniel J Boorstin (Atheneum, 1962)

A critical look at American society and its growing substitution of manufactured experiences and events for actual experience and events.  This piece of social criticism is even more remarkable for how early these trends in American culture were discerned by the author.   [917.3]

This is a deeply perceptive analysis about the direction of American culture in the middle of the 20th century.  Although the book was first written in 1962, the analysis could read as a modern critique of American culture and our intellectual and moral outlook.  The key concept for this book is the "pseudo-event."  A pseudo-event is a planned happening or news event, like a press conference.  It an event arranged or brought about merely for the sake of the publicity it generates, especially one designed to appear spontaneous or unplanned. It isn't truly spontaneous, but is particularly designed for press coverage.  Boorstin defines a pseudo-event as an ambiguous truth that appeals to people's desire to be informed.  The problem, in the author's judgement, is that our "news" is increasingly made up of pseudo-events.

One of his key examples is the 1960 Presidential debate.  Boorstin questions whether the quiz show format is in any realistic way revealing about what sort of President either man might be.  (This trend has only worsened as the response time allotted to a speaker is reduced to a few minutes.)  Note what is remembered about that first in the Presidential debates series: that Nixon perspired and looked unshaven because of the make-up he was wearing and that perceptions of who carried the debate depended on whether one saw it on television or heard it on the radio.  Although such an event feels like something important is occurring, subsequent debates have come down to exercises in which each candidate is trying to land a well-rehearsed catchphrase rather than outline in any detail specifics of his programs.    

Flowing from the concept of a pseudo-event is the author's definition of a celebrity as a person who is famous for being well known.  That the concept is an empty tautology is of no matter to society today.  The critical difference from Boorstin's view is that one may not be able to consciously become a nationally honored hero, but one can campaign to become a celebrity with a good chance of success.  All that is required is the effort and means of getting one's name known.  (Our mass media and our need for something to talk about in a full-day news business have made the task of becoming a celebrity easier.)  Think of how often Warhol's "15 minutes of fame" aphorism is invoked today.
   

The second key concept is "image."  Boorstin argues that our culture has replaced ideals with images.  The difference between the two is significant.  An ideal, say, honesty, is a goal or quality.  It may not be attainable fully, but it is something to aspire to.  An image is a created picture of oneself or of a corporation or any other organization.  An image can be changed.  An image is expected to be achievable.    

This book is more than 50 years old.  It may even seem a bit quaint in what it considers shallow or unworthy.  At times the audible sigh of a world-weary observer comes through the text.  Boorstin did become a social conservative.  (He was, however, of the type of old-line conservative that has been replaced by a "conservatism" of advocacy.)  These aspects may make the book a slower read at points.  It may seem to be describing a world we acknowledge is long gone rather than as a world that is still slipping away.  If anything, there is no way to go back to the American society of 1960..    

Still, the book is a striking read and is recommended.

The Go-Go Years - John Brooks (Weybright & Talley, 1973)

An episodic history of the equities markets during the decade of the 1960s to show how the market transformed from a gentleman's club to a national market.  [332.64273]  

The decade of the 1960s on Wall Street is likely remembered as a period characterized by a steadily rising stock market.  Fifty years on, not much else may survive in the details, but it might be thought of as a bland and safe age compared to the crashes of 1929, 1987, the dot-com era, or 2008.  This stands in sharp contrast to the sense of social upheaval in the United States during the same decade.  This book offers evidence that the 60s were certainly not bland nor was the market on a steady upward path throughout the period.

Brooks' central theme is that the decade saw the final transition of Wall Street from a private gentleman's club to a national financial market.  The story is told through a series of individual biographies of characters who stood for their brief moment on the financial stage with the collection bracketed by the record one-day loss of H Ross Perot in his losses from a sharp drop in EDS.

Here are the stories of the American Stock Exchange trying to right itself and avoid the scandal of corruption among its leaders, of Eddie Gilbert gambling desperately to finance continuing acquisitions of competitive flooring firms, and of a somnolent SEC and a major insider trading scandal among the directors of Texas Gulf Sulfur.  As these events are sweeping out the old, slow ways of the Street, a new generation of fund managers is coming to the fore.  These are the Gunslingers: mutual fund managers who took heavily concentrated positions and moved in and out of investments rapidly to show "performance."  There were also the new conglomerates.  These were collections of companies created by mergers and acquisitions across multiple industries.  It was argued that there was some mystic synergy that made sports equipment, tractors, and dish soap manufacturers better if they were all part of one larger corporation.  Finally, there were the hyper-growth, new technology firms that attracted investors whose money could be used for more ambitious growth.  One might see, for example, a computer leasing firm making a bid to take over a major money center bank.

The market itself was beginning to attract the interest of many new, small investors as Wall Street became more of a national institution.  It wasn't prepared for this new role.  Clearing paper share certificates became a backroom nightmare.  Customers accounts were in disarray and the problem was growing.  In an attempt to stem the problem, brokerages were to close one day a week and not solicit new business.  In a story familiar to anyone acquainted with the growth of synthetic MBS until 2008, the firms could not resist the additional profit in new accounts - and churning those accounts - in an era of fixed, high commissions.

As the economy began to slow in 1969, the brokerages took in less income.  Many had lived with almost fictional capital assets and failures in several brokerages, including some of the largest houses, began to stress the NYSE.  (There was, as yet, no Security Investors Protection Corporation - SIPC -  to insure investors' accounts.)  As share prices sagged, the performance of the hot-handed gunslingers seem to cool.  This bears out John Kenneth Galbraith's aphorism that "genius is a rising market."   It could be seen that by the end of 1970, actual performance over the decade for many hot hands had been nil.  The synergy of the conglomerates and their stock prices evaporated.  That synergy proved to be only the result of accounting manipulation made possible by acquiring firms with lower price to earnings multiples.  The Dow Jones index which had touched 1,000 in 1966 wouldn't return to that value until nearly the end of 1972.

By the end of the decade, despite all the pain of growth and transition, Wall Street was something new.  It had become integral to American life in a way it hadn't been before.  Where it was once a spectator sport, it now held pensions and individual savings that would make it critical to more households.  To be more a part of the life of many Americans, however, would mean that the slumps and bubbles that seem an inevitable part of markets would have more that an academic impact for the average citizen than in times past.  This may be the reason, more than simply because they are in recent memory, why the crashes of 1970, 1987, 2000, and 2008 had such an impact in ways that the 1954 or 1962 slides did not.      

This book has been re-issued in the Wiley Investment Classics series and it very much deserves to be.  It is strongly recommended because it covers a market era that is usually overlooked. 

Mathematics and the Unexpected - Ivar Ekeland (University of Chicago Press, 1988)

The world of mathematics is reputed to be precise and exact; Ivar Ekeland shows how it is not.  This well-written introduction to catastrophe theory and chaos theory makes these topics clear to the non-mathematician without sacrificing the sort of precision that often characterizes popular presentations.  [514.7]

The world once seemed wonderfully crafted: Newtonian mechanics made the entire universe graspable and, more importantly, predictable far into the future and, in the same way, far into the past.  Using the celestial mechanics inherent in Newton's system, Urbain Le Verrier discovered the planet Neptune by inference based on perturbations of Uranus' orbit.  What could better demonstrate the triumph of science than the discovery of planets by pure mathematics rather than by telescope?  What would be left for science to discover?

But this was an illusion brought about by only taking partial views of the systems.  Henri Poincaré pointed to problems of calculating orbits precisely under the gravitational effect of additional bodies.  The result of perfect trajectories in orbits the "three body problem" meant that orbits were not truly periodic functions.  The planet might return to a point near in space to that from which it departed a "year" earlier, but would not be truly periodic.  This leads the author into a discussion of what is often called chaos theory.  He is at his clearest in discussing a sensitivity to initial conditions and how this occurs.  finally, he bridges this discussion to a way to see probabilistic outcomes as the result of seeing only part of the system.

The author then goes on to discuss catastrophe theory.  This was a very hot topic 40 years ago.  Perhaps it was the name that led to so many hints that the theory would explain stock market crashes, wars, and other catastrophes.  This was reading in too much.  The theory as developed was quite limited in discussing only dissipative systems.  The author is frank in showing the limits of the theory.

The author writes with clarity.  Some sections do require a mathematical view, not because they are given in equations, but because they are presented with the sort of logical rigor that a mathematics education gives one.

This book is recommended for readers who wish more than the popular approach to these topics.
   

Dominion of Memories - Susan Dunn (Basic Books, 2007)

At the time of the American Revolution, Virginia was the leading state in the Union.  By the time of secession 80 years later, Virginia had slipped into an economic and cultural backwater.  The author finds that the system of slavery was the principal cause for this decline: it stymied state politics, discouraged industry and commerce, and led to a rigid social structure that caused its most talented to seek their fortunes elsewhere.  [975.503]

The thesis is simple: Virginia was the premier state in the early Union, yet within 70 years it had become a backwater.  The reason is slavery.  It is clear that the commonwealth of Virginia had produced a disproportionate share of the leading men of the early Republic.  Four of the first five Presidents and four Virginians served on the early Supreme Court.  Men like Patrick Henry, George Mason, Jefferson, Washington, and Madison had defined the new country.  Virginia had been prosperous in the 1780s but would be impoverished by the 1820s.  It would never play a leading role again in U.S. history.

Susan Dunn finds slavery as the cause of this decline and she presents clear arguments for it.  The slave economy and its agricultural base stultified economic development and sustained political rule by a class of conservative landowners with very different interests from the mass of people.  Slavery corrupted the intellectual life of the people and discouraged invention and industry.

The first impact of slavery was to define labor as something unfit for white men.  Labor was servile and only lesser people should perform it.  (By drawing the work line along color boundaries, the myth of the equality of all white men could be maintained.)  By denigrating work, interest in promoting new industries or inventions was discouraged.  Persons of talent left the state to find more conducive environments.

With so much wealth tied to land and slaves, the decline in land values in the 1820s impoverished many of the state's elites.  The nature of the assets and the decline in values led to a shortage of capital for new enterprises.  The agrarian interests that controlled the state legislature had a fear of banks.  Consequently, few banks were chartered and the capital shortage persisted.

Slavery induced a fear of the central government because it might always be possible for the national government to tax or outlaw slavery.  Therefore, all encroachments on state sovereignty had to be resisted.  This meant that national roads and canals and, even state managed roads, were to be resisted which further discouraged new industry.  Although western Virginia was rich in minerals, for example, difficult transport meant that these were not exploited.  While the opening of the Erie Canal boosted New York with goods from the Midwest, the ports at Alexandria and Richmond suffered for lack of exports coming from the interior.  Ironworking in Richmond was based on pig iron brought from Pennsylvania rather than from smelting in Virginia.  Further, to make internal improvements would require tax revenues.  The planter class that dominated the state legislature was not going to allow taxation of its property in persons.  

The lack of public funds - and the bar on educating slaves - meant that public schools were not established as they were in New England.  Education remained principally a private domain.  The University of Virginia stands as an exception, but it remained beyond the reach of most residents.  Virginia would not have a comprehensive school system until the 20th century.  

Finally, the structure of plantation society impeded political reform.  The Revolutionary War era constitution of the state allocated Delegates (members of the legislature) equally to each county regardless of population and the governor and judges were appointed by the same legislature.  This left the commonwealth's government dominated by planters from the Tidewater region who would continue to govern based on their group's interests.  In addition to their aversion to taxation and public works and their fear of abolition, they were hesitant to embrace political reform, especially of the franchise.  Voting remained restricted to white males who owned property.  It was contended that governance should be in the hands of those who have the greatest stake in society.  All other state inaction followed from this.  By the 1840s, Virginia was one of the only two states in the Union that still required property ownership as a condition of voting.

Thus, without the will or the means to adapt to the changing economy and society, Virginia slipped into a nostalgia that made a virtue of its old-style ways, bad roads, and divided society.  Without economic development, it fell further behind the North and the Midwest and lost its role as leader of the nation.

Throughout the book, Messrs. Jefferson and Madison continually appear to exert local influence on events and movements.  In doing so, they alternate between radical and conservative positions.  The bold men of the 1770s and 1780s could become cautious farmers by the 1820s.  Although it is disappointing to see heroes fail to live up to their reputations always, it is a reminder that these men could be misguided by their own immediate interests, poverty, and needs.  This is not muckraking or just bringing down statues, it is history.

This short book is strongly recommended for a fresh perspective on U.S. history as seen through ties to economics and social dynamics. 

The Truth Matters - Bruce Bartlett (Ten Speed Press, 2017)

A useful summary and guide to quality data sources, research tools, and questions to ask oneself in evaluating published information.  [070.9051]

The title, given the author, might lead one to expect a philippic on the leaders of these times or a cry of exasperation regarding our society's increasingly cavalier relationship with truth, facts, and objective reality.  It isn't either of these.

What this small book does provide is a collection of methods or sources for undertaking research, comments about interpreting news stories (i.e., understanding terms such as background), suggestions for doing internet and news research, and other tools for fact-checking.  The argument - reasonable for adults - seems to be that the reader should be better informed about the quality of materials set before him.  He should learn to be skeptical about fantastic stories and more accepting of well-curated sources.

These are all good advice.  If the reader comes to the book with a more toned-down attitude, she will find it quite useful.

This short book is recommended as quick read.   

America's Bank - Roger Lowenstein (Penguin Press, 2015)

A history of the conditions, events, and political maneuvering that led to the creation of the United States' third attempt at a central bank, the Federal Reserve System.  The book serves to remind those who argue against having the central bank how the world actually was in its absence.  [332.110973]

Depending on how they are counted, the Federal Reserve is the third or fourth attempt at establishing a central bank in the United States.  Central governments need a fiscal agent: a financial entity where public money can be held and that faces the rest of the economy for the collection of taxes, fees, and customs and for the disbursement of funds.  The Bank of North America,  a private bank chartered by the Confederation Congress in 1781, served that role during the earliest days of the Republic.  When it was re-chartered as a Pennsylvania bank, it could no longer serve the necessary role.

The Bank of the United States, as designed by Alexander Hamilton, was then chartered for twenty years to take up the role of the central bank.  It served as the fiscal agent of the government, but did not provide a uniform currency.  When the Bank's charter was due for renewal, the Jeffersonians were in power.  They opposed the centralization of credit power the Bank represented and allowed the charter to lapse in 1811.  The War of 1812, however, demonstrated the handicap the Nation operated under with a fragmented financial structure.  By 1816, a second Bank of the United States was chartered to operate for 20 years.  Once more, populist political forces, under Andrew Jackson, allowed the charter to lapse.

After the demise of the Second Bank of the United States, an extended period of financial disarray and volatility marked the United States' economy.  There was no uniform currency until the American Civil War made it desirable.  Every bank issued its own notes.  There was no central source of credit; the growth of the new economy was funded through London.  Individual banks were fragile; there was no system for pooling reserves to meet banking crises.  The only defense system was a pyramid of deposits in correspondent banks that could not survive severe credit events and there were many severe "panics" through the period.  The Panic of 1907 highlighted how much the system depended upon a few individuals and how precarious such a situation could be.

Republican Senator Nelson Aldrich had been an advocate for minor changes in the National Banking Act (1864) as constituting all that was needed to repair the system.  Through the efforts of Paul Warburg, however, he began to see the need for a European style central bank.  In the new approach, a system of pooled reserves would be available among a large group of banks to stave off bank runs or other temporary stresses that could lead to larger panics if not checked.  Aldrich, unfortunately, represented the "old Guard" and, as such, his efforts to bring it about were suspect.  The split in the Republicans and the election of Woodrow Wilson brought a fresh complication.

Through all of this, the term "central bank" was a forbidden concept, particularly among the Democrats and the Populists.  (Bryan was still a major leader of the Democrats and Wilson would have to keep him on side.)  A central bank was feared to be a tool for powerful Eastern interests to control the economy.  And, among the Eastern bankers, generally Republicans, there was little enthusiasm for a government-managed bank that might encroach on their practices.  

In the end, the issue came down to who was the proper manager of "money" under its possible definitions. Bankers felt that money was a creation of the financial system and that the central bank should be private.  There was a further split regarding the basis of bank credit which created money; the "real bills" doctrine came into play.  For some, bank credit should be based on discounting of commercial paper and notes related to actual trade.  Clearly, consumer credit was beyond consideration.  The other view was closer to the "Greenback" view, that is, that money was created by government fiat, although the gold standard was assumed to prevail.

The final legislative action was led by Carter Glass in the House and Robert Owen in the Senate.  The legislative struggle is covered extensively.  At points, one might even fatigue of the legislative dance, except that one is reminded of how difficult any major legislation can be.

The value, for me, in this text is that it stresses how ingrained the resistance to a central bank was in the United States despite the evidence that the financial system was weak and brittle without one.  One need only look, however, at the blogs and opinion pieces that still decry the Federal Reserve's existence to realize how easily important lessons are forgotten when the conditions that taught those lessons are addressed.

This book is generally recommended.

     

  

Getting It Right the Second Time - Michael Gershman (Addison-Wesley, 1990)

This is a quick, entertaining read on the history of several major products with emphasis on difficulties they experienced in getting started or in dealing with market changes.  It is also a guide to thinking about marketing when it explores how the challenge facing each product was addressed.  [658.800973]

Companies fail and products fail.  Even the most successful companies have their "New Coke" moments.  Sometimes the trajectory of failure can be changed.  This book looks at forty-nine major consumer products that, surprisingly, were not the successes that they became.  In fact, many looked like they were never going to achieve any consumer acceptance.

In analyzing these stories, the author identifies what changed in product promotion or placement.  In fact, he uses the forty-nine stories to illustrate the value of twelve aspects of marketing.  For example, Quaker Oats was sold originally in open containers from which grocers would fill bags for sale.  Henry Parsons Crowell, who had bought the failing Quaker Mill, was up against a virtual monopoly in the steel-cut oats market.  Crowell's insight was to sell the oats prepackaged as a guarantee to cleanliness that also reduced grocers' work time filling open bags, eased shipping, and allowed a space for recipes suggesting other uses for oats.  Gershman uses this anecdote to stress the value of packaging as the pivotal change with the opportunity for premiums and promotion to add on.

In another example, Gershman describes how Kimberly-Clark began by offering Kleenex as a premium, disposable face cloth for removing makeup in the 1920's.  Despite price cuts and promotion by Hollywood stars, the product was not moving.  What Kimberly-Clark did hear was that customers were using the product instead as a handkerchief substitute.  This prompted them to survey users with newspaper ads.  The results were definitive as to how Kleenex were really being used and Kimberly-Clark duly changed its pitch of the product.  Success was further enhanced by a lower price and the pop-up style of packaging.

Each chapter focuses on one of the author's marketing principles by explaining how it can be applied.  He then offers three or four anecdotes to illustrate the lesson.  The twelve marketing principles Gershman describes are pitch, piggyback, perception, position, packaging, placement, price, premium, promotion, publicity, promise (warranty), and perseverance.  (The gimmickry of making everything begin with the letter "p" has to be overlooked.)  The anecdotes strengthen each discussion of a principle by making the concept clearer in its application.

Even if one has no interest in marketing, the anecdotes should be an enjoyable read.  The book is recommended.       

Bacardi and the Long Fight for Cuba - Tom Gjelten (Penguin Books, 2008)

A well-written account of the history of Cuba - and its relations with the United States - as seen through the fortunes and travails of the Bacardi family and their rum.  [338.766359097491]

Perhaps by virtue of geography, Cuba's history since the 19th century has been linked to the history of the United States.  The island has been a lure for American interests for since at least the 1850s.  It was eyed as a prospect for expansion of the slave territories by some in the South before our Civil War.   The United States intervened in its revolt against Spain in the 1890s and inherited a global empire as a result.  Thereafter, the United States was uncertain about what it should do with its new dependent.

Tom Gjelten has chosen an innovative way to explain Cuba's recent history and its tangled relationship with the U.S. by following the fortunes of one of its premier families, the Bacardis.  Across several generations, members of the family had been important in commerce, in the revolution, in civil administration, and even in the Castro Revolution.  At the same time, the family was introducing new distillation processes and moving to become the leading rum distillers on the island.

Although rum was easily found throughout the Caribbean, there was no Cuban rum industry at the start of the 19th century.  Cubans produced a form of aguardiente from their sugar, but the molasses was refined into rum in New England and elsewhere.  Facundo Bacardi returned to Santiago de Cuba from Spain in the 1850s after several years' absence to find his local warehouses had been looted and that he faced a financial struggle.  Sugar had stopped rising in price and the demand for molasses from the United States was falling off.  He chose to develop a distillation process that improved on the rather rough local distilled products.  He experimented carefully with sugar concentrations, preparation, and distilling techniques until he achieved a satisfactory rum.  He then developed a brand and a market for his rum.

Emilio Bacardi became involved in the business with his father after his return from study in Spain.  He also became sensitive to the ills of slavery and to the rising aspirations of the Cuban people to be independent of Spain.  He became a patriot and eventually joined the rebellious forces.  The revolt ended after ten years, but soon Spain again began to neglect the rights of Cubans.  After the U.S. intervention, Emilio Bacardi had to adapt to working with the new government as a functionary.  It was still not complete independence.  The U.S. government imposed its own restrictions on the autonomy of the Cuban government.

The twentieth century brought a series of changes.  Prohibition in the United States encouraged American travel to Cuba.  The government, however, decayed into a corrupt dictatorship under Fulgencio Batista which provoked a new revolution in the 1950s.  The Bacardi Company was sympathetic to the Castro forces; Raul Castro even married a daughter of a senior Bacardi executive.  Perhaps that is why the company felt betrayed when the Castro government nationalized the Bacardi holdings in Cuba.  From that point forward, the Bacardi Company became a forceful member of the Cuban diaspora resistance.

With late twentieth century capitalism, the anti-Castro sentiment played out in rivalries among major liquor conglomerates such as Pernod Ricard, Diageo, and Bacardi Limited.  The struggle came down to trademarks, labels, and import licenses.  In this contest, once again American political considerations came into play.  That challenge for Cuba is the underlying theme of the book.

The book can be detailed in trivial aspects of the Bacardi family life.  It is, however, an engrossing history set against the history of one family.  With the warning that some sections focus more on individual lives rather than the larger tides of history, this book is recommended.  

Breakfast at Sotheby's - Phillip Hook (Overlook Press, 2014)

A witty look at the modern art market.  The book is formatted as a brief lexicography with entries on aspects of art presentation, history, and anecdotes.  From fakes and forgeries to the personal lives of artists, this book always leads to how the price of an art work is affected.  [707.5]

Phillip Hook served as a director at both Christie's and at Sotheby's.  From these experiences, he draws insights into the functioning of the art market as a response to aspects of the works that make each one more or less desirable. 

Although this book and the classic The Economics of Taste, which covered the variations of the art market from 1760 to 1960, each provide some analysis of the art market, the similarity ends there.  The approach taken by Hook is not an updated analysis of statistics of sales records by artist.  Hook instead presents a lexicon of key terms and names in five areas: the artist, subject and style, wall power, provenance, and market weather.  Within these categories, he presents brief essays on individual artists (such as Géricault or Breughel) which may deal with their biography, but also attempts to identify periods or subjects of the most auction  appeal, or he addresses concepts (such as Branding or Color) to note how it affects the salability of artists' works.

The book is a rich store of anecdotes, many from the author's own experiences (and mistakes), to illustrate the peculiarities of the market for art; that is, a market in which every item may be unique, a market which is driven by forces that defy analysis: status, emotions, and fleeting opportunities, and a market distorted by frequent rent-seeking behavior by some investors.  Along the way, the reader is introduced to factors that drive art prices.  One learns that blue skies over sunny landscapes with bright colors sell positively.  Hence, the Impressionists continue to enjoy a strong market.  The right frame becomes important, even though it isn't a fixed aspect of the work itself.  The public generally dislikes rain, muddy colors (even those of van Gogh's early work), religious themes, especially martyrdoms, and war.  Even individual artists' work may be affected by some non-aesthetic concerns: is it a Mondrian with any red in it? is it a Chagall with a blue background?

This book is recommended as a refreshing break from issues of policy or from quantitative analysis and offers a reason to rethink what economic behavior encompasses.