The Wisdom of Finance: Discovering Humanity in the World of Risk and Return

In Forex Books Reviews by

Seen as both entertaining and purposeful, the book, “The Wisdom of Finance: Discovering Humanity in the World of Risk and Return,” walks its readers through the basics of finance. The book effectively discusses asset pricing, risk management, mergers, debt, and the horrors of bankruptcy. 

It has been said to be clear and concise, with the language that speaks of the author’s high education. It goes to lengths to discuss the French Revolution and probability to make sense of why modern-day Finance looks the way that it does. 

About the Author

The book was written by one Mihir A. Desai, a Professor of Finance at the Harvard Business School and Professor of Law at Harvard Law School. He has garnered many awards for being a teacher at these institutions Mr. Desai’s expertise resides in tax policy, international finance, and corporate finance. It has become his advocacy to imbue upon industry movers that a relevant tax policy design is adopted for the global scene. 

The book contains the following topics:
Chapter 1: The Wheel of Fortune

  1. The Flitcraft Parable
  2. The Quincunx
  3. From Bottomry to Tontines
  4. We Are All Insurance Companies
  5. Wallace Stevens and Ideas of Order

Chapter 2: Risky Business

  1. Lizzy Bennet as Risk Manager
  2. If Isaac Newton Had Worked at Goldman Sachs
  3. I Would Prefer Not To
  4. Stephen Curry, Stringer Bell, and the Only Free Lunch in Finance
  5. The Negative Betas of Your Life

Chapter 3: On Value

  1. The Parable of the Talents
  2. The Cruel Logic of Value Creation
  3. Is Education Worth It?
  4. Your Terminal Values
  5. The Talents of Samuel Johnson and John Milton
  6. Alpha-Beta Soup
  7. Have You Financed? 

Chapter 4: Becoming a Producer

  1. Bialystock and Bloom on Corporate Governance
  2. Apple and Tootsie Roll
  3. A Daisy Chain of Principals and Agents
  4. Vyse vs. Emerson
  5. Mel Brooks on Freud
  6. A Blank Sheet of Paper

Chapter 5: No Romance Without Finance

  1. Working Girl
  2. The Dowry Fund of Renaissance Italy
  3. The M&A Pages
  4. A May-December Romance
  5. Mergers and Marriages Gone Wrong
  6. General Motors and Fisher Body
  7. Romance Without Finance

Chapter 6: Living the Dream

  1. Adam Smith vs. Jeremy Bentham on Leverage
  2. The Hooks of Gratitude and Obligation
  3. Jeff Koons vs. George Orwell on Leverage
  4. Mr. Stevens and Debt Overhang
  5. The Power of Commitments
  6. Popeye in Las Vegas

Chapter 7: Failing Forward

  1. The Man Who Could Have Been on the $10 Bill
  2. The Bankruptcy Act of 1800
  3. An Automatic Stay
  4. A Strategic Bankruptcy at American Airlines
  5. Agamemnon, Arjuna, Hecuba, and Bankruptcy

Chapter 8: Why Everyone Hates Finance

  1. The Temptation of Pakhom
  2. The Lobster and the Squid
  3. More and More Is Less and Less
  4. The Asshole Theory of Finance
  5. Alexandra Bergson as Finance Hero

As written in the chapters above, the main topics are furnished with subtopics, which make “The Wisdom of Finance: Discovering Humanity in the World of Risk and Return” a worthy addition to any financial player’s library.