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

The book, “The Wisdom of Finance: Discovering Humanity in the World of Risk and Return,” is entertaining in that it uses both Pop Culture and historical references to illustrate certain points. 

The material discusses the basics of Finance, such as asset pricing, risk management, mergers, debt, and the horrors of bankruptcy, to name a few of its facets. 
The material is clear and gets to the point, with erudite language, but not entirely highfalutin and, in light of the references, relatable and fun. 

About the Author

A professor of Finance, Mihir A. Desai, is the celebrated author of this opus. He had taught Finance at the Harvard Business School and Professor of Law at Harvard Law School. He is an award-winning teacher with advocacy in tax policy, international finance, and corporate finance. Mihir Desai relates to his audience that a relevant tax policy design is adopted for the global market. 

Table of Contents

The book contains 8 chapters which effectively discusses pertinent 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 seen through the topic breakdown above, each chapter has numerous subtopics that make it not necessarily just lengthy, but comprehensive and wholly helpful.

Posted by Anastasia