The Wisdom of Finance: Discovering Humanity in the World of Risk and Return
by Mihir Desai
Published by Profile Books, £12.99 (Available from 31 August)
(Buy at Amazon)
Finance and literature aren’t the most obvious bedfellows. Many writers see the City and Wall Street as a more sophisticated form of organised crime. For their part, many bankers dismiss literature and the humanities as having little practical value. Professor Mihir Desai of Harvard Business School begs to differ. Both provide valuable insights into human behaviour and they have a lot to teach each other. His book tries to explain finance using selected examples from literature and the humanities, and vice versa.
The book covers seven areas: risk, valuation, corporate governance, mergers, leverage, bankruptcy and the value of finance. Each chapter uses a wide variety of examples to illustrate the topic. His section on mergers, for example, draws on everything from the 1988 film Working Girl to the marriage market of medieval Florence, via the songs of Ray Charles and Kayne West. He talks about mergers that worked, such as the famous GM-Fisher deal, and those that didn’t, such as the notorious AOL-Time Warner merger, as well as those that were close but never quite formalised, such as Ford and Firestone.
The result is a fascinating romp through history and Desai is to be commended for finding fresh examples away from the obvious reference points, with both Wall Street and The Wolf of Wall Street getting only brief mentions.
The book is very short and is focused on finance in general, so you are unlikely to find much specific advice about investing, though his discussion of why some mergers succeed and others fail may be useful for those thinking about buying or selling shares in companies undergoing this process. Desai also has a tendency to drift off on extended tangents. However, even if it is imperfectly executed at times, the idea is highly original.
What the press said
This is unlike any business book you’ve ever read, says Steve Denning for Forbes. Desai explains financial concepts in simple terms and “shows how they apply to every aspect of our lives”. “Let us hope that it will inspire bankers and we’ll see more copies of Jane Austen and Willa Cather on bank trading floors” says Gillian Tett in the Financial Times.