How Finance Works: The HBR Guide to Thinking Smart About the Numbers
by Mihir A. Desai
This is an outstanding book which presents some complicated topics in a clear, well-organized manner with real-world examples. The author, a professor of finance and taxation at Harvard Business School and Harvard Law School, includes some sidebar commentary from two CFOs, an investment banker, and a hedge fund manager.
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Small Business Finance and Valuation
by Rick Nason and Dan Nordqvist
A finance professor and a CPA have teamed up to explain finance and risk management concepts specifically for small business, defined as assets under $5 million. They acknowledge that the objectives of small business owners often differ from those of a Fortune 500 CFO, whose focus is typically maximizing shareholder value. Freedom, peace of mind, and other quality of life issues may be more important to a small business owner. Continue reading “Small Business Finance and Valuation”
After posting more than 250 book reviews, I decided to try something new: an author interview on YouTube. I am grateful to Alastair Thomson for graciously sharing his wisdom on managing small and medium-sized businesses. Alastair has an accounting background, but this conversation is not about debits and credits. It’s about improving your business from the perspective of an experienced CEO and CFO. We cover cash flow, profit, customer experience, metrics, business ethics, marketing, quality, continuous improvement, front-line employees, growth, margins, inventory, and receivables.
An interview with Alastair Thomson, author of Cash Flow Surge
July 16, 2020 – 1 hour – Book Review – Amazon
Transcript
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Cash Flow Surge: 101 No-Cost and Low-Cost Fast-Action Strategies to Boost Your Business Cash Flow
by Alastair Thomson (interview)
In college I took a course called Small Business Finance. The main thing I remember from this course is the emphasis on “cash flow, cash flow, cash flow.” Alastair Thomson is an accountant who has been a CFO and CEO of several businesses in the U.K., across variety of industries. He wrote this book for owners of small and medium-size businesses. While cash flow and profit are not the same thing, many of the ideas in the book can improve both.
The 101 chapters cover suppliers and expenses, customers and revenue, staffing and procedures, communication, insurance, logistics, contracts, and technology. Here are some snippets: Continue reading “Cash Flow Surge: 101 No-Cost and Low-Cost Fast-Action Strategies to Boost Your Cash Flow”
Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean
by Karen Berman and Joe Knight
This outstanding book teaches corporate financial literacy to nonfinancial employees. There are 33 short chapters grouped into sections covering the income statement, the balance sheet, cash, ratios, return on investment, and working capital. “You’ll learn how to decipher the financial statements, how to identify potential biases in the numbers, and how to use the information in the statements to do your job better.”
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I, Pencil
by Leonard E. Read
This is the story of how a simple pencil is manufactured using numerous raw materials from all over the world, as told in the first person by the pencil itself. It was first published in 1958 to explain how free-market economies work and to discredit centrally-planned economies, such as the Soviet Union. While trade barriers are not expressly discussed in the story, the reader can infer potential consequences rippling through the supply chain. Continue reading “I, Pencil”
How to Think About Money
by Jonathan Clements
Jonathan Clements, a personal-finance columnist at The Wall Street Journal for some 20 years, advises how to think about work, debt, investments, and insurance at various stages of life. He puts an emphasis on preparing for retirement, starting at a young age.
“Chronologically, retirement might be our final financial goal, but we should always put it first. Amassing enough for a comfortable retirement is our life’s great financial task.” Given longer life expectancy, “we need to get ourselves on the right financial track as early in our adult life as possible, so we quickly achieve some measure of financial freedom.” Continue reading “How to Think About Money”
The Most Important Thing: Uncommon Sense for the Thoughtful Investor
by Howard Marks
Howard Marks is the co-founder and co-chairman of Oaktree Capital Management and he ranks #374 on the 2017 Forbes 400 list of wealthiest Americans. In this book he covers 20 topics: second-level thinking; market efficiency and its limitations; intrinsic value; the relationship between price and value; understanding risk; recognizing risk; controlling risk; market cycles; the pendulum; combating negative influences; contrarianism; finding bargains; patient opportunism; knowing what you don’t know; having a sense for where we stand; appreciating the role of luck; investing defensively; avoiding pitfalls; adding value; and pulling it all together.
Can you guess which one is the most important thing? Continue reading “The Most Important Thing: Uncommon Sense for the Thoughtful Investor”
50 Economics Classics: Your shortcut to the most important ideas on capitalism, finance, and the global economy
by Tom Butler-Bowden
Tom Butler-Bowdon has summarized 50 economics books spanning 240 years (1776 to 2016), however 40% of the books were published in the 21st-century, thus offering contemporary relevance with historical context. Indeed he notes in the introduction, “if there is anything that the financial crisis of 2007-08 told us, it is that economic and financial history matters.”
Each book is distilled to about six pages. Among the many topics covered are: the euro, the Great Depression, subprime loans and the 2008 financial crisis, the value of a college education, the economics of cities, free trade, protectionism, globalization, the gold standard, income inequality, innovation and entrepreneurship, investing in the stock market, employment, technology, poverty, famines, crime, foreign aid, property, dead capital, and behavioral economics.
Here are some selected highlights. Continue reading “50 Economics Classics”
The Laws of Wealth: Psychology and the Secret to Investing Success
by Daniel Crosby
Psychologist Daniel Crosby works in the field of behavioral finance. “Given that you, as a member of the human family, have tendencies toward impatience, arrogance and a fetish for complexity, it is very likely that you will screw this up… At my last count, psychologists and economists had documented 117 biases capable of obscuring lucid financial decision-making.”
Crosby presents 10 rules of behavioral self-management.
Rule #1 – You Control What Matters Most. “The behavior gap measures the loss that the average investor incurs as a result of emotional responses to market conditions.” As an example, the author notes that the best performing mutual fund during the period 2000-2010 was CGM Focus, with an 18.2% annualized return; however the average investor in the fund had a negative return! The reason is that they tended to buy when the fund was soaring and sell in a panic when the price dipped. More on volatility later… Continue reading “The Laws of Wealth”
The Key Point 