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The Theory and Practice of Rational Investing, Harry M. Markowitz worries about a "great confusion" that reigns in finance - namely, "the confusion between necessary and sufficient conditions for the use of mean-variance analysis." This is a serious matter. Mean-variance analysis has been the cornerstone of portfolio construction since Markowitz's seminal 1952 article. Meanwhile, academics and practitioners have been in constant search of the next holy grail that will guide the allocation of capital. Consider the endless stream of articles proposing enhancements to mean-variance analysis or substitutes for it. Substantial bodies of literature discuss optimizers that incorporate higher moments or attempt to replace variance with alternative risk measures. Another takes account of investors' so-called irrational tendencies. I recall a former colleague saying, "Let's not re-implement Harry Markowitz's PhD thesis for the millionth time. We can do better." But we have not. What are the objections to mean-variance analysis, and are they well grounded? Markowitz has devoted Risk-Return Analysis to these questions, concluding that mean-variance analysis is central to finance for good reason. This book proceeds in unhurried steps from a set of incontrovertible premises to the conclusion that mean-variance analysis is the best tool available for addressing a wide range of portfolio-construction problems.

Resurrecting a 45-year-old book, Bill Gates included Business Adventures: Twelve Classic Tales from the World of Wall Street on his 2014 summer reading list. His enthusiasm ("Warren Buffett recommended this book to me back in 1991, and it's still the best business book I've ever read"-and claims it's Warren Buffett's favorite business book, too) was contagious. With prodding by Gates's team, the out-of-print book was reissued as an e-book by Open Road, and as I write this post it's Amazon's #1 best seller in commerce and #2 in books. John Brooks originally published these business stories in The New Yorker, so it goes without saying that they are well written. Describing the stock market as "the daytime adventure serial of the well-to-do," Brooks devotes the first chapter to a blow-by-blow account of the "little crash" and rapid recovery that occurred in the last week of May 1962. On Monday the Dow dropped more than it had on any day except October 28, 1929. By Thursday, after the Wednesday Memorial Day holiday, it closed "slightly above the level where it had been before all the excitement began." The infrastructure in place at the time could not cope with the overwhelming trading volume. On Tuesday, May 29, "there was something very close to a complete breakdown of the reticulated, automated, mind-boggling complex of technical facilities that made nationwide stocktrading possible in a huge country where nearly one out of six adults was a stockholder. Many orders were executed at prices far different from the ones agreed to by the customers placing the orders; many others were lost in transmission, or in the snow of scrap paper that covered the Exchange floor, and were never executed at all.

How the Media Influences Your Investment Decisions for Better or Worse by Joshua M. Brown and Jeff Macke (McGraw-Hill, 2014) is a book by financial pundits about financial pundits. It alternates between reflections on the financial media (I assume written by Josh Brown) and interviews conducted by Jeff Macke. The interviewees are Jim Rogers, Ben Stein, Karen Finerman, Henry Blodget, Herb Greenberg, James Altucher, Barry Ritholtz, and Jim Cramer. Since both authors are members of the financial media (Brown is author of The Reform Broker blog and a regular contributor to CNBC, Macke is the host of Breakout on Yahoo Finance), the reader can't expect to be told: "just turn off the news." Instead, the authors try to explain which pundits may be worth listening to and which ones are just noise, or worse. For investors who are not intrinsically skeptical and who have no idea of how to separate the wheat from the chaff, the authors offer a few good pointers. For the rest of us-hardened, cynical folk that we are, the interviews offer some good tidbits. The book has a strange subtext, along the lines of "I once was lost but now I'm found." Jeff Macke recounts his career-killing "Car People" episode on the now defunct evening program CNBC Reports and his subsequent emotional descent and recovery. And he interviews three insiders who to a greater or lesser degree faced their own professional crises: Henry Blodget, banned from the securities industry but now the editor and CEO of Business Insider; Jim Cramer, who took a drubbing on Jon Stewart's The Daily Show; and James Altucher, who seems to specialize in failing and bouncing back-and writing about it. Whom do I personally consider worth listening to? First, those who readily admit they don't know the answer. Bob Shiller comes to mind here. Second, those who move markets, such as David Tepper. And third, those who are both

Jerome Booth, a British economist, investor, and entrepreneur, has written a refreshing book. Emerging Markets in an Upside Down World: Challenging Perceptions in Asset Allocation and Investment (Wiley, 2014) is not the usual whirlwind trip around the emerging market world-"if it's Tuesday it must be sub-Saharan Africa." Rather, Booth looks at some generally accepted notions that both inform and misinform emerging market investors and tries to set the record straight. The book is, to labor the travel metaphor, a tour of ideas conducted by a knowledgeable, articulate guide.

Book Reviews Dyman Associates Publishing Inc - In "The Wealth of Nations," Adam Smith wrote, "The sole use of money is to circulate consumable goods." Truer words have rarely been written, but the remarkable thing about Smith's passage was that it was a throwaway line in what remains to this day one of the most important books on economics ever written. Smith's line about money was throwaway simply because it was a tautology. The world is round, the sun sets in the west, and yes, money's sole purpose is to facilitate exchange. Money is not wealth, it's merely what we use to measure our production so that we can exchange it for that which we don't have, not to mention place a value on investments representing the production of future wealth. Precisely because money is a measure, much like a foot and minute are, it's essential that its value be as stable as possible. Gold has historically been used to define money not because it's nice to look at, but simply because its stability renders it "money, par excellence," in the words of Karl Marx.