How to Write a Good Book

Most of the time, when a book is bad, I don’t write a review.  Sometimes it will inspire me write a screed against a certain topic that the book was about, and occasionally a negative review.  But most often I say nothing.

What to avoid if writing a finance/investments/economics book?

1) Don’t claim you are an expert when you have a thin resume.  If you are writing, you better have some real accomplishments behind it.  Particularly irritating are vigorous self-promoters and newsletter-writers that are facile writers — they say lots of clever things, but they are not subject to market discipline in the same way that a portfolio manager is, who manages real money, and has real results, good or bad.

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2) If you are merely pushing the services of your firm, don’t write a book.  It is very annoying to read a book where the says, “This is the broad outline, but if you want the whole enchilada, buy my service.

3) Don’t advertise your book as popular if it is academic.  Please don’t raise the hopes of people if they find by the middle of the book that they can’t understand it.

4) Don’t write a book that has already been written unless you have a very, very special gift for teaching that makes the concepts far more accessible to the average person.

5) Just because it is a “little book” does not mean it deserves to see the light of day.

6) You may think you have boiled down the concept for dummies, idiots, whatever.  In investing, dimwits tend to lose — no amount of simplification will replace study.

7) Books that forecast total destruction get no play with me, because they assume that we can’t adjust.

8 ) Books that are a series of essays from “experts” don’t grab me.  Good books take a position and argue for it.

9) Books that do an extended series of stock screens in order to show the best one are just an exercise in torturing the data to make it confess.

10) Books that force you to study abstract philosophy that I can’t follow means that most people won’t follow it.  Useless.  (I have studied philosophy to a high degree.)

11) Books written by a group of academics rarely make for good reading, unless the editor forces them to interact with each other, which is rare.

12) If you write a book on a controversial area, and you don’t interact with the criticisms of the topic, you lose major credibility with me.

13) If you aren’t an expert, don’t write.  There are a lot of newsletter writers, or radio talk show hosts who know little about the areas they talk about.  Avoid them.  Okay, do research.  Do they really have talent, or are they just facile talkers?

14) Please don’t advertise the past as being the future.  History is not prologue, and by the time your book is published, it is time for those who believe you to lose.

15) Don’t write a book where you tell people that they ought to read your last book or books.  Make your book readable, so that you give a quick summary of the relevant information.  Every book should stand on its own; no one should have to buy another book to read your book.

16) If you are describing a bunch of quirky people who made money deploying small amounts of capital, do not declare them to be great investors, and don’t write about them.

17) Simulations off of past data have little relevance to the future, unless carefully done.  Most are not carefully done.

18) If you are writing a policy book, try to be fair.  If you are a liberal or conservative, that will win a lot of points with me, because it means you have really looked at the issue.  Few things are totally clear.

19) Please, please, don’t write another book on a basic topic where you have nothing new and good to say — asset allocation is a good example for me, and few books get a good review from me as a result.

20) Don’t write books saying that you only need one asset class in order to do well.

Beyond that, I would say, write something unique, and well-researched.  Create a good theme and follow it.  Even if academic, don’t settle for dull writing.  Find a way to make the topic live, and after that, explain the complexities.  Above all else, explain what could go wrong.  Most strategies fail at some point, so explain where failure can happen for the good of your readers; it will give you greater credibility.

There may be another part to this series, but at present, I think this could be all.

By David Merkel, CFA of Alephblog

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.