But mastery of all asset classes and being able to choose between them is too much to ask from a book on investing* (“The Intelligent Investor?”) I think that in stocks he does it rather well, better than most, and on this subject there is the proven long term positive track record, original ideas, and written in a style that will not bore you to death.

On stocks as an asset class (and because of indexing and limited liability) wouldn’t it be the logical choice for having the largest allocation in a market neutral environment – by construction the upside is unlimited.

*There is an asset allocation book by David Darst that looks interesting, but seems to be more instructional than philosophical as I suspect you would appreciate.

In fact since then from reading his op-eds I get the impression he is much more worried. Taken to its logical conclusion, his “heart attack” metaphor represents a non-negligible risk of death, and almost certainly a lengthy recuperation and period of sustained weakness.

He doesn’t say We are all going to have a collective “heart attack” in the book at all, does he?

But the sausage is there – he really is looking beyond the immediate problems of the US and European banking systems, at the more fundamental causes of those problems, namely, that the banks got over-leveraged because there was so much more liquidity sloshing about. This discussion has helped me, because it helps to distill a view about which tendencies will stay, and which will dissipate.

In particular, the savings of emerging economies, especially Asian ones, will continue to be positive, and will be looking for a home. That led to a huge under-pricing of risk, which is currently being corrected, and will probably over-shoot. But the money will still be there, and I need to think about what it will do once things have settled down. And for this, I found El-Erian’s discussion in terms of liquidity preference very helpful. Now, maybe this is because I’m just more used to this Keynesian model, with a neoclassical overlay, and I just happen to be the perfect audience for this book. But I would recommend it to any economist as a way to think about the broader picture within a theoretical framework that’s a little more developed than what they read in Samuelson.

Another thing I like is that while giving comfort that there is a destination for the world economy that does not involve the complete collapse of the fiat money system and a 1930s style depression, he takes pains to point out that the journey taken will affect the destination. This is important in the context of the bank bailout currently underway in the US and Europe. If the banking system is one of the engines of the boat that will bring us to our destination, then the speed and quality of the repair work will determine the speed of the trip, and exactly where we make landfall.

One real criticism that I have is that he is certain that Asian and commodity country consumption can compensate for the demand fall that will result from a restoration of US savings – as far as I understand it, they are really quite different magnitudes.

My problem with having a clear directional position on stocks, bonds or whatever in a book, is that the market has a way of making one look a spazzer after a while. A book is a long-lived thing, one will be remembered for it after one is gone, one hopes. Being wrong and/or irrelevant after a certain while is probably inevitable.

Tom, I hope you’re referring to Cambridge.

One has to consider his audience. Perhaps some readers of this blog and your good self will find it obvious but it may not be to others. However touche on the dullness of delivery.

As for books on investing, why not stuff by Ken Fisher? The man has the track record, passion, experience and lineage, his books have genuinely interesting ideas, they do not cost thousands of dollars because they are out of print, and it doesn’t mess around with technojargon.