Practical analysis for investment professionals
24 December 2015

Book Review: Heroes and Villains of Finance

Heroes and Villains of Finance: The 50 Most Colourful Characters in the History of Finance. 2015. A. Baldwin.


Finance has evolved in fits and starts over a very long period of time. Ideas and practices that are the stock-in-trade of bankers, traders, and economists have their origin in the thoughts and actions of many a prominent forebear. Students of financial history and political economy, however, will not find much, if anything, new in Heroes and Villains of Finance: The 50 Most Colourful Characters in the History of Finance. A. Baldwin’s text is geared toward those with little knowledge of the subject matter who desire a brief introduction.

Accordingly, the introductions of these actors on the stage of global finance are terse. Their noteworthy achievements are summarized in a page or two, with the main narrative supplemented by large-font highlights of principal ideas and famous quotes attributed to them. The book reads like a series of written sound bites — amusing but, for the most part, superficial.

Most major areas of finance are well represented. The featured players cover such topics as venture capital (Georges Doriot), value investing (Benjamin Graham), option trading (Thales of Miletus), and free-market economics (David Ricardo, Adam Smith, and Milton Friedman). The author emphasizes philosophers, practitioners, and economists, whose short-form biographies occupy much of the book. The depictions of such figures as Friedrich von Hayek, Ludwig von Mises, David Ricardo, Milton Friedman, John Maynard Keynes, Joseph Schumpeter, Eugene Fama, Muhammad Yunus, and Karl Marx render their ideas and accomplishments accessible to the lay reader.

Villains figure much less prominently. Nick Leeson is the most notorious example involving unsupervised discretionary trading gone awry. Others who might also have been profiled include the likes of Jérôme Kerviel of Société Générale and Kweku Adoboli of UBS. Baldwin affords the recent financial crisis scant treatment, profiling only former Lehman Brothers CEO Dick Fuld. Bernard Madoff’s misdeeds, though revealed during the crisis and profiled in the book, were part of a Ponzi scheme having nothing to do with the domino effects of mortgage fraud. Perhaps Lehman Brothers’ high-profile collapse made Fuld’s inclusion worthy.

Baldwin’s lauding of political figures’ achievements tends to ignore controversies surrounding their policies. For instance, the author credits Franklin Roosevelt’s New Deal with leading the United States out of its worst economic downturn. Some would contend, however, that the surfeit of government intervention set a dangerous precedent. Yet this aspect of Roosevelt’s achievements goes unmentioned. One could advance a similar argument about Reaganomics, to which Baldwin attributes America’s strong recovery in the wake of the high inflation and shaky economy of the late 1970s and early 1980s. A generation later, however, many would rue the paucity of regulation that originated in Ronald Reagan’s presidency. Baldwin ignores this aspect of Reagan’s policies as well.

Such is the nature of lists: They will invariably spark debate as much about whom they exclude as whom they include. Consider the following omissions.

One cannot overstate the value and power of information for financial decision making. Michael Bloomberg’s absence from the book, therefore, seems odd. The eponymous financial empire that created the Bloomberg Terminal, a staple of trading rooms and financial firms, has transformed the pace of global finance. Federal Reserve chairman Paul Volcker’s management of inflation in the late 1970s marked a watershed in the exercise of monetary policy. His actions exemplified a sound prudence that later leaders of the institution failed to emulate. One would think such accomplishments worthy of inclusion. One of the Great Recession’s bad actors, Fred Goodwin, erstwhile CEO of the Royal Bank of Scotland whose ill-fated stewardship of the bank placed it in administration at the expense of British taxpayers, was as high profile a character as any. Yet, in line with the book’s minimal treatment of the villains of the Great Recession, he also fails to make the list. Finally, it is interesting to note the absence of two practitioners who bridged theory and practice. While Eugene Fama’s inclusion is certainly merited, on the basis of his creation of the efficient market hypothesis, John Bogle also deserves consideration in connection with its practical implications. His success in bringing the concept of passive investing into the mainstream over the past 40 years continually challenges active management. Likewise, Bill Gross’s thought leadership has been a focal point for fixed-income practitioners and traders for nearly half a century.

The book’s light-touch approach can be disappointing in other ways. Neither in the book nor on the publisher’s website does the reader find anything about the author, A. Baldwin. In addition, the discussion of Nick Leeson gets the timing of his departure from Singapore wrong. The revelation of his losses and his flight occurred a year later than the 23 February 1994 date reported by Baldwin. Also, the glossary can be confusing. Rather than define or describe concepts, it merely lists the relevant characters under each one.

Heroes and Villains of Finance, though imperfect, affords the reader a kaleidoscopic view of the field’s major strands of thought and practice. Although the glossary has shortcomings, the list of references at the end of the book serves as a point of departure for further inquiry. For some, the book may appear little more than an intellectual dalliance. For others, it may elicit further interest in the many and varied subjects on which it touches. In this sense, the book’s impact could extend far beyond what is contained between its covers.

More book reviews are available on the CFA Institute website or in the Financial Analysts Journal.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

About the Author(s)
Marc L. Ross, CFA

Marc Ross, CFA, is an experienced investment professional with a varied skill set that encompasses third party manager research and due diligence, securities compliance, investment advisory, and ERISA qualified plan design, sales, and implementation. In addition to the CFA charter, Ross holds the CFP® and CLU designations.

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