Practical analysis for investment professionals
23 June 2017

Weekend Reads: Classic Papers for Lasting Learning

Posted In: Weekend Reads

A few weeks ago, Morgan Housel scared Twitter by asking, “How much of what you read today will you care about a year from now?”

Speaking personally, much less than I’d like.

Fortunately, Google Scholar created Classic Papers, a “collection of highly cited papers in their area of research that have stood the test of time.” Enjoyably, it “excludes review articles, introductory articles, editorials, guidelines, and commentaries,” and allows for high-signal interdisciplinary browsing.

I took the news of this week to the exercise, which began with reports that the US military had downed a Syrian jet. On Thursday Rodong Sinmun, the official newspaper of the North Korean government, reportedly warned South Korea against following “psychopath Trump.”

You wonder about these sorts of things. How are investors reacting? In a discussion at the Annual Ben Graham Value Conference IV, hosted by CFA Society New York on Tuesday, investor John Levin observed that in general, “domestic earnings are undervalued and international earnings are overvalued” as a result of these and other tensions.

While wondering about this and flipping through the aforementioned classic papers, I came across Niall Ferguson’s “Political risk and the International bond market between the 1848 revolution and the outbreak of the First World War.” Its final section asserts that World War I came as a “bolt from the blue” for investors, despite plenty of early discounting.

Ferguson’s paper is relevant to the present but is easy to misinterpret. Whenever one refers to World War I in a geopolitical discussion, it’s hard to avoid the notion that the war was inevitable. Such predestined wars — when established powers clash with rising ones — are sometimes called “Thucydides Traps.” However, Arthur Waldron, reviewing Destined for War: Can America and China Escape Thucydides’s Trap by Graham Allison, writes that there is little evidence that they really exist.

Unexamined assumptions are a silent killer of thoughtful analysis, and one of the most common of these is that “developed” and “emerging” markets have important uniform characteristics. In their paper, “The Early Modern Great Divergence: Wages, Prices, and Economic Development in Europe and Asia, 1500–1800,” economists Stephen Broadberry and Bishnupriya Gupta look under the hood of economic development during that time. The connection they draw between high productivity and eventual prosperity is worth noting in the context of contemporary worries about productivity growth. The discussion continues, as Ryan Avent recently summed up.

I thought Stefaan Walgrave and Peter Van Aelst’s article on the contingencies that enable the media to set a political agenda to be particularly interesting. The discussion of the methods used to create truth in this arena is fascinating.

We often feature posts on the role of women in investment management, so I’d be remiss if I didn’t close this section by mentioning Patricia Yancey Martin’s “Practising Gender at Work: Further Thoughts on Reflexivity.” It is an invitation to view gender performance through the same prism that George Soros suggests we view markets: reflexivity.

Further Reading

Fun Reads

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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.

Image credit: iStockphoto.com/JLGutierrez

About the Author(s)
Sloane Ortel

Sloane Ortel serves CFA Institute's members globally as a curator and commentator. Based in New York City, she is a regular contributor to the Enterprising Investor, a co-author (with Jason Voss, CFA) of CFA Institute's Investment Idea Generation Guide, and a frequent interviewer of leading industry figures.

2 thoughts on “Weekend Reads: Classic Papers for Lasting Learning”

  1. Frank McCraw says:

    What an interesting compilation of interesting readings across a broad range of topics. Thanks for putting this together, Will.

    1. Will Ortel says:

      That’s very kind, Frank! Thank you for reading.

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