Latest Read: The New Market Wizards

I had last discussed relevant financial books in my post Some Great Financial Reads. You can keep up-to-date with my financial reading at the toolbar on the lower right-hand side, the section labeled "Financial/Investment Books."

Well, I recently finished The New Market Wizards: Conversations with America's Top Traders, by Jack D. Schwager. This is one of a three-book series in which Jack D. Schwager interviews some truly remarkable and legendary traders. This was truly an eye-opening read, and it seems to certainly poke at the efficient market theory.

The book starts out with an interview of Bill Lipschutz, in a chapter Schwager aptly titles: "The Sultan of Currencies." Already on page 18 we begin to witness the vigilant nature of a currency trader:

"The interviews I held with Lipschutz were conducted in two marathon sessions at his apartment. Lipschutz has market monitor screens everywhere. Of course, there is the large TV monitor in the living room, receiving a feed of currency quotes. There are also quote screens in his office, the kitchen, and near the side of the bed, so that he can roll over in his sleep and check the quotes - as indeed he does regularly (since some of the most active periods in the market occur during the U.S. nighttime hours). In fact, you can't even take a leak without literally running into a quote screen (there is one conveniently located, somewhat tongue in cheek, at standing height in the bathroom). This fellow obviously takes his trading very seriously."

I also very much enjoyed the chapter under Part IV - Fund Managers and Timers: "Stanley Druckenmiller: The Art of Bottom-Up Investing". However, my favorite section of the book was under Part I - Trading Perspectives: "Hussein Makes a Bad Trade." This quote from page 11 really brings home the nature that market manipulation and supply and demand truly play in policy dictation on the world's stage:

"Hussein's trade was the invasion of Kuwait. Initially, he had solid, fundamental reasons for the trade. (The fundamentalist reasons came later, of course, as Hussein found it convenient to discover religion.) By invading Kuwait, Hussen could drive up oil prices to Iraq's benefit by eliminating one of the countries that consistently exceeded its OPEC quota and by creating turmoil in the world oil markets. He also stood a perceived good chance of permanently annexing part or all of Kuwait's oil fields, as well as gaining direct access to the Persian Gulf. And, last but certainly not least, the invasion provided a wonderful opportunity for Hussein to feed his megalomaniacal ambitions."

Can anyone think of similar market manipulations being played out on today's world stage?

On a Related Note, here is a link to some interesting theories on the potential coming Oil Crash:

Peak Oil: Life After the Oil Crash