Capital Ideas

Book Title: Capital Ideas: The Improbable Origins of Modern Wall Street
Author(s): Peter L. Bernstein
Rating: $$


Review:
No wonder why my colleague, who happens to be a senior quant analyst was so keen that I read this book, an attempt possibly to make me pay my respects to the high priests of Ivory Towers.

Capital Ideas is a tribute to the academicians who have contributed to the current body of knowledge in the finance discipline. The book will take you to a very familiar journey, reminding you of those interesting days of MBA spent on not so interesting topics such as MPT, MM Theory, Beta and all that academia had to teach us on finance. I think the book would go a long way in developing interest and understanding of finance theory, if it is introduced to the students before they are subjected to plain and boring finance text books.

Capital Ideas chronicles the development of finance theory since its very inception. The book is a beautiful passage on the life of people behind the modern finance theory and takes the reader through the development of idea surrounding these theories. The book ought to be a must for every student of finance who is interested in studying the development of the modern finance theory and take the research forward.

However, investment professionals who find their time precious would do just fine if they could avoid this book. The book is more relevant to the historians than to the practitioners in the field, as the book doesn’t offer any insights on investing (the book doesn’t claim that either). The author could have done more justice to the book by presenting a balanced critique of the theories and their relevance to modern day investing rather than writing a mere eulogy.

As Barton Biggs is quoted in the book on his view on the Modern Portfolio Theory: “I think it’s just a lot of baloney”