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The Wisdom of Finance: Discovering Humanity in the World of Risk and Return

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4.05  ·  Rating details ·  1,485 ratings  ·  179 reviews
"A fascinating new perspective on modern finance," --Oliver Hart, 2016 Nobel Laureate in Economics

"Lucid, witty and delightfully erudite...From the French revolution to film noir, from the history of probability to Jane Austen and The Simpsons, this is an astonishing intellectual feast." --Sebastian Mallaby, author of The Man Who Knew: The Life and Times of Alan Greenspan

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Hardcover, 223 pages
Published May 23rd 2017 by Houghton Mifflin Harcourt (first published 2017)
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Popular Answered Questions
Andrew Gulakov Of course it overwhelmingly complex and, yes, the fear of responsibility is always there.
1) How complex it is you can easily perceive just by looking…more
Of course it overwhelmingly complex and, yes, the fear of responsibility is always there.
1) How complex it is you can easily perceive just by looking at the number of variables needed to be considered before any investment decision and how this number is changing from industry to industry and asset class.
2) People are lazy by nature. Taking on responsibilities or more responsibilities is in direct conflict with it. Thus, the majority will opt to be led than leading themselves. We can clearly realize it just by looking around. We always have more employees, accountants and middle class than employers, financiers and rich.(less)

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Ishwardeep Singh
May 19, 2017 rated it it was amazing
Full disclosure: I'm a former student of Mihir Desai. I had a lot of expectations from this book knowing Mihir as a teacher, and knowing his ability to break down complex ideas into their simple, intuitive, core understandable by a lay person. This book exceeded those high expectations by showing me a different side of Mihir - his understanding not only of Finance, but also of life in general. Not only does he explain ideas in Finance with elegance, but he relates them to ideas in life (relation ...more
Frank
Jul 05, 2017 rated it it was amazing
Quite possibly one of the most interesting books I've read in years. The author takes stories far and wide - from Jane Austin, to Stringer Bell from The Wire, to The Simpsons, Shakespeare, The Producers, and so many more - to craft a story of the basics of finance from the perspective of the humanities. There is amazing insight at every turn as he draws from literature, history, art, film, and theater to illustrate basic concepts of finance and their importance in life. I can't recommend this en ...more
Jason Furman
May 10, 2017 rated it it was amazing
The Wisdom of Finance is worth reading if only to marvel at Mihir Desai’s amazing mind, wide range, and exciting set of insights. The book undersells itself, claiming to use a range of novels, movies, music, TV shows, philosophy and history to better understand and illuminate finance. And it certainly does that, covering the full set of topics: insurance, asset pricing, corporate finance, principal-agent problems and bankruptcy among other topics. But the book is about much more, including bette ...more
Mehrsa
Dec 13, 2017 rated it it was amazing
This was such a beautiful and relevant book that I did not think I needed to read. Finance gets a bad wrap, but the issues finance deals with are human issues. Desai shows this through literary criticism and explanations of core financial issues. Risk, for example, is about the bad stuff that can happen to you in life. Finance can show us how to deal with this risk. I teach contracts and I'm always trying to convince my students that contracts are about trust and relationships.

I wish he had don
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Sidharth Mishra
Jan 18, 2021 rated it it was amazing
A wonderful book that looks at finance from a very refreshing lens!

The author does a tremendous job of connecting the myriad concepts of finance, it's origins with our lives through very relatable experiences and stories of people in the preceding millennia and right upto today.

For example -
1. Insurance came about because there is inherent randomness and unpredictability in life and while it is difficult to make a sound guess about it in isolation for a single instance / individual it becomes
...more
Undrakh
Oct 20, 2019 rated it it was amazing
Shelves: favorites, business
‘Wisdom of Finance’ was a book that really punched me with fresh ideas; it’s been a while since I experienced this level of 'new ideas flow' from reading. It doesn’t have anything to do with me working in finance (maybe a little, like 5%). Even though it contains multitude of cases happened in the finance world, the book itself is not about finance – it’s about values, relationships, commitments, and many more. Mihir Desai takes basic ideas about risk and return, capital asset pricing model etc ...more
Diego
May 12, 2019 rated it it was amazing
Shelves: finance
What an incredibly smart journey about finance. It felt like I was engrossed in his Harvard Business School class and left wiser from it. His ability to use literary classics to explain finance is so impressive. This might be one of the wisest and interesting books I’ve ever read.
Jay
Nov 25, 2017 rated it liked it  ·  review of another edition
Shelves: business, audiobook
When I read Piketty’s “Capital in the Twenty-First Century” I found that I really appreciated his efforts to explain wealth and capital in historical context by referring to the fiction of the times, especially Jane Austen’s. By using the descriptions of the characters and their place in the world from those fictional stories written centuries back, you understood how wealth made itself known, how money was spent, and how wealth brought status and the ability to purchase fine tools (e.g. a horse ...more
Bridgett
Feb 25, 2018 rated it it was ok
Shelves: non-fiction
As the title implies, this book attempts to bring together the worlds of finance and humanities. It uses literary and other assorted media references to illustrate particular financial concepts, and argues that finance can be used for the good of humanity, despite the finance's reputation as greedy and evil.

Although I earned my degree in a social science, I find myself working in a finance-related field. I feel pretty ambivalent about my current career, and I hoped that this book might open my e
...more
Lorenzo Primiterra
Apr 05, 2020 rated it it was amazing
Shelves: economy-finance
It's an unusual book that connect finance with real life stories, full of wisdom and real stories of past man and woman, not always connected to finance.
This is the kind of book that talks about a subject using another and allows your brain to make connections and think multi dimensional.
If I could I would give more than 5 stars.
...more
Ian Cook Westgate
Sep 20, 2018 rated it it was amazing
Given the odd premise (bouncing concepts of finance off of poetry, literature, and pop culture), I went into this book with rather low expectations. Needless to say, they were surpassed in every way. As someone who has struggled for some time to pierce the veil of complexity surrounding the financial world, this book has helped immeasurably in helping me to understand it, and in an oft entertaining way.

I don't know how appealing this book would be to someone who actually works in or with Wall St
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Mukesh Pareek
Dec 17, 2020 rated it liked it
Shelves: finance, self-help
It's okay. Nothing too great. Most of the concepts or advices were quite obvious and didn't really need all the explaining and analogies the author draws from other spheres of life. Nonetheless, some good things, some non-trivial messages, put interestingly. ...more
Hakan
Jun 07, 2017 rated it it was ok  ·  review of another edition
The one who are looking for "how finance works or academic information about the subject" will find "TOO FEW" in this short book. The author extremely focused on "intersection of finance and everyday life(love, romance,movies, music, insatiability, philosophy)" .. and I think that is boring for FİNANCE... ...more
Myles
The Wisdom of Finance it seems is a primer on the moral hazards undergraduate and more so graduate business students can expect to find once they leave the academy and join Wall Street.

Author Mihir A. Desai employs literature to explain how the principles of business and high finance inform universal human challenges not only in business, but in life.

As a graduate of English Lit and later an MBA, I was a sucker for this kind of book. Indeed, I enjoyed it, if I didn’t think all of the chapters we
...more
Abhishek
Dec 24, 2020 rated it it was amazing
Just to get it out of the way, the reason I picked up this book was to not learn the technical details of finance. This book delivers on what it sets out to do i.e. explain financial concepts that seem out of this world to an untrained person. It does the opposite as well, if you're familiar with financial concepts already, prof Desai will open your eyes to the real life implications. My favourite chapter was on the principal-agent problem narrowly followed by how principles of mergers and acqui ...more
Ivan
Nov 27, 2019 rated it it was amazing
I met this professor from his “Leading with Finance” class at HBS. Excellent resource to understand finances. No figures or numbers found in his book. He takes you from personal stories and takes you to a deep understanding of finance terms and concepts. Either you are new on the econ or finance room, you’ll get something new out of it.

Arts, history, films, literature, etc. makes part of the stories of this book. I got a way deeper understanding of the insurance business and his importance in t
...more
Sameera
Mar 12, 2019 rated it it was amazing
My personal rating is 9/10. I mean, just go read it. My favourite chapters are 'On Value'+ 'Becoming a producer' + 'No Romance Without Finance'. I think what sets the book apart is the intersection of economics, politics and history to explain the evolution of finance and it's main concepts. Desai does a great job to help outsiders (external to the finance industry) understand concepts like portfolio theory, hedge funds etc. Book can be finished within a few-days (4-5) maximum. ...more
Mona
Apr 21, 2018 rated it really liked it
4.5 stars.
Chris Brady
Nov 14, 2020 rated it it was amazing
A philosophy book through a financial lens. I'm not sure this amazing author knew how profound his message might be.

Featuring constructed and conceptually crystal clear

I hope to live like this.
...more
Lawrence FitzGerald
Jun 08, 2020 rated it liked it
Shelves: economics, 2010-s
Desai knew he needed a catchy title and thus The Wisdom of Finance but his real thesis is discovering humanity in finance and thus the rest of the title. If I were forced to put wisdom on a numerical scale with finance as 1, then humanity might be a 100, and the ignorance of humanity might be 10,000. So Desai faced an uphill climb with this reader. But he manages.

Precisely because he looked for the humanity and only then its pale reflection in finance and not the other way around. Replete with e
...more
David Wilusz
Sep 05, 2018 rated it really liked it
The author echoes my feelings that, rather than being at odds (or even at war), the humanities and sciences - finance in particular - are in fact complimentary and intertwined in ways that few today appreciate. Leveraging wide-ranging examples, from Jane Austen to the Producers and George Orwell, the author frames finance in everyday human terms, defending the usefulness and practicality of risk management in particular, something near and dear to my heart. The author is clearly well-read and ha ...more
Eunjun Choo
Jul 04, 2017 rated it it was amazing
As a noobie to finance, I wanted an accessible finance text to introduce me to what the heck is finance. Fortunately, this book has exceeded my expectations. Even though previous background in finance would have helped, Desai describes finance with such a humanity that even a noob like me was able to understand and apply finance strategies to my daily life from spending proportional amount of time on "High-beta assets" such as acquaintances to "negative-beta assets" such as my family.
Moreover,
...more
Rob Saunders
Sep 03, 2017 rated it it was amazing
An obvious choice for my 5 star rating, I found The Wisdom of Finance, Discovering Humanity in the World of Risk and Return (2017) by Mihir A. Desai to be a thoughtful, informative, fun, easily digestible, and memorable read. Certainly this book would be great to own though my edition was from the library. You will like this book if you have a checking account or a loan or have ever made a commitment to yourself or others - pretty much everyone.

Desai uses broadly researched literature - from an
...more
Vikash Anand
Aug 14, 2019 rated it really liked it
The Wisdom of Finance by Mihir Desai delves into core financial concepts i.e. insurance, options, leverage, valuation, diversification, capital asset pricing model, bankruptcy etc. connecting with various analogies of our social life. The book introduces core financial concepts taking different perspective from our general personal life than decisions as a finance professional.

Appropriate Financial structure is extremely important for the growth of the economy. Lack of inappropriate financial st
...more
Vladislav Burda
Jan 08, 2018 rated it it was amazing
The book is tremendous help for me as entrepreneur to understand the history, the values and boundaries of finance.
Mihir is right - finance is everywhere. And their omnipresence could be found not only in business, but in literature, movies and even art.
I was not only reading the book with pleasure but watched some movies like Double Indemnity & Working Girl, for which book was perfect illustrator of their use.
The main concept of:
Insurance,
Leverage,
Bankruptcy,
Risk taking,
Diversification,
Options,
...more
Jonathan Carey
Oct 25, 2017 rated it really liked it
I think that the book brings up many things to consider in life and in finance. My favorite is how he describes how a Revolutionary War financier ended up in debtor's prison and how that experience led to future reforms in bankruptcy law so that risk takers would not be punished too severely. "Failure, when we encounter in ourselves or in others, should not be understood or seen as a moral defect. Inevitably, risk-taking will lead to failure, and failure should be viewed as a bad outcome with an ...more
Ryan
Mihir Desai does an excellent job in this book laboring nourishing and healing the divide that Modern Finance's reputation has taken. He humanizes and speaks of the profession as 'ennobling', while acknowledging those who tarnished it.

Desai acts as a sincere and welcoming bridge using popular movies, stories, and uncommon subjects to make parallels between things like leverage, options, risk, and a whole variety of other concepts.

For anyone who wants to see a more human, personable, and insightf
...more
Bryan McNeil
Aug 09, 2017 rated it it was amazing
Those who know me will think I've lost my mind, but this book is categorically awesome. Professor Desai is a true master of weaving together wildly disparate examples from all corners of human life to illustrate concepts from unrelated fields. The chapter on leverage is one of several high points. I understand leverage in terms of Archimedes, basic physics, and even carpentry and related applications. As relates to finance, however, leverage takes on a dark and ominous tone of jargon, not for th ...more
Savyasachee
The Wisdom of Finance is a provocative title for any book. One, it has to provide wisdom, and two, the wisdom must be traceable to finance. It is to Mihir Desai's credit that he's able to do both, albeit with a slight stretch of credulity.

Desai's greatest accomplishment here is to humanize Finance. As he himself acknowledges, Finance has become a kind of bad word even among those who rely upon it. Being the very foundation of both modern economics and modern society, Finance cannot afford to be
...more
Gaurav Moghe
Aug 12, 2017 rated it it was amazing  ·  review of another edition
Finance can sound both cryptic and evil. Cryptic, because of various financial instruments with tedious names which keeps the lay person from trying the understand them. Evil, because of the image problem that it has created for itself since time immemorial. Finance, as the conventional wisdom goes, is ultimately about extracting profits at the expense of, well, anything.

But one guy wasn't okay with how finance gets viewed. Mihir Desai, Professor of Finance at HBS, decided to come up with this
...more
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