John Kay's latest book The Long and the Short of It has been very favourably reviewed (including by my BBC Trust colleague Jeremy Peat, in the forthcoming Business Economist). Although I've not yet read my copy, I spoke to John about it earlier this week.
He is, as most readers will know, an ornament to the economics profession, a constant ambassador for the power the analytical approach of economics in business and policy, and a clear and compelling writer including in his regular FT columns. John (pictured with a copy of the FT, below) told me this book is intended as a readable guide to finance and investment which finds the middle ground between the many inane 'how to' books which insult the intelligence, and the heavyweight texts such as Burton Malkiel. There are few other books aiming at this gap, especially for UK-based investors. He wrote the book in 2007 and into October 2008. It was published last month, so there have been some more dramatic events in the financial markets meanwhile, but the book does take account of the fact that the financial world has fallen apart.
The intended market consists of intelligent but non-specialist investors, and concerned citizens. For the former, the book's key message is that the least risky way to increase returns is to do more investing for yourself and not through intermediated products. This is cheap and practical online. The messages are: pay less in fees, diversify, and be contrarian. A summary I picked out: “Keep it simple. If you don't understand a financial product, don't buy it.”
For the concerned citizens, John's message is that less regulation is needed, rather than more, but of a structural kind. The utility of narrow banking must be separated from casino banking. The financial services conglomerates were unmanageable and uncontrollable. John told me he now favours nationalisation as the fastest and easiest way to achieve this.
All in all, it looks like a rewarding read. Soon I'll post about the rest of our conversation, which was about self-publishing.
