Good Reads

Here is a small selection of the books and article whose findings  SMC – Burik has used in helping clients’ successfully address the challenges they face.    We hope you find something on the list that interests you.   Enjoy.   Please contact SMC-Burik to discuss how these studies and others and be applied to upgrade your business or investment program.

A.  Decision-making & Strategy for Executives, Board Members & Analysts 

     1. Why Good Companies Go Bad by Donald N. Sull, 2003.  

Sull identified “Active Inertia” as the syndrome which causes success to breed failure.  It is one of about a dozen key studies that examine the common traits that undermine sound decision-making and how to neutralize them.   SMC-Burik applies this research in helping organizations to alter their governance and management processes and teams to avoid big strategic failures.    

     2. “Strategy’s Strategist:  An Interview with Richard Rumelt”, McKinsey Quarterly, Nov. 2007.

Firms, sometimes unwittingly, try to “take the easy way out” to formulating strategy.  They lose sight essential role “entrepreneurial insight” plays in good strategy.   The result is what in later work Rumelt characterizes as “bad” strategy which he believes is increasingly common.  

    3. “The Last Kodak Moment? The Economist, Jan. 14, 2012.

This article examines a recent high visibility bankruptcy.  Kodak’s decline illustrates Sull’s concepts as well as those of Michael Porter (Innovator’s Dilemma). 
 

B. Investment Policy & Portfolio Management   

     1. Expected Returns: An Investor’s Guide to Harvesting Market Rewards by Antti Ilmanen, 2011.  

This book provides an encyclopedic review of financial market research since the early 1980s.  Many of those findings have yet to be commonly embraced by institutional or individual investors or asset or wealth managers.  Therefore, it provides actionable ideas for improving investment programs and investment product design.  SMC – Burik has access to work in progress that extends or challenges finds discussed in Ilmanen’s book.       

    2. “Are Stocks Really Less Volatile in the Long Run?”  Lubos Pastor and Robert Stambaugh, 
          Journal of Finance, April 2012.

This article seriously challenges the conventional wisdom that a larger allocation to equity is appropriate as an investor’s horizon gets longer.  Standard models assume that investors have an excellent understanding of the processes generating capital market returns.  In reality, investors’ knowledge of those processes is imprecise, even in the case of those asset classes where data is available for a very long period of time.   If that imprecision is taken into account, the typical equity allocations adopted by life-cycle and target-date funds as well as pension and sovereign wealth allocations, are too high. 

C.  China

Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise by Carl Walter & Fraser Howie, 2011.

This book provides a critical look at Chinese financial markets.    It can help you adapt your financial market and economic intuition to how China works.  Dr. Burik’s students in Shanghai, many of whom are successful entrepreneurs or managers, have little trust in the Chinese equity market.   Reading this book as well as magazine reports on accounting frauds such as Sino Forest, will enable you to begin to understand why.   China may continue to experience very high GDP growth, but it may disappoint investors.