I’m only a couple of chapters into it but I think it’s good enough to warrant a giveaway here on AFM.

If you’d like to take part in this giveway, just leave a comment below detailing what you feel was the dumbest investment mistake you ever made. Since this giveaway will probably foster some discussion, I will only have one rule this time:

You must be a resident of North America (I won’t ship internationally).

I’ll randomly-select a winner early next week. Good luck!

So, what books am I talking about? Well, off the top of my head, I assembled the following list in no particular order along with the amount I would be willing to pay my kids to read them in parenthesis.

Success God’s Way by Charles Stanley ($50). This has become one of my favorite books on success because it’s written for Christians.

Think and Grow Rich by Napoleon Hill ($50). A classic. The language and some of the ideas are dated but the message is still very good.

Basic Economics (4th Edition) by Thomas Sowell ($200). Thomas Sowell is one of my favorites. This is a pretty large book. I would pay $200 for this one.

Economics in One Lesson by Henry Hazlitt ($50). This one’s an oldie but a goodie. Written in a very easy-to-understand way. One of my favorites.

Common Sense Economics (Revised Edition) by James D. Gwartney, Richard L. Stroup, Dwight R. Lee, and Tawni Hunt Ferrarini ($50). I thought about not including this one in the group because it might be overkill. However, it’s a great book and could serve as compliment to Hazlitt’s book. Therefore, I want my kids to read both.

How to Win Friends and Influence People by Dale Carnegie ($50). A classic if there ever was one. This is an excellent book on how to relate to other people. This book was first published in 1936 and the information it contains has never gone out of style.

Goals! by Brian Tracy ($50). This is the best book I have ever read on goal setting—one of the best things your kids can ever do for themselves.

How an Economy Grows and Why it Crashes by Peter and Andrew Schiff ($50). This is a fictional story about an economy that starts out with three fishermen alone on an island. Start it and you won’t be able to put it down. Excellent illustration of an economy.

Wooden on Leadership by John Wooden and Steve Jamison ($50). Just an all-around good book by an all-around good man.

Dig Your Well Before You’re Thirsty by Harvey Mackay ($50). A book on networking. Remember: it’s not what you know as much as it is who you know. Sure you, have to have both. You know what I mean.

Chapter 2 is titled “Desire – The Starting Point of All Achievement”

Hill opens the chapter by referring back to the story of Edwin Barnes, the man who “thought” his way into a business partnership with Thomas Edison…

Today, people who know Barnes envy him, because of the “break” life yielded him. They see him in the days of his triumph, without taking the trouble to investigate the cause of his success.

Barnes succeeded because he chose a definite goal, placed all his energy, all his will power, all his effort, everything back of that goal. He did not become the partner of Edison the day he arrived. He was content to start in the most menial work, as long as it provided an opportunity to take even one step toward his cherished goal.

Five years passed before the chance he had been seeking made its appearance. During all those years not one ray of hope, not one promise of attainment of his DESIRE had been held out to him.

I think that’s the way it is with most success when we look at it from the outside after the success has already occurred. We don’t look at all the hard work that went into creating that success.

Anyway, the chapter is about how desire is the starting point of all achievement.

Further into the chapter, Hill lists his method for turning desire into success. In his steps, Hill focuses on the attainment on money but this method can work for any goal:

1. Fix in your mind the exact amount of money you desire. It is not sufficient merely to say, “I want plenty of money.” Be definite as to the amount. (There is a psychological reeason for definiteness which will be described in a subsequent chapter).

2. Determine exactly what you intend to give in return for the money you deisre. (There is no such reality as “something for nothing.”)

3. Establish a definite date when you intend to possess the money you deisre.

4. Create a definite plan for carrying out your desire, and begin at once, whether you are ready or not, to put this plan into action.

5. Write out a clear, concise statement of the amoutn of money you intend to acquire, nae the time limit for its acquisition, state what you intend to give in return for th emoney, and describe clearly the plan through which you intend to accumulate it.

6. Read you rwritten statement aloud, twice daily, once just before retiring at night, and once after arising in the morning. As you read–see and feel and believe yourself already in possession of the money.

Reading over those steps, I’ll admit they sound a tad hokey. However, if you take them as a whole and adjust them for your particular goal, they make a lot of sense. Basically, figure out what you want, decide what you will give, write it down, and review it.

The final third of the chapter is about achieving goals no matter what other people say. He closes the chapter with an inspiring story about his son, Blair, who was born without ears but used his “gift” to become a salesman for a hearing aid company.

#7 – Brian Rink

#10 – JQ

#16 – Josh L.

Congrats to the three winners. The rest of you who didn’t win, the book can be purchased from Amazon for less than $6. It might make a great gift for a kid in your life (provided they’ll read it).

More giveaways to come.

If you’re interested in winning a copy (I have not read the book, I only thought it sounded interesting and the price is perfect for a giveaway), leave a comment below. I’ll randomly pick three winners on Friday.

Just remember…

1. This is for the KINDLE EDITION of the book.

2. You can only enter one time.

I picked Napoleon Hill’s Think and Grow Rich as our first book because it’s considered a classic in the personal development realm.

Before we begin, let me say that some of the ideas presented in the book will seem old fashioned and even hokey. That’s due to the fact that the book was first published in 1937. Also, some of the events in the book may look different to us now that we have the benefit of hindsight. That said, let’s dive into chapter one of Think and Grow Rich.

Chapter One – Introduction

The book opens with the story of Edwin C. Barnes. A man who basically started with nothing and “thought” his way into a business partnership with Thomas Edison selling Edison’s dictating machine. The point of the story—and the point of the book—is that Barnes first thought about what he wanted (DESIRED) before he pursued it. He didn’t get his desire fulfilled immediately. Rather, Edison gave him a job and Barnes worked hard until the opportunity presented itself. This brings me to one of my favorite quotes from the first chapter:

That is one of the tricks of opportunity. It has a sly habit of slipping in by the back door, and often it comes disguised in the form of misfortune, or temporary defeat. Perhaps this is why so many fail to recognize opportunity.

It’s Hill’s contention that knowing what you want first is the starting point to success. The second point is internalizing that want to the point that you can think of nothing else. The third important point to take home from chapter one is that one must be will to push through temporary defeat in pursuit of success. He illustrates this point with a story about a man named Darby who set out to mine gold. He discovered a vein of gold that disappeared during his mining activities. So, he quit and sold his mining equipment. The person who bought that land from Darby, brought in an engineer who figured out that a fault line had disrupted the vein of gold and that it continued three feet from where Darby had stopped mining. The point: don’t give up. The second point: surround yourself with experts.

That is the bulk of chapter one. I left out several other details that you’ll want to read about in the book.

So, that brings us to the main question:

What is your desire? What is it that you want for your life?

This is a tough question for me. I simply don’t know. That’s been a problem all my life. I have never had a major definitue purpose other than “I want to be well-off,” which is way too vague.

“If all the money that’s ever been invested in hedge funds had been put in Treasury bills instead, the results would have been twice as good.”

I have often suspected the same thing. I think hedge funds are really only good for the hedge fund managers. If a hedge fund manager is making outsized returns, he’s probably taking lots of risk.

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For those of you not familiar with what’s going on, e-book prices have been going up over the last year or so. In some cases, e-book prices are higher than the price for a paper version of the same book.

The reason?

Agency pricing. Basically, what that means is that publishers set the prices for e-books and do not allow discounting. There’s no such restrictions on paper books.

Why the change?

This is the interesting part. This all happened due to Steve Jobs. From the article:

It was Mr. Jobs himself who wanted to level the playing field for e-book pricing. Early last year, as Mr. Jobs, then CEO of Apple Inc., planned for the launch of the iPad, the company wanted to start an e-book store so that iPad owners didn’t have to rely on Amazon’s Kindle store to buy e-books.

But Apple didn’t want to have to compete with Amazon’s discounted prices. Under Mr. Jobs’s direction, Apple persuaded five of the biggest publishers to abandon the wholesale model, by which retailers were free to discount the recommended retail price. Under the new pricing arrangement, publishers set the price of e-books.

In March, Random House Inc., a unit of Bertelsmann AG and the country’s largest consumer book publisher, joined its five large rivals in adopting the no-discounting digital pricing model.

Thanks, Steve.

Seriously, it really irks me to have to pay so much for something I know is cheaper to produce than the paper edition. So, I have decided that I’m not buying any more e-books until the prices come down.

Related: The Wall Street Journal Takes a Look at E-Book Pricing

The randomly-selected winner of the latest AFM giveaway winner was commenter #1, Laurie Smith. This is the first time in my 7 years of blogging that the first commenter was randomly selected for any giveaway. Congrats to Laurie.

For those of you who didn’t win, I still highly recommend Exile on Wall Street: One Analyst’s Fight to Save the Big Banks from Themselves*. It’s a very interesting and easy read.

The next giveway will be posted in a bit.

I received a copy of Mike Mayo’s Exile on Wall Street: One Analyst’s Fight to Save the Big Banks from Themselves* a week and a half ago. As the title suggests, the book is about his experience as a securities analyst covering banks.

First things first. Who is Mike Mayo? According to the inside flap of the book, he’s “…one of the top-ranked banking and finance analysts of the past twenty years. Mayo was the only analyst to testify during the Senate Banking Committee hearings in 2002 on conflicts of interest on Wall Street, and in 2010, he testified again, this time as the first analyst to speak on the causes of the crisis.”

My thoughts on the book

Overall, I liked the book very much. It was an easy read and gave a nice overview of what happened in the years leading up to and following the housing crisis. Along the way, the author discussed the problems he had trying to be an honest analyst. When he was critical of banks, they shut him out and wouldn’t give him access to their management. He was even fired for his honesty. I applaud his efforts to put investors first.

Reading the book, it’s very clear that Wall Street is a racket. It’s heavily loaded in favor of the bankers and investors are only important because they provide money. Something needs to be changed.

I enjoyed the personal aspects of the book like when he shared about his struggles to land his first banking job. He ended up working at the Fed in the merger-approval area after working briefly at IBM. He spent five years at the Fed and eventually landed a job at UBS. Mayo’s honesty in his reports didn’t do him any favors with his employers. At one point he was fired from his job a Credit Suisse and spent six months unemployed.

When it came to his discussion of the causes of the housing debacle, I felt he was too easy on the politicians and their role in helping create the crisis. The lack of detail here could be because he was writing about the crisis from his perspective. Whatever the case, he left the impression that politicians (both Democrats and Republicans) played a minor role in the creation of the crisis.

The best part of the book was his discussion on fixing capitalism. From the book:

To fix the banking sector, should we rely more on government regulation and oversight or let the market figure it out? Tougher rules or more capitalism? Right now, we have the worst of both worlds. We have a purportedly capitalistic system with a lot of rules that are not strictly enforced, and when things go wrong, the government steps in to protect banks from the market consequences of their own worst decisions. To me, that’s not capitalism.

I can understand the appeal of certain regulation. If we’d had the right oversight in place, we would have limited the degree of the financial crisis, which included bailouts measured in hundreds of billions of dollars, and millions of people losing their homes due to foreclosures. But we also would have sacrificed innovations in credit and a vibrant financial sector. Over the past century, our economy probably would not have grown as fast or been anywhere near as dynamic. Moreover, the real problem with regulation is that it often doesn’t work very well, in part because it’s always considering problems in the rearview mirror. The financial system today is almost dizzyingly complex and moving at light speed, and new rules tend to address fairly precise things. They ban specific types of securities or deals or trades instead of addressing larger principles.

He goes on…

A related issue is that regulation can sometimes trigger unintended consequences. Another section of Dodd-Frank cut the fees that a bank can charge a store for debit card transactions. As you can imagine, banks are not about to simply shrug that off. It adds up to billions each year. Instead, they’ll make it up somewhere else—most likely by charging consumers for other services, as in no more free checking. The bottom line? Consumers will now pay more for the convenience of using a debit card, and will likely never see the benefits from the lower costs to merchants. This is—let’s face it—price-fixing by the government, and it shows why measures like this don’t really help things in the long run. If the government were to set a cap on how much McDonald’s could charge for Big Macs, it wouldn’t take long before the price of fries went up to cover the difference.

I agree. Unfortunately, our politicians don’t seem to be listening.

Overall, Exile on Wall Street* is a great read. It’s easy to understand and not at all mundane. I highly recommend it to anyone who’s interested in learning more about the housing crisis and the interworkings of the banking industry.

Now you have a chance to win a copy of the book from AllFinancialMatters. If you’re interested, please leave a comment below. I’ll randomly select and announce a winner on Friday. Before you enter, please consider my two rules:

1. You must be a resident of North America (I will not ship internationally).

and…

2. You can only enter one time.

*Affiliate Link