Understanding The Markets
January 28, 2021 12:32 PM   Subscribe

So it's come to my attention that I have no understanding of the stock market, hedge funds, short selling, etc. beyond a very basic few days in economics class a few years ago and watching The Big Short once. I have no interest in buying/selling stocks, but I would like to understand what the consequences of financial markets are for The Real World. What books/podcasts/articles/etc. would you recommend for someone who is not looking to Get Rich Quick but would like to understand financial markets?
posted by ChuraChura to Work & Money (13 answers total) 22 users marked this as a favorite
I've found Planet Money to be reliably excellent for explaining various financial concepts in intelligible terms.
posted by eponym at 12:39 PM on January 28, 2021 [4 favorites]

2nding Planet Money

Also, A Random Walk Down Wall Street is a great book for understanding the basics of investing.
posted by soy_renfield at 12:42 PM on January 28, 2021 [3 favorites]

I'm seconding @soy_renfield's recommendation of A Random Walk Down Wall Street, although that book alone probably wouldn't provide the type of complete overview that you are requesting. But A Random Walk is very readable, well-written, and interesting (not dry), so it's not a bad place to start.
posted by alex1965 at 1:09 PM on January 28, 2021

A Random Walk Down Wall Street is the classic of this genre, although I will say that I found its tone to be a little Boomer Dude.
posted by dismas at 1:21 PM on January 28, 2021

Best answer: Read Matt Levine's newsletter (archive here, subscribe here if you prefer email).
posted by caek at 1:32 PM on January 28, 2021 [7 favorites]

Warren Buffett writes an annual letter to the shareholders of Berkshire Hathaway, which is included in the annual report. These are written in readable plain English, and often Buffett takes the time to explain what he is talking about.

Here is a delightfully Web 1.0 directory of all of them.

In the 2005 letter, starting on page 17 he tells a parable about the value of long-term, broad investing rather than stock picking.
posted by Huffy Puffy at 1:44 PM on January 28, 2021 [2 favorites]

Response by poster: These are great so far! If anyone has an idea for books or other things that are less about how to invest and more about how financial market influence other aspects of society, I would be particularly interested!
posted by ChuraChura at 2:12 PM on January 28, 2021

You could actually do far worse than watching the Wolf of Wallstreet, there are actual whole narrative fourth wall breaking explainers peppered through the movie. This movie provided me enough of a primer that I kinda sorta can follow some financial news (the most recent GameStop/reddit stuff was only slightly inaccessible, but came into clarity pretty quick).
posted by furnace.heart at 3:44 PM on January 28, 2021

Ah crap. I meant to say The Big Short. Both are probably applicable though.
posted by furnace.heart at 3:47 PM on January 28, 2021 [2 favorites]

Best answer: The thing that doesn't get as much popular press (until something goes wrong) are bond markets, which are far larger in terms of dollar value than equity (stock) markets. While they're not as sexy in the public imagination, they're worth learning more about since governments, publicly-traded, and privately-held companies all rely on them to varying degrees in order to operate, either through overnight borrowing (the commercial paper market) to cover very short-term cash shortfalls, or longer-term bonds (e.g., T-bills and U.S. Treasury bonds).

I definitely recommend The Big Short (the book) if you want even more of the nuts and bolts of how and why things happened in 2008 than the movie gets into (but the movie does a pretty good job of providing some explanatory narrative without bogging down too much). But I'd definitely recommend Michael Lewis' Liar's Poker, set in the 1980s, because it deals with the early creation of mortgage bond and junk bond markets (and the resulting S&L crisis). I've always found his writing engaging and accessible.

Another recommendation here for Planet Money, and in particular their series on Toxie the Toxic Asset ( they bought a crappy mortgage bond that was going to slowly die and used it to explain the various causes and consequences of the 2008 financial crisis) is a great explainer. They bring it down to real-life impact on everyday people (as I recall, they interviewed some of the people whose defaulted mortgages were among those bundled into the mortgage bond they named Toxie). Again, a case of bond markets seeming boring in the popular imagination, until they became waaay too exciting and make their presence felt in more everyday ways.

But in general, Planet Money can be relied on for up-to-date segments of the "You saw this crazy stuff in the news, so what the hell happened? We're going to explain it" sort.

The Wolf of Wall Street actually does a very good job of explaining pink sheet stocks and pump-and-dump scams. And, as loathe as I am to admit it because I can't stand Ben Affleck, The Boiler Room does a pretty good job of explaining those as well.
posted by mandolin conspiracy at 7:29 PM on January 28, 2021 [1 favorite]

Morning Brew does a great job of this. Here's a Markets 101 article and a bunch of links that are organized as a Finance for Beginners intro.
posted by saltypup at 11:19 PM on January 28, 2021 [1 favorite]

Like mandolin conspiracy, I recommend you check out the work of Michael Lewis, the author of the book the Big Short. He has written a bunch of books taking a look at the markets from various perspectives, is well regarded, and writers really well. I've only read Liar's Poker, about his days working at Salomon Brothers (and found it to be an excellent read), but he has a bunch of other books about various facets of finance and the economy that might interest you, too.
posted by reren at 8:31 AM on January 29, 2021 [1 favorite]

Yes, read a Random Walk to vaguely understand stocks.

Do not watch the Big Short, do not read about various mortgage-backed securities, or credit default swaps - because everything you read about them is going to be overstated and mostly wrong. Also with a big side helping of blaming the poor and minorities (who mostly were the victims of default), either implicitly or explicitly.

Housing Bubble - credit markets

This is pretty basic, but includes charts from the Fed and other government entities that are easy to follow, or to personally verify if you and a wealthy (or poor - I don't know you!) friend want to head to the bank and get a loan or just check your own rent.

It's also why you should be extremely wary of regulators over this GameStop stuff, because this stuff is extremely complex and off-the-cuff 'solutions' have real problems, and blaming WSB or RobinHood without actually looking deeply at the problem will produce worse problems.
posted by The_Vegetables at 8:45 AM on January 29, 2021 [1 favorite]

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