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[review] Man vs Markets by Paddy Hirsch

Man vs Markets - Economics Explained

Just completed this book recently.
It was a good summary of the financial markets and how it works, in USA. The basic way the markets work would be similar, and thus I think this book is a good overview to the financial market.

The author was successful in explaining various terms and concepts by simplifying and giving excellent examples which most of us would be able to relate to. Some examples include the use of "toy lending" between kids to explain the components of a bond, and the use of the 3 little pigs' plight to explain the concept of stocks. He even simplified derivatives such as options, futures and swap through the use of stories and examples. In his words, these are simply tools which we use in our daily life, packaged in different terms. —————
Just went for a talk and book signing by Hirsch last night. He explained that futures is similar to the system we use to reserve airline tickets. Futures allow us to pay a specific price at a specific date. Options are similar to situations where we pay a deposit to lock in the price. It gives us the option to buy something (for call options) at a specified price, for a deposit. Swaps are, in his words, like insurance. Uncertainty is swapped for certainty.
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The second half of the book focused on the economy of the USA, with Hirsch narrating the events leading to the subprime crisis in 2008.

Overall, this book is quite an interesting read, and does not bore readers with too much technical terms. (Since these terms are explained by the author). It allows beginners to grasp the basic understanding of how the financial markets works, and the role played by the government and banks.

For me, a major takeaway from this book would be that; it is very important to carry out DUE DILIGENCE  before going into any investments. Especially if the investment vehicle is new and is the latest hype.

You can watch some of Paddy Hirsch's videos, in which he explains various concepts of the financial markets at: http://www.marketplace.org/topics/business/whiteboard

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