Book Review: The Nature Of Risk

by: David Merkel, CFA

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I'm here this evening to review another excellent book on risk control by David X Martin.

This is a difficult book to review, because if I describe what happens, I end up spoiling the book. This is a small book, and I read it in less than an hour.

This book came into existence because the author had a hard time explaining risk to the family of a friend who had died, and then his own family. He wanted to come up with a simple way to describe risk to those who don't know markets. His tool was using common animals in a forest to explain risk, because their behaviors mimic those of different sorts of people as they face risks, or decide to ignore risks.

One thing I appreciate about the book is that it takes an ecological approach to risk. My view is that markets are not like physical systems, they are like ecological systems.

Risk can never be eliminated, but it can be prepared for and managed. I think that is the main message of the book.

For most of you reading me at Aleph Blog, this book would be fun for you but not necessary for you. But consider some of your friends and family members that are not as sharp as you. Personally, I am planning on having my wife and kids read this book. Living with me, they pick up a lot, but this book is a clever way to teach risk management without making it seem like it is being taught.

To me the real use of this book is to teach less market oriented friends, family, and children about risk. This is a small, simple but powerful book.

For those that are advanced, and want something more meaty, please read my review of the author's book, Risk and the Smart Investor.


It's a little book, and it is a very good book, but 15 clams for such a small book? I would have priced it at $10 or so.

Who would benefit from this book: This book is designed for beginners and intermediate investors. Get it as a gift for friends who you think are taking too much risk, and don't get that. Or, use it to educate young people about risk. If you want to, you can buy it here: The Nature of Risk.

Disclosure: The author asked me if I would like the book and I assented.