Five Must-Reads for Understanding This Market

The General Theory of Employment, Interest and Money by John Maynard Keynes

This work is the basis for the Keynesian school of modern economic thought: Aggregate demand, which is the sum of consumption and investment, is the driving force of economic activity for a nation. For many decades, the Keynesian model of macroeconomics was the fundamental driver of economic policy. While Keynesian economics has lost favor over the last few decades, the recent global financial crisis and resultant recession has given it a new life. With an understanding of Keynes and his work, you can better understand how the massive federal stimulus plan has helped the economy as a whole or an individual company such as Wal-Mart(WMT).

Irrational Exuberance by Robert Shiller

Shiller is another former professor of mine, this time during my undergraduate years at the Wharton School of Business. This book, named for Alan Greenspan's "irrational exuberance" quote, presented arguments warning of the stock market/technology bubble that was created in the late 1990s and burst in the early part of this century. Later on, and included in the second edition of this book, Shiller also used similar arguments to warn of the housing bubble. Shiller's book sheds light on such things as why Time Warner's(TWX) investment in America Online is a fraction of its original purchase price or how Beazer Homes(BZH) went from a moneymaker to money-loser.

Kane and Abel by Jeffrey Archer

This is the one piece of fiction in this year's reading list. Originally published in 1979, Kane and Able is the story of a William Kane, an American from a wealthy family, and Abel Rosnovski, a poor immigrant from Poland. The story details the rags-to-riches story of Abel and the capitalistic twists and turns as the two characters cross paths. It is definitely an entertaining page-turner.

Now I've made my recommendations for the year. If you have any favorites of your own, please let me know, and I will try to pick up a copy for myself.

-- Written by Scott Rothbort in Millburn, N.J.

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