The author, a familiar name in the financial media, is a PhD in Economics and Political Science from the Massachusetts Institute of Technology. Mobius was among Asiamoney’s 2006 list of ‘Top 100 Most Powerful and Influen tial People’; earlier, Carson included him in ‘Top Ten Money Managers of the 20th Century’. He currently manages Templeton’s emerging market portfolios of nearly $30 billion.

“In its most basic form, a mutual fund is a company that pools money from a group of people with common investment goals to buy securities such as stocks, bonds, money market instruments, a combination of these investments, or even other funds,” explains the intro. “The collected holdings of these securities is known as its portfolio. Each share, or unit, represents an investor’s proportionate holding of the portfolio and their proportionate entitlement to the income generated by those holdings.”

The concept is old. During the late 1700s “a Dutch merchant and broker, Adriaan Van Ketwich, invited subscriptions from investors to form a trust… to provide an opportunity for small investors with limited means to diversify,” reads a quote from ‘The Origin of Mutual Funds’ by K. Geert Rouwenhorst.

The fund manager invests the fund’s assets, often visits the companies he is researching, uses computer models to choose securities, accesses ‘sophisticated fund analysis tools and real-time financial information services from various data sources’, and gets paid ‘a salary plus a bonus based on the fund’s total return’.

Mobius shares a page from his diary in a box titled ‘a day in the life of a fund manager’. Datelined Belgrade, Serbia, it begins at 7 am with a wake-up call. “I get out of bed and turn on the broadband connection for my laptop computer and begin downloading e-mails…”

While exercising at the hotel gym, he skims the financial magazines for articles on emerging markets. “The benefit (and problem) of us fund managers is that we must be interested in anything and everything, since the range of businesses in which we could invest is virtually unlimited. Even fashion magazines may have something of interest.”

Breakfast meeting with a local consumer goods company is followed by a visit to a construction company, and a discussion with the research scientists of a to-be-privatised pharma company. At lunch Mobius meets with bank officials to get their views on macroeconomic policies; then, a visit to companies making dairy products and confectionary.

A conference call with an institutional investor, e-mail answering, discussion with team members, and more… By 21:30, he begins to review company research and study the portfolio allocation recommendations made by analysts around the world. “23:00 I go to sleep. I will be flying to Istanbul the next day with three analysts…”

A book that can keep you awake!

Bullish or bearish are words used by people who do not engage in practising uncertainty, like the television commentators, or those who have no experience in handling risk.

Thus chides Nassim Nicholas Taleb in ‘Fooled by Randomness’ ( www.crosswordbookstores.com).

“Alas, investors and businesses are not paid in probabilities; they are paid in dollars,” he adds. What is important, therefore, is not how likely an event is to happen that matters, reasons Taleb. “It is how much is made when it happens that should be the consideration. How frequent the profit is irrelevant; it is the magnitude of the outcome that counts.”

The book, now an updated second edition, after having been published in 18 languages and, was selected by Fortune magazine as one of ‘The Smartest Books of All Time’.

Past events will always look less random than they were, writes Taleb, explaining hindsight bias. “I would listen to someone’s discussion of his own past realising that much of what he was saying was just backfit explanations concocted ex post by his deluded mind.”

The principal asset to Taleb is his ‘deep-seated intellectual insecurity’. And his motto or principal activity is “to tease those who take themselves and the quality of their knowledge too seriously.” Why don’t most journalists end up figuring out that they know much less than they think they know, he asks? “Scientists investigated half a century ago the phenomena of ‘experts’ not learning about their past failings. You can mispredict everything for all your life yet think that you will get it right next time.”

Unputdownable.

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