Writing about finance is an invitation to confuse people. Not that "financial people" are smarter than other types, but it's just easy to lose people in the jargon, like many other fields. But throw in people's potentially negative emotions about math and money, and you have a recipe for glazed over eyes.
That's why it's nice to invoke guys like Malcolm Gladwell and Michael Lewis, no matter what they write about, they make sure the reader can actually understand it. Gladwell tangentially talks money and on occasion, talks about it directly (one of my favorite articles of all time is right here). Lewis tends to talk directly about money more, while occasionally and famously drifting into sports. On a recent podcast, Gladwell basically says Lewis is his writing idol. So, all of this is to say when Lewis has a story to tell, it's worth reading. It won't take long, it will be readable and you will likely learn a nugget or two.
A relatively recent book by Lewis, Boomerang, is about the effects of the 2007-2009 Global Financial Crisis on countries such a Greece, Iceland, Germany and Ireland. We all know how it was in the U.S., but for smaller countries with more fragile economies, the effects were likely more palpable and longer-lasting. It's not quite the seller that The Big Short is, but that is largely because it's a similarly story, told more broadly and from different angles.
The book begins with the story of Iceland, a homogeneous land of only 300,000 people with no real history of complex finance. But, even they fell for the siren song of financial engineering, perpetual growth and easy money, to the ruin of basically everyone involved. Not every story is like that, though. Take Greece, for instance. In their case, the banks were pretty sane. It's just that the country ran into a fundamental problem, no one wanted to work that hard or pay taxes. Now, they aren't the only people to every have those impulses, but they are one of the few to pull of indulging both at the same time on a national level. It's like everyone saw Office Space too many times. And, they didn't exactly pull it off successfully, because the economy, like the Parthenon, is in ruins.
Some of these results were somewhat predictable. Sure, a few people warned of the consequences of audacious handouts and financial over-engineering, but enough people bought into the hype to drive the bubble forward. So, what is obvious in hindsight isn't obvious in real time. And if it is obvious, it's often not enough to discourage participation.
So, that begs the question: what are we missing now? Sure, not every bull market (such as the one we have ridden for the last 7 years) is necessarily a bubble. However, our economy had a good deal of structural problems (debt-personal and government, lack of saving, college costs, reduced manufacturing base, etc.) that haven't exactly been solved. Awareness of these problems seems high compared with the mania associated with the internet and real estate bubbles of the last 15 years. Maybe that is what has kept things from getting too insane. Everyone is still gun-shy, and a little but too ready for the other shoe to drop. Busts rarely happen when so many people are expecting it. as seems to be the case now. So, the bull market has just enough energy to chug forward, but, ironically, also too much pessimism to produce the circumstances for an actual correction.
This isn't an invitation to try to time the end of the market. That likely won't end well. If you have a plan, it should be one that takes ebbs and flows into account beforehand, so you aren't left to make awful predictions and guesses when the world is going to hell. But, it is an invitation to adopt such an investment plan, and likely to spread your money around. Diversify, but merely diversifying within the stock market is likely to get you only so far. Stocks tend to go up and down together.
One of the best definitions of risk I have seen is from Carl Richards. He said risk is what is left over after you have thought of everything else. What are we missing right now that will only be obvious in hindsight and does your investment plan attempt to address it? Even if you have an answer to that question, it's best to emotionally gird yourself for the possibility that, even after you have accounted for everything, you can't ever truly account for everything. Investing tends to punish hubris and Lewis's books are proof that we keep falling for the unexpected.