The Lovely Lisa wants to know if I’m ever going to read that stack of books in the basement. The answer is yes of course, but not soon enough. I like to buy books in bunches, and then work my way through the stack gradually. This means I’m usually reading books that are a year or two old, which until recently hasn’t made that big a difference.

Suddenly my two-year-old books are like historical artifacts. I just finished American Theocracy by Kevin Phillips, a book published in March 2007 that, among other things, warns of the potential for a global financial crisis.

Wish I’d gotten to that one sooner.

So I’m looking for something a bit more current. Ian Bremmer’s The Fat Tail: The Power of Political Knowledge for Strategic Investing, looks perfect. (It was co-written with Preston Keat, director of research with Eurasia Group.) I met Bremmer at a conference I helped organize a year ago. He delivered one of the best presentations I’ve ever heard.

Bremmer is a pioneer in the application of political science to finance. He developed the Global Political Risk Index in 2001, “Wall Street’s first,” according to Wikipedia.

He granted an interview to McKinsey & Co. that’s up on The McKinsey Quarterly. “[T]he fat tail, simply put, are these 1-in-100-year storms that seem to be hitting us every 15 minutes nowadays in this global economic crisis,” he explained.

Bremmer is in the business of advising Wall Street executives and world leaders. But there is good advice here for the rest of us. Four key takeaways:

1. Politics affects capital markets. Fail to consider the impact of geopolitics on your portfolio at your own risk. “[Y]ou desperately need to know what is determining the likelihood of an exposure that you have to a country, to a sector … to an individual investment.”
2. We are living in a period of great volatility. “You can count on changes that you weren’t expecting hitting your investments. You want to know how likely it is they’re going to stay in place. And I think that likelihood is increasingly going to be determined by political – and not economic – inputs.”
3. Invest in companies that understand that the world has changed. It is virtually impossible to plan based on 10- or 20-year projections. Smart executives are “focusing on scenarios for 12, 18, 24 months.” They are worth special consideration.
4. The downturn will have a social effect around the world that results in regional instability, well after the global recovery has begun.
   “[T]here will be serious social discontent in developing markets all around the world. But they don’t typically hit at the same time as an economic crisis. They’re lagging indicators. They take 12, 18 months to really play through individual economies, after the economy starts to seriously slow.”