Michael Lewis’ new book about the subprime scandal, “The Big Short,” is a fascinating, edge-of-the-seat read.

But for everyone trying to manage their own finances these days, it’s also a gold mine of valuable insights about how the modern economy really functions — and what you need to watch out for.

Among the takeaways:

1. Never, ever invest in something you don’t fully understand. Ever.

There are no exceptions to this rule. Simple, really. But it never ceases to amaze me how many people are still tempted to break it. Like all the top Wall Street bankers who were willing to bet blindly on subprime paper they didn’t understand. Many banks were still buying the stuff in late spring 2007, when the fundamentals were already in freefall. With complex investments, it’s hard know when to get in or get out. This never seems to happen when you invest in, say, a beer company.

…..read more HERE.