A Portfolio of Advice for Grim Times
Reading used to be such a pleasant escape. Even books about money--mid-Clinton Era stuff such as The Millionaire Next Door, for example--took us to fantasyland. Today, three years into a relentless bear market, the money books have taken a turn toward harsh realism. To see what I mean, look no further than the latest from James J. Cramer, You Got Screwed! Why Wall Street Tanked and How You Can Prosper (Simon & Schuster, $20).
A hyperactive ex-hedge fund manager, CNBC personality, and author of last year's hot seller, Confessions of a Street Addict, Cramer is back with a breathless rehash of such fiascoes as WorldCom and Enron. Few Establishment types escape his glare, nor do the feckless financial media he knows so well. He recounts how, at TheStreet.com, a Web site he co-founded, he repeated the advice he had given his dad, which was to dump Janus mutual funds. Janus then killed a $400,000 ad deal, he says. Such pressure, plus legal threats, got financial writers to turn a blind eye to all the hype during the bubble: "If you hinted that something was dirty, your managing editor was right in your face telling you about corporate libel," Cramer writes, overstating his case as usual. You Got Screwed!'s 117 pages are more screed than book, with stock tips tacked on at the end. They amount to using index funds, possibly bolstered by a small portfolio of dividend-paying companies with strong balance sheets.
All of us who are sick of Cramer's shtick will find a fast-acting antidote in Leon Levy's The Mind of Wall Street (Public Affairs, $26). An early partner and research director at Oppenheimer, Levy is Cramer's temperamental opposite: soft-spoken, clear, and wryly amusing. His book is part memoir and part diagnostic manual on Wall Street's addled ways. Along with co-author Eugene Linden, he sketches many of the characters he encountered, from his boss Max Oppenheimer to real estate mogul William Zeckendorf and even Enron's Andy Fastow. Levy details the patient way big scores were made by the likes of J. Paul Getty, and he dissects the Long-Term Capital Management cadaver. His view of the future is by no means bright: It's possible, Levy writes, that we will see stocks sink to levels last seen in 1995, when the Dow Jones Industrial Average sat south of 5000.
On this much, anyway, Levy would agree with Cramer: When it comes to your money, few can be trusted. That too-late-appreciated truth has given rise to a slew of books bent on guiding do-it-yourself investors back to the basics. One that proved a keen disappointment is Morningstar Guide to Mutual Funds: 5-Star Strategies for Success (Wiley, $24.95). Morningstar has done much to clarify the choices confronting investors. Yet this book, by Christine Benz, Peter DiTeresa, and Russel Kinnel, suffers from scattershot organization and way too much minutiae. For example, in a section on fund families, we learn which are publicly held companies. But why do we care? Shuffling through such clutter, I got a sad sense that much of it was swept in from other projects and turned into a book. You can safely skip the first 198 pages and focus on pages 199-212, which tell how to build solid fund portfolios.
A happier surprise lies between the covers of Straight Talk on Investing: What You Need to Know (Wiley, $22.95) by Jack Brennan with Marta McCave. Brennan heads the No. 2 mutual-fund outfit, Vanguard Group. It has been his peculiar hell to succeed Vanguard founder Jack Bogle, whose regular pronouncements make him the mutual-fund world's leading iconoclast. To be heard over Bogle, Brennan would have to talk as fast and loud as, heaven help us, Cramer. Instead, he doesn't try, and the result is a fine book that's short on flash and long on balance. For instance, while discussing "balanced" mutual funds--those holding both stocks and bonds--Brennan notes: "Balance in investing is like a navy-blue blazer--you can joke about it being stodgy, but over and over again it has demonstrated its reliability." It's an apt metaphor for Brennan's book, which succeeds as an excellent guide for beginners. Its key message: "There are financial professionals who want to make you think you can't make your own investment decisions. Don't believe them."
An inescapable fact about all books such as Brennan's is that they are, in part, marketing ploys. This is also true of Charles R. Schwab's latest. The brokerage pioneer has teamed up with his daughter, Carrie Schwab-Pomerantz, on It Pays to Talk: How to Have the Essential Conversations with Your Family about Money and Investing (Crown Business, $24.95). But it's not the subtle sales lure that is the problem here, because the authors' hearts are clearly in the right place. It's that this book spends too much time on run-of-the-mill personal finance advice and not nearly enough on the tougher stuff of dealing with money within families. What it does offer is often superficial: "Although your parents may welcome talking to you about their financial situation, they may also resist. Losing their privacy may feel like a first step in losing control over their lives...They could even become hostile." So what to do? Don't press, unless it can't wait, and then "push--but delicately and with love."
Running parallel to the back-to-basics trend is a raft of titles on investing in that ultimate basic, real estate. A good case in point is Unlimited Riches (Wiley, $24.95) by lawyer and real estate guru Robert Shemin. In it, you'll find plenty of useful tips, plus cold-blooded advice on exploiting others' moments of weakness. He tells, for instance, how to make pals with nursing-home administrators in order to learn which patients are ready to dump a house fast. Also, how to work the obits: "You could be doing their relatives a service by writing or calling them and saying, `I am so sorry to hear about your loss, but if you have any property you want to dispose of quickly, I can help you."' Not revolted by that? You may be on your way to riches.
If you suspect wealth isn't awaiting you, try the latest edition of Ralph Warner's Get a Life: You Don't Need a Million to Retire Well (Nolo, $24.99). It has sound, concise advice on picking funds and figuring how much you'll need to retire, but mainly this volume extols the other assets that enrich life after work: family, friends, health, and community ties. The author does this using interviews with the real experts--ordinary retired folks. Warner may give too-short shrift to the helping hand that steady cash flow brings. Yet as an escape from today's harsh environment, you won't find better reading.
By Robert Barker