Cashing in, cashing out

Lately it seems as though all my friends are either getting rich or grousing about not getting rich while everyone else is. With the stock market and the overall economy steaming through yet another year of almost obscene prosperity, many Americans are rolling in the dough -- while others try to figure out how to get a taste of it.

There are new books out for both sorts of people: those who want to make the best of the money they have, and those still struggling to build up a nest egg. This month's featured books cover how to start investing in the future, how to pick hot stocks, which hot stocks to pick, and what to do with all that moolah after retirement.

REVIEWS BY E. THOMAS WOOD

Let's start simply. In Wealth Happens One Day at a Time: 365 Days to a Brighter Financial Future, Brooke M. Stephens offers a combination of advice, affirmations, and action to demystify the process of reaching financial security. Like Dave Ramsey and other authors who address the basics of creating personal wealth, Stephens tells readers they can gain greater control over their lives by getting control of money.

It's only natural for some people to feel intimidated about all the flashy wealth on display these days. This book is a self-help course in overcoming financial intimidation. One day at a time, it will help readers master the concepts of saving and investing even as they master their own emotions about money. Its 365 mini-essays move from the simplest of topics to such complex issues as Roth IRAs and testamentary trusts -- all explained in a breezy style with plenty of enlightening anecdotes.

Wealth Happens is a valuable road-map to personal enrichment. If you or people you care about have been meaning to get control of finances -- but just haven't figured out where to start -- this book may be the highest-yielding investment you ever make.


Graduates of Stephens's tutorial in personal financial management can move on to the small time with Gene Walden's The 100 Best Stocks to Own for Under $20. Not every stock on Walden's list is a small company, but most are small enough to have stayed off the radar screens of Wall Street know-it-alls in recent years. The author has applied sophisticated technical analysis to screen through the more than 8,000 stocks trading at less than $20 a share, finding a final 100 that excelled by a broad range of performance measures.

Imagine the rewards that can come from taking risks. Somewhere out there is the next Microsoft, priced today as cheaply as Bill Gates's fledgling company was in 1987. A $10,000 investment then would be worth $1 million now. Walden argues convincingly that small stocks have been the 20th century's most lucrative form of investment, and he makes a compelling case that his 100 picks are the hottest performers in this hot category. At a time when the true value of many high-flying stocks is very much open to question, Walden's research can help investors find the market's hidden gems.


Global Bargain Hunting: The Investor's Guide to Profits in Emerging Markets traces another route to riches for intrepid investors. It's true that the Asian financial crisis gave all emerging markets a bad name in 1998, soon after the first edition of this book came out, but the turmoil did nothing to shake the faith of authors Burton Malkiel and J.P. Mei in the less-developed world's markets. Their new paperback edition incorporates the wisdom gained from the Asian experience and points stock-buyers toward the opportunities that abound in its wake.

Unlike Walden, Malkiel and Mei focus more on how to pick the right international stocks than on which stocks to pick. They devote plenty of attention to the pitfalls of investing in emerging markets, which range from high transaction costs to underdeveloped stock markets to corruption and even the risk of government expropriation. And they discuss which types of investment are and are not suitable for the typical individual buyer.

Like Walden, Global Bargain Hunting's authors crunch numbers to reveal true values in the market that most investors could never discover on their own. You don't have to be a math wizard to be persuaded by their valuation formulas, such as a calculation of domestic-growth-to-price/earnings ratios in ten nations that ranks the U.S., with its overheated stock market, dead last in investment values -- and Poland first. The message: Sell apple pie short; go long on kielbasa.

Malkiel and Mei explain complicated financial concepts in simple and clear language. They are admirably blunt about some of the dirty secrets of Wall Street, offering such insider warnings as: "Initial public offerings of closed-end [mutual fund] shares are usually a rip-off." And, as Malkiel advocated (controversially at the time) in 1973's A Random Walk Down Wall Street, the authors tend to favor indexed funds over managed funds for international investors.

Global Bargain Hunting makes a strong case for buying into the developing world, even with all the financial hazards involved. Investors wary of buying at the top of the U.S. market will find this book a worthwhile form of armchair traveling.


So, suppose you profit from the advice of all three of these authors. Enjoy the warm, fuzzy feeling of success while you can, because what comes after it is the realization that you really have something to lose now. Margaret A. Malaspina wants to help you cope with your riches. Don't Die Broke: How to Turn Your Retirement Savings Into Lasting Income is Malaspina's guide to a topic that Baby Boomers and others may not have thought about much as they squirreled away savings in 401(k) and IRA plans over the years: managing those accumulated, and often half-forgotten, assets before and during retirement.

Malaspina, who helped make fund manager Peter Lynch a superstar when she was a communications executive with Fidelity Investments, displays a thorough grasp of the wickedly arcane rules that govern retirement savings, especially when it comes time to start withdrawing them. Just as importantly, she finds ways to help ordinary readers understand those rules -- and what can happen when retirees inadvertently break them. The horror stories here, about incredibly damaging financial decisions made by smart people acting in good faith, will suffice to focus the minds of future retirees on what they have at stake.

Don't Die Broke is not just for people approaching retirement age, either. Anyone, of any age, who inherits retirement-plan assets may face a bewildering series of choices, with little guidance from the IRS or the trustee holding the assets. Your heirs may wish you had died broke before it's all over -- and, in fact, Malaspina contradicts her book's title by offering sage advice on how to do just that. Effective estate planning, which may need to begin sooner in life than many would think, can shift enough assets out of an estate to avoid large tax burdens.

Malaspina's work is important reading for any American who is saving for the future, because it hammers home the uncomfortable fact that just saving money is not enough. Every retirement account needs a game plan as well, and Don't Die Broke will empower its readers to create solid strategies.


Briefly noted: Money, Greed, and Risk: Why Financial Crises and Crashes Happen, by Charles R. Morris, is a salutary reminder, in these heady times, of what can go wrong in the financial markets. Morris deftly surveys America's two-century history of occasional busts, panics, and market hiccups, skewering the hubris almost always at the core of a financial disaster. In Succeeding Generations: Realizing the Dream of Families in Business, Ivan Lansberg offers insightful case studies and astute analysis to guide parents, siblings, and other relatives through the tricky business of succession planning in a family company.


One of this month's most intriguing works (remember, "intrigue" can have more than one meaning) is a former U.S. military spy's primer on corporate espionage. Confidential: Uncover Your Competitor's Secrets Legally and Quickly and Protect Your Own, by John Nolan, provides chilling glimpses into the cloak-and-dagger world of finding out (and protecting) companies' most valuable secrets.


And finally, aspiring tycoons can choose from among 50 potential role models in Lessons from the Top: The Search for America's Best Business Leaders. Authors Thomas J. Neff and James M. Citrin, both executive search specialists, have finely honed their instincts for finding good leaders, and their chosen honchos sound off on life at the top in revealing interviews.

    Lessons from the Top:
    The Search for America's Best Business Leaders
    By Thomas J. Neff
    and James M. Citrin
    Doubleday, $24.95
    On sale August 17
    ISBN 0385493436

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Journalist E. Thomas Wood is an editor with the Champs-Elysees.com family of European language-and-culture magazines.

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