Neal Lipschutz

Review by

As the free market economic machine ascends ever higher, through the rubble of Communism and the default of Russia, despite the Asian financial crisis and in the face of the Internet craze, we approach a crossroads. The big question can be boiled down to this: Are we on the right path? Is an ever more open market economy, based on the American model, the proper road toward world prosperity and even human happiness? Or are we headed for corporate domination, enfeebled national governments, and the easy exploitation of the planet's workers and resources? It's amazing how differently the same set of circumstances can be interpreted. It all depends on who you talk to, or, in this case, what you read.

Two new books nicely represent vastly divergent views on where we should be economically headed. We'll start with a book that wants us to do what we're now doing, only more so. In The Future and Its Enemies: The Growing Conflict over Creativity, Enterprise and Progress, author Virginia Postrel argues essentially that the less we try to control and limit the economy, the more it will bring us. The incentives, flexibility, and serendipity of an open society and economy will allow individual genius and innovation to bring us consistent material gains. To hijack a phrase often heard during the presidency of Ronald Reagan, Ms. Postrel, editor of Reason magazine, would let the economy be the economy.

This is an excellent book. It is clearly written, well argued, and broadly sourced. It is a dynamist manifesto that makes the case for letting people, each in his or her own way, invent the future for themselves. No grand plan, and as few limits as possible on technology. Sure there will be failures and bad ideas, but the struggle will allow the right ones to win out. And they likely will be the unexpected ones. Who, for instance, predicted the Internet? The dynamist view is that a freewheeling human-dominated future holds the best chance to create broad-based prosperity and find cures for diseases. Postrel's description of how economic freedom helped the development of eyeglasses and then ever more convenient versions of contact lenses is quite telling.

Her optimism is captured in this passage: Progress does not mean that everyone will be better off in every respect. But under ordinary circumstances, for the random individual, life in a dynamist society tomorrow will be better, on the whole, than life today. David C. Korten doesn't see things the same way at all. In The Post-Corporate World: Life After Capitalism, Korten, who taught at Harvard University and who spent decades as a development consultant in Asia, Africa, and Latin America, tells us why he thinks we are on a very wrong road. To his way of thinking, we are not even in a free market at all. He writes: "For those of us who grew up believing that capitalism is the foundation of democracy and market freedom, it has been a rude awakening to realize that under capitalism, democracy is for sale to the highest bidder and the market is centrally planned by global megacorporations larger than most states." In this latest book, Korten, who also authored When Corporations Rule the World, argues that we have gotten to the point where we have substituted money for life itself. He argues here, among other things, for stakeholder (rather than shareholder) control of companies. Those stakeholders include workers, managers, suppliers, customers, and members of the community where a company is based. Korten's plea is to bring economics back to a human scale and to infuse lives with more than material concerns.

We now journey from broad visions of the future to practical stock investing in the present tense. First, there's the newest offering from the brothers Gardner, David and Tom. They are better known as the founders of The Motley Fool, the popular finance and investing Web site that's now branched into a multi-media enterprise. With two top-selling books for the individual investor already under their belts, the Gardners are back with a third. Their reputation for clever writing and clear explanations remains intact. The new book, The Motley Fool's Rule Breakers, Rule Makers, is about picking stocks.

Plenty of financial services professionals will warn investors away from picking individual stocks, arguing that the broad diversity and professional management available through buying mutual funds is the better course. The Gardners beg to differ. They write: Our thesis for this entire book is that individuals will, on average, spend less time worrying about money, have greater control over their destiny, and substantially improve their results, if they choose common stocks over mutual funds. In addition to being no friends of mutual funds or stockbrokers, the authors don't think much of the financial press. In fact, while spelling out the criteria for rule breaking stocks, those securities likely to outpace the market, they say that discovering that the financial media thinks a stock is grossly overvalued is a good reason to like that very stock. For a stock to merit rule breaker status it must, among other things, be on top and a first mover in an important, emerging industry; it must have a sustainable business advantage; strong past price appreciation; smart management and good backing; and strong consumer appeal. Traditional measures of stock valuation don't fit into this admittedly more-art-than-science approach.

The second half of the book is devoted to identifying rule makers. Those are the companies that essentially have graduated (not all do) from rule breaker status to now dominate their respective industries. Numerical evaluations play a larger role here. Among the numbers the authors advocate you peruse to identify the true rule makers are net margins and gross margins and cash-to-debt ratios. Also, the authors write, these winning companies are focused on mass markets and lock out the competition by selling to the world's daily habits, generating enormous cash flows, believing that their dominance will only come over the long haul, and fairly representing their progress to shareholders. The Gardners offer plenty of examples of flesh-and-blood companies for both categories.

Technology stocks of all types have been high fliers of late. Every Investor's Guide to High-Tech Stocks and Mutual Funds, Second Edition by Michael Murphy is a thorough and thoughtful guide to every aspect of the technology phenomenon. Yes, there's a separate chapter on Internet stocks. Mr. Murphy is the editor of the California Technology Stock Letter and has been an observer of the technology scene for nearly two decades. He makes a strong case for how technology is taking over the economy (strong research and development coupled with falling prices). He also notes that despite all the attention nominally paid to technology, Wall Street professionals still spend a disproportionate amount of time analyzing traditional industries. In addition to doing a good job explaining the various sectors of technology and medical technology, Mr. Murphy offers specifics on investment techniques, individual stocks, and mutual funds.

Ah, youth. Just getting started in the business world? Wondering how to start? Here's a sampling of new books to get you going. There's Reality 101: Practical Advice on Entering and Succeeding in the Real World (Simon ∧ Schuster, $12, 0684846527) by Fran Katzanek. There's also Knock 'Em Dead 1999 (Adams Media Corp., $12.95, 1580620701) by Martin Yate, which boasts great answers to over 200 tough interview questions. And The Future Ain't What It Used to Be: The 40 Cultural Trends Transforming Your Job, Your Life, Your World (Riverhead Books, $14.95, 1573227188) by Mary Meehan, Larry Samuel, and Vickie Abrahamson. And a success story, The CDNow Story: Rags to Riches on the Internet (Top Floor Publishing, $19.95, 0966103262) by Jason Olim, with Matthew Olim and Peter Kent. The cover says it tells how two kids in a basement grabbed the online music business.

Neal Lipschutz is managing editor of Dow Jones News Service.

As the free market economic machine ascends ever higher, through the rubble of Communism and the default of Russia, despite the Asian financial crisis and in the face of the Internet craze, we approach a crossroads. The big question can be boiled down to this: Are we on the right path? Is an ever more […]
Review by

Even in the seemingly dry world of money and economics, you can't get away from human psychology. Confidence levels (how they're feeling about the future) among corporate leaders determine investment spending and hiring. Indeed, between business reticence and consumer hesitance, we are quite capable of talking ourselves into a recession. One need only glance at the volatility and quick declines in financial markets earlier this year to know investors sometimes let fear and even panic direct their actions. We can keep improving technology and business efficiency, but human nature and psychology are tougher nuts to crack.

The brain and its relationship to money is at the heart of Money Talks: Candid Conversations About Wealth in America by Robert Koppel. Mr. Koppel has had a fascinating career that includes stints as a VISTA volunteer in the inner cities of America and as a hugely successful futures trader in Chicago who subsequently lost his fortune. Looking back at his roller-coaster financial ride, he writes: For me it [money] is both a responsibility and an obligation. I also am convinced that I needed to lose my money in order to find its proper role in my life. Money is not only a medium of monetary value, but an expression of personal values. In addition to his own briefly told money story, Mr. Koppel interviews a couple dozen people about their attitudes toward and relationship with money. He asks about their earliest memories of money, how it was treated in their families while they were growing up, and about their current attempts to put money in its proper place in their lives. The interview subjects inhabit a wide range of occupations. They are universally intelligent and honest about a subject not often discussed in public. They range from successful financial markets traders to a judge to an office manager to an art historian to a professional gambler. Some themes emerge from the interviews. There is a yearning for simpler lives. Most of the interviewees are not young people just starting out, so they have a sense of perspective about money and note that it doesn't have the power for happiness they may have falsely ascribed to it when they were younger. Read separately or together, the interviews and Mr. Koppel's conclusions offer interesting insights into the role of money in people's lives.

Cloe Madanes takes her shot at the connection between mind and money in The Secret Meaning of Money: How to Prevent Financial Problems from Destroying Our Most Intimate Relationships. The family therapist (with her brother Claudio Madanes as co-author) ranges widely in this book to show how money issues (broadly defined) can threaten marriages and parent/adult-child relationships. The authors write: Most people don't even think of consulting a therapist when they are plagued by financial conflicts. Yet probably more marriages break up because of disagreements about money than any other reason. The book is kept interesting by the use of case studies, often married couples in different stages of life. One of the book's recurrent themes is that monetary conflicts between loved ones are often symbolic of deeper issues, such as a parent's attempt to control a child or one spouse's attempt to control the other. Some of the therapist's suggestions for resolving problems seem unusual. For example, when discussing problems of young couples, this advice is given: A troubled spouse should blame his or her own parents. The authors write: "All behaviors that are not appreciated by your spouse can be explained as originating in your childhood. Nothing unites a couple better than to have a common enemy. Your parents can help your marriage by becoming the objects of your blame."

Psychology and self-worth are also central to The Corrosion of Character: The Personal Consequences of Work in the New Capitalism by sociologist Richard Sennett. He's concerned not so much with money, but with what we do with the majority of our lives in order to obtain it work. Mr. Sennett presents an intellectually challenging picture of the downside of the new economy. Flexibility and nearly constant change are replacing the old rules of single-company employment and coherent careers. The professor of sociology at the London School of Economics and New York University ranges far in this enlightening and sometimes complex book. There are references to 18th-century French philosophers as well as intriguing here-and-now profiles of workers and managers. If the new economy can be summarized in the phrase no long term, the author posits, it spells trouble for the long-term human values most of us still hold dear; namely, loyalty, trust, and commitment. It is the time dimension of the new capitalism, rather than high-tech data transmission, global stock markets, or free trade, which most directly affects people's emotional lives outside the workplace, he writes. He finds the freedom promised by flexible work elusive if decentralized; multi-function work groups are still expected to meet ambitious financial goals set by a central authority. One particularly interesting part of the book details the author's trip to a Boston bakery 25 years earlier (which he wrote about in a different book). A quarter-century ago, the bread-baking was hard, sometimes dangerous work done by a unionized group of Greek immigrant men. Now the baking is computerized. The work force is polyglot and includes part-timers and some working on flex time schedules, but the workers now are not bakers. They do not know how the computers that bake the bread work. They only know how to manipulate the icons on the computer screens to operate them. Their relationship to the job is superficial. It is quite easy to walk away. Mr. Sennett writes, The work is no longer legible to them, in the sense of understanding what they are doing. The new economy is characterized by the need to constantly change with the shifting fates of companies, whole industries and occupations. Some people can and have thrived in this atmosphere (Mr. Sennett uses Microsoft Corp. Chairman Bill Gates as the poster boy for those who have mastered the new economy). But risk and historical discontinuity present significant psychological obstacles for many others. The author writes: An apprehension is an anxiety about what might happen; apprehension is created in a climate emphasizing constant risk, and apprehension increases when experience seems no guide to the present. Many writers have extolled the freedom and opportunity inherent in a more flexible, changeable economy. Give Mr. Sennett credit for running a bit against the tide and provocatively detailing the psychological costs of constant change.

All would agree the rules governing work and the economy are changing. Direct marketing consultant Dan S. Kennedy goes further, knocking down whatever behavioral shibboleths remain standing. His book is called No Rules: 21 Giant Lies About Success and How to Make It Happen Now. This lively book is filled with contrarian advice on how to succeed. Kennedy debunks the importance of creativity or finding a business idea that is unique. On the latter point, Mr. Kennedy writes, Comparatively few successful businesses are built or fortunes made because of the true uniqueness and inherent power of the product itself. Instead, it is the careful assembly of a collection of product, 'story,' advertising, marketing, and distribution factors. Basing much of the book on his own interesting experiences in marketing, Mr. Kennedy advises, among other things, You cannot afford to be humble.

Neal Lipschutz is managing editor of Dow Jones News Service.

Even in the seemingly dry world of money and economics, you can't get away from human psychology. Confidence levels (how they're feeling about the future) among corporate leaders determine investment spending and hiring. Indeed, between business reticence and consumer hesitance, we are quite capable of talking ourselves into a recession. One need only glance at […]
Review by

Securities markets have been volatile lately (to say the least), worrying people in all walks of life. But that volatility has had the most day-to-day impact on the working lives of the people who populate A Million a Minute: Inside the World of Securities Trading—The Men, the Women, the Money That Makes the Markets Work, by Hillary Davis. Traders are the people in the trenches of our financial markets (including those people in funny looking jackets screaming at each other in futures trading pits). They may trade for themselves, for the firm they work for, or execute trades for clients. Even in calmer times than these, it's not an occupation for the faint of heart.

Davis, a former fund manager at Barings Brothers in London, provides an upbeat look at traders, their history, and codes of conduct. She's talked to and profiles a lot of the big names in the trading world and explains how technology has (and will) radically change the workings of markets and, with it, the role of traders.

Neal Lipschutz is managing editor of Dow Jones News Service.

Securities markets have been volatile lately (to say the least), worrying people in all walks of life. But that volatility has had the most day-to-day impact on the working lives of the people who populate A Million a Minute: Inside the World of Securities Trading—The Men, the Women, the Money That Makes the Markets Work, […]

Sign Up

Stay on top of new releases: Sign up for our enewsletters to receive reading recommendations in your favorite genres.

Trending Features

Sign Up

Sign up to receive reading recommendations in your favorite genres!