Good things in a small package
By Alan Wallace
Published: Sunday, April 24, 2011
Ben Stein — economist, TV and movie personality, winner of the 2009 Malcolm Forbes Award for Excellence in Financial Journalism — brings his familiar and welcome humorous touch to investment advice in "The Little Book of Alternative Investments" (Wiley).
Co-written — as was 2010's "The Little Book of Bulletproof Investing" (Wiley) — with Phil DeMuth, a psychologist who advises high-net-worth clients as managing director of Conservative Wealth Management LLC, this new book focuses on "alternatives to all those other investments that lose money, like stocks and bonds and real estate." Covering both assets and trading methods and recommending specific investment vehicles, the book aims to provide a blueprint that minimizes investors' losses when economic times are bad and builds their wealth when times are good.
Following are excerpts from the Trib's phone conversation with Stein.
On humor's value for investors:
It does pay to have a good sense of humor because you're going to get kicked in the teeth by the mule so many times. ... Many's the day when the market had turned against me, and if I hadn't been able to laugh about it and say that I hoped someday I would be able to tell this story with a smile, I would have been feeling extremely, extremely bad. ... In '08 and ... early '09 I was just suicidal about the stock market. Being able to laugh about it and say to my wife, "Well, look, as long as we have each other, we'll be fine" — that was a good way to get through it. That, by the way, is an extremely good line to use on yourself and on your wife or your husband — "No matter how badly I've screwed up in our investing, if we have each other, we'll be fine."
On financial and economic illiteracy:
Well, first, money is a scary subject. Second, it takes a lot of study and a lot of experience to know much about it. ... I did my first investing when I was 12 years old. I bought a stock called Douglas Aircraft and I've been investing pretty consistently ever since, and I still make mistake after mistake after mistake after mistake. ... The difference between having knowledge and experience and being a novice is dramatic in terms of your results.
On too-good-to-be true claims:
If someone came to me and said either "I can predict the market with any kind of certainty" or "I have never lost money," I would laugh, I'd slap him on the back in a friendly way, shake his hand and leave. I'd never want to talk to him again.
On politics and investing:
You can't predict politics, you can't control politics, we never know the results from minute to minute in politics, and there's no point in trying to control it at all, whatsoever. We're perfectly happy if we can pick good investment ideas, suggest them to people, and over long periods of time — even if there's very, very poor economic guidance from government — you should do OK.
DO'S & DON'TS
In their new book, Ben Stein and Phil DeMuth discuss what makes various alternative investments good or bad. They advise staying away from:
• Collectibles — "Collect for love, not money."
• Private equity — "Private equity falls into two broad categories: venture capital and leveraged buyouts . They are alike in that they are both illiquid investments that will tie up your money for years."
• Structured products — which "are carefully structured to make money for the people who sell them, at the expense of the unfortunate individuals who buy them."
• Precious metals — "If you are a king or a pirate, you should have a chest full of gold. If your name is Auric Goldfinger, you will want a Rolls Royce made of gold, because you love only gold. In other cases, however, the need is less compelling. ... The fact that it has gone up a lot recently does not mean that it is going to continue going up even more."
Commodities (via the futures market) and real estate investment trusts (REITs) are among alternative investments that Stein and DeMuth recommend. They also advise emulating hedge-fund strategies — "exploit small market anomalies, the sea shells left on the beach by the ocean of efficient markets" — and always remembering that any investment involves risk.
SHELF LIFE: FIRST, CHRIST; THEN, CHRISTENDOM
Today, Christians celebrate Easter — their holiest day, marking Jesus Christ's resurrection. Yet Easter's both spiritually and historically significant, for without Easter, neither Christianity nor Western civilization would be what it is.
Without Easter, Christianity likely would not have evolved from outlaw cult in the eyes of the Roman Empire to center of religious and political power in the guise of the medieval Roman Catholic Church. "Christendom" probably wouldn't have become a synonym for Western civilization. And the fraught history of Christian-Muslim relations might well not include events ranging from the Crusades to 9/11.
American history — particularly our struggle to properly balance church and state — almost certainly would be very different without the Reformation splintering Catholicism and fostering numerous denominations, Enlightenment thinkers elevating reason over faith, and religious arguments against slavery.
Explore Christianity's influence on today's world with the following titles, selected especially for A Page of Books readers by manager Karen Rossi and her staff at Carnegie Library of Pittsburgh's Downtown & Business branch.
Cities of God: The Real Story of How Christianity Became an Urban Movement and Conquered Rome
by Rodney Stark (HarperCollins, 2006)
God's Battalions: The Case for the Crusades
by Rodney Stark (HarperOne, 2009)
The Last Crusaders: East, West and the Battle for the Center of the World
by Barnaby Rogerson (Overlook Press, 2011)
What Has Christianity Ever Done for Us?: How It Shaped the Modern World
by Jonathan Hill (InterVarsity Press, 2005)
So Help Me God: The Founding Fathers and the First Great Battle over Church and State
by Forrest Church (Harcourt, 2007)
American Jesus: How the Son of God Became a National Icon
by Stephen Prothero (Farrar, Straus and Giroux, 2003)
Faith and Politics: How the "Moral Values" Debate Divides America and How to Move Forward Together
by John Danforth (Viking, 2006)
God and Country: How Evangelicals Have Become America's New Mainstream
by Monique El-Faizy (Bloomsbury, 2006)
Head and Heart: American Christianities
by Garry Wills (Penguin Press, 2007)
The Great Awakening: Reviving Faith & Politics in a Post-Religious Right America
by Jim Wallis (HarperOne, 2008)
A Nation in Crisis: The Meltdown of Money, Government, and Religion
by Larry Bates and Chuck Bates (FrontLine, 2010)
NEW PAGES TO TURN
The Big Scrum: How Teddy Roosevelt Saved Football
by John J. Miller (Harper)
The controversy over Pittsburgh Steelers linebacker James Harrison's punishing hits was a minor flap compared to what went on more than a century ago. Football then was a college game -- a derivative of rugby, lacking universally accepted rules, helmets and other protective equipment, and decades away from its ascendancy as a professional sport. Numerous, widely publicized and horrific player injuries -- and dozens of deaths -- prompted early Progressives led by Harvard University's president and the editors of The Nation to advocate football's abolition. President Theodore Roosevelt, who'd been a sickly child and too small to play college football but promoted "the strenuous life," thought football worth saving. He brought the Harvard, Yale and Princeton coaches to the White House, and the NCAA, forward pass, line-of-scrimmage neutral zone and other reforms resulted. Author John J. Miller, national correspondent for National Review, draws on Roosevelt's papers in the Library of Congress, plus Harvard and Yale archives, to tell the tale of how those changes came about, enabling football to become America's most popular sport.
The Seamless City: A Conservative Mayor's Approach to Urban Revitalization That Can Work Anywhere
by Rick Baker (Regnery)
Rick Baker draws on his 2001-10 tenure as mayor of St. Petersburg, Fla., to offer prescriptions for reversing American cities' decline into red ink, employee layoffs, service cuts and tax hikes. By "seamless," he means that no part of a city should be "a place where you do not want to be" and that all parts of a city should be safe, clean and have "the services, retail and public infrastructure" its residents need. He urges "advancing the entire city by addressing the needs of its parts" and writes favorably of his experiences with creation of such amenities as bike paths and dog parks. Baker likes measurable results from easily understood strategic plans, downtown areas as business lures and job creators, improving services while cutting government jobs and taxes, and mentoring of public school students. The fact that Baker, a conservative Republican, succeeded as mayor of a city where Republicans make up less than 30 percent of the electorate lends credibility to his policy ideas, grounding his book firmly in "real world" practicalities.
A Page of Books, written and compiled by Alan Wallace, appears on the last Sunday of each month.
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