Review of Financial Engineering Principles: A Unified Theory for Financial Product Analysis and Valuation (Wiley Finance) (Hardcover)

Good reading.Beaumont has shown how useful and insightful it can be to approach markets from the viewpoint of financial engineering as well as how to innovatively think about risk and return in an everyday portfolio management context. Well, I found the book to be very well written, concise, logical, and plain smart.



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Review of Welfare Brat: A Memoir (Hardcover)

Intimate and powerful, Mary Childers' memoir of growing up in urban poverty in the 1960s Bronx leaves haunting images in its wake. Though arising from the usual sad litany of poverty - alcohol, drugs, unpredictable tempers, frightened children, abused women and dangerous streets - these images are singular, personal and painfully complex.

Like the time they had their roach-infested basement apartment painted, because a guy who owed the older sister's boyfriend a favor sent his crew over (this sister, Jackie, a high school drop-out, is already following in her mother's footsteps). Their mother, Sandy, exuberant at the prospect, drags the furniture away from the walls and urges the whole family to paint pictures of their own, whatever they want before the painters come to cover it up.

On the day itself, "no beer bottles in sight," Sandy takes them all to Coney Island, a trip which involves dragging cooler, stroller and duffle bag on two packed trains, where casual violence is always a danger. "Virtually every family on the train designates a hawk to detect the danger zones where action might flare....Everyone knows what happens if you interfere with teenage boys proving their manhood."

Though the lunch is only PB&J, "I'll be happy as long as Mom doesn't buy beer or, even worse, flirt one out of an innocent bystander." She doesn't and the day is idyllic. They take turns guarding the blanket. "I welcome my turn to guard our stuff. Reading on the beach without any of the kids bothering me is one of the most peaceful events of my life."

Sandy caps the day by taking the whole family on the roller coaster. Her glasses fly off in mid-whoop but her daughter Joan snags them in mid-air. Unfortunately a lurch slams her hand on the bar and a lens pops out. "Oh boy, wait until Mom sees this. She'll lose her temper. The day will be ruined....Mom believes Joan saved her glasses, and Joan and I dread admitting the truth. Joan squeezes back her tears as she rubs her hand with pain and worry." But the charmed day persists. Sandy's left eye is glass and it was the left lens that was lost.

Sandy is a mercurial figure who envelops her surviving seven children - six girls and one silent, outnumbered, beleaguered boy - with love, pelts them with curses, and leaves them hungry while she goes off partying. The atmosphere in their dank crowded apartment seesaws between giddiness and rage. And yet, suddenly, when one of the girls is hit by a car, Sandy promises God to quit drinking if the child survives - and does.

Not that her children trust the transformation. And the grinding cycle of poverty remains unbroken. Worn out by so many pregnancies and "bad habits" Sandy works even less, eking out their living on welfare alone and whatever her children contribute. While the fate of Mary's sisters remains precarious, her own determination is never in doubt.

"Most of the time I tell myself that my family feels like a lifeline, not a prison sentence, but I always have one eye on the door."

She is the one who insists on going to school, who braves any amount of resentment and ridicule to stay on the college-bound, escape-bound path. Taunted and persecuted by neighborhood kids as well as her mother, and even teachers sometimes for her welfare-brat clothing, Mary seldom wavers, as desperate as she is for friends and approval. An adrenaline-spiked stint with a neighborhood gang ends in shame when a boy's sneer jolts her back to herself. These kids are mean, racist bullies, she realizes. "I rolled in laughter when I should have been racked with guilt."

There are many threads that weave through Mary's story, but the cyclic, self-perpetuating nature of poverty is the strongest. There is one message children like her read loud and clear every day: "People who speak well and read widely may be admirable, but if you stand out, you'll be picked out. You're inviting trouble and loneliness when you distinguish yourself from your own by choosing to care about good grades, books, accents and magazine clothes.... Against my will, I've absorbed resentment and the nagging perception that my ambitions are disloyal, and worse, punishable."

Against the turmoil of the times: the assassinations, from JFK to MLK; the race riots and rampaging gangs; the fear of crime on the subway and on the street; the stigma and inadequacy of welfare, Mary keeps her eye on the prize - college. Escape. Her tumultuous, wrenching, sometimes funny story knocks home a serious lesson about the cycle of poverty. It takes more than brains, talent and hard work to escape the underclass. It takes steely determination, a tough shell and a willingness to go it alone.

- Portsmouth Herald



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Review of How to Profit from the Coming Real Estate Bust: Money-Making Strategies for the End of the Housing Bubble (Hardcover)

SUMMARY:

I personally think the advice about "profiting" from the bust in this book is mostly worthless, indeed possibly even dangerous, but the arguments about whether there is a bubble & how to recognize it IMO are better.

DETAILS:

The first half of the book (which another reviewer suggests you could skip -- !!!) is actually the most useful IMO.It gives a general summary of the reasons that suggest current housing prices are unsustainable.The arguments are not very complex in construction, but I don't fault the book for it, I think it has a target audience, and that is the general public, not the subset who have a firm grasp of macroeconomics & math. My biggest gripe with this part of the book is that he expresses some facts in a misleading way, to my mathematically semi-sophisticated eye. For example, on p. 62 he has a graph of total US debt and GDP vs. a 45 year time axis. To the "untrained eye" (and he supports this impression in his text), it looks like debt is growing much faster than gdp. This impression is created by the fact that both are under $5trillion in 1957, and by 2002 gdp is $10t and debt around $34t. However, I suspect if you graphed the RATIO of debt to GDP (which is really the issue, what multiple of gdp is debt, i.e. very roughly, how many years of earnings collectively would it take to pay it off), you'll see the ratio MUCH higher at the start of the period than now, you'd probably see a decline in the graph slope for many years, then maybe an increase starting around 1985, based upon an eyeball evaluation of the two curves. That would have been a MUCH more meaningful graph, a more useful historical perspective. Maybe he thought that too abstract for his intended audience, being a derivative of the data (change over time in the rate of change of the ratio), but in this particular case I believe he has made more out of those historical numbers than is really warranted.The problem for me is, when you see that once you start to trust less all the rest of the arguments he makes, you instead find yourself wondering "what did he leave out or misrepresent this time?"But with that caveat, this is still the best overall attempt to make a case for a housing bubble, with the possible exception of a "Special Survey" done by the magazine Economist on 5/29/2003, which looks at the issue from an international perspective.

The last 1/2 of the book (the ostensible purpose, "how to make (or save) your money when the bubble bursts") seems even less well thought out. I'm not a professional investor, but I have been doing it a couple decades now & I came out of reading this book with very few viable (IMO) ideas on how to achieve what the title promises. For example, buying cash rich companies -- he lists msft, csco, intl, dell, nok. This advice is totally bereft of the context of stock price or p/e, and I'm sorry, a dollar is worth a dollar, and you can't say a company with cash is a good buy without even referencing how much cash you will pay for that cash!!!The suggestion of convertible bonds is also curious, I admit I have not looked at them much in my years, but my intuitive reaction is, won't these only do better than normal bonds as the stock price INCREASES (i.e. as it approaches the conversion price?), these bonds pay a lower rate & make up for that with the option to convert to shares at a fixed stock price. The value of that conversion option drops with the stock price (indeed for convertibles close to strike price, stock price changes are MAGNIFIED in the convertible pricing). So if what he suggest comes true, convertibles will be a WORSE buy than plain old bonds, overall.(maybe he suggests convertibles just as a safer alternative to stocks, and not necessarily better to buy than plain old bonds?If that's what he meant he should have SAID it though).And regarding gold pricing -- I actually have one raw gold producer that he mentions on my watch list right now, they are a major player in many other metals markets as well (copper, silver, etc). Having that POV, I can tell you that he has totally ignored the whole question of decreased industrial demand that would come with the kind of financial catastrophe he envisions, very relevant given the exposure this particular stock has to these other metal productions. Heck that is the reason that I am still on the sidelines, reduction of demand in China (which is creeping up in the news more in recent weeks as they attempt to engineer a "soft landing" to a badly overheated economy) could totally take the floor out from underneath a lot of these raw material producing companies.

Finally, while by no means suggesting this is a fair way to evaluate his advice in this second half of the book -- since the whole argument is predicated on the collapse of the housing market, which has not (yet) happened -- it should be noted that a quick review of many of his suggested strategies shows that anyone following his advice in the one year approx since he finished writing it (he mentions this being the beginning of June 2003) would have vastly underperformed the market, or even lost money, in the interim.

So, in short, I find the first half the book (is there a bubble, why) a pretty good introduction to the argument for it, not perfect, but perhaps the best one out there. I find the other half (what will happen to the economy when it bursts, how to profit/protect yourself from it) very much unsatisfying, and I am stuck where I started, thinking "I think there is a serious risk here" but still unable to figure out how to translate this concern into concrete action for my own personal finances.

*** UPDATE 9/12/04: Since writing this review on 5/2/04, I have found and read John Talbott's book from 2003 on the same subject,
"The Coming Crash in the Housing Market : 10 Things You Can Do Now to Protect Your Most Valuable Investment."Having read that, I have changed the title of the review, & I would now change my statement in my review above that this book is 'perhaps the best introduction to the argument for a housing bubble out there.'I now believe the Talbott book is better, the statistics in that book are more carefully and rigorously presented, and do not seem to suffer from the misleading presentations you see in this book.In other words, although both books make essentially the same argument, the Talbott book makes it more completely & convincingly.



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Review of MEGACHANGE: How Today's Leading Companies Have Transformed Their Workforces (Hardcover)

The title of this book could have been "putting people into the heart of the organizational change equation." In its well written pages, the author shows how to engage, liberate and develop an organizations's humanpotential.

MegaChange describes a process of transformation based onassumptions of human capability, rather than limitations. The approachfocuses on people (below the top) and assumes that they have valid input,can be trusted, and can play a vital role in the change process. Key themesare: greater emphasis on human values, goals, capabilties, and efficacy;placing people at the center of strategy, structure and systems;approaching change from a top-down-bottom-up sequence of developmentactivities, involving two parallel, synergistic efforts: (1)strategy-driven, organization-wide transition in systems and structures and(2) a transformation in culture, beginning with the workforce.

The mainbody of the book is devoted to explaining this change process. This workprovides an excellent perspective on the nature of organizational changeand presents an approach to change that, based on my own consultingexperience in this area,should be read-and given thoughtfulconsideration-by top executives. Highly recommended. Reviewed by GerryStern, founder, Stern & Associates, author of Stern's Sourcefinder: TheMaster Directory to HR and Business Management Information & Resources,Stern's CyberSpace SourceFinder, and Stern's Compensation and BenefitsSourceFinder.



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Review of A Vision for 2012: Planning for Extraordinary Change (Hardcover)

Well here is yet another 2012 book. Don't get me wrong - this is far better than most. John Petersen outlines his view of what is going wrong, what the possible scenarios are, and what directions might prove resourceful. The problem is of course that most of the things he suggests will not show up on the "radar" for most people.

There are some contradictions and fact-related problems in the book. On the one hand Petersen admits (quoting Ilya Prigogene) that no one can predict the future and that unique, novel emergents can arise that "save the day" so to speak. He never considers though that unique, novel emergents may arise that solve some problems while not fundamentally changning the power structures (e.g. a new way to make internal combustion engines so efficient that the oil reserves we have would last 5 times longer than anticipated).

Petersen also speaks glowingly of progress (with some justification) but seems to ignore the problems with things like cloning, cold fusion, and saltwater agriculture.

In the end I'd say this is a book worth reading though because it is concise and in being concise helps the reader make her or his own position an object of awareness. And once you know where you stand on some of these issues, you know what you're willing to try.



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Review of Maverick Real Estate Financing: The Art of Raising Capital and Owning Properties Like Ross, Sanders and Carey (Hardcover)

This rating is based on how well the book met my expectations. If you are honestly ready and focused on joining the ranks of Zuckerman, Shorenstein, Zell, or Trump, then a book like this might serve well as a type of guide post. You would then be dealing with projects in the $100 million plus range. If, however, your focus is on the lower end of the spectrum ... like financing apartment buildings under $5 million - with or without the aid of an investment group - you will not gain much in the way of practical knowledge from this book



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