Showing posts with label Rodale Books. Show all posts
Showing posts with label Rodale Books. Show all posts

2/20/2010

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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1/01/2010

Review of The Citi Commonsense Money Guide for Real People (Hardcover)

The book is well organized into three sections that deal with major issues in our financial lives.For those who find themselves in financial difficulty, the first section deals with practical solutions to problems from cash flow to debt management, offering very specific "commonsense considerations" imbedded in each chapter.The second section entitled "Basic Training" gives insight into many issues from budgeting to investing.Finally, the third section titled "Curveballs" considers those unique events in life that can derail any financial plan if not carefully managed.Events like budgeting between jobs, managing divorce, handling finances in blended families, death of a spouse and identity theft are some of the topics explored.The book is an interesting read because many real life stories are included throughout the book.We can all relate to the emotional issues represented in these personal stories and better understand how they can complicate our lives and work against our best financial interests.This book helps to cut through those complications and provide very specific action-oriented solutions.



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12/13/2009

Review of The Family CFO: The Couple's Business Plan for Love and Money (Hardcover)

Mary Claire Allvine and Christine Larson wrote "The Family CFO: The Couple's Business Plan For Love And Money" to help couples get their finances in order.

Allvine and Larson write: "Managing your money wisely means having a clear vision of 1) what you want to do-go back to school, have a family, start a rock band-and then 2) what you need to get there-money for tuition, financial security, an electric guitar. Most couples get this backward; they focus on financial assets (what they have) to the exclusion of their real goals (what they want to do), which makes it impossible to make wise financial decisions. Only by thinking about your life goals can you really make your money work for you."

We learn that money conflicts are the biggest source of fights between engaged people and newlyweds. The authors point out that money arguments between couples usually are about priorities. For example, the husband wants to start a rock band, while the wife wants to build savings.

To help couples resolve conflicting priorities, Allvine and Larson suggest couples take an annual retreat (OK, it could be at home), write down and share their dreams, and agree on a time frame for achieving their plans. The authors say couples must decide upon both an investment manager (someone to handle investments and insurance) and a cash manager (who budgets family expenses and pays the bills).

"The Family CFO" discusses seven key financial decisions couples face, including:

1) Managing debt, including student loans and credit cards. The advantages and disadvantages of pooling money are covered. Suitors learn to tell each other just how much student debt they have, to see if either the bride or groom will bolt for the door, when they hear "the number."

2) Deciding whether or not to buy a home and the process of purchasing one. This section includes solid information about choosing the right mortgage and a home-buying worksheet to help couples evaluate the costs of home ownership.

3) Changing jobs. This section includes the financial planning that may be necessary during a career change. As with each section, couples struggling with the decisions are featured and their reasoning evaluated.

4) Having children and can the couple afford them?The authors write: "If you had a baby in 2001, you will spend between $170,000 and $338,000 on the child over the next seventeen years..."

The cost of raising children is evaluated in detail. The authors break down typical expenses by day care, clothing, food, etc. A detailed "Kids Cost Worksheet" is provided. And, they address the question: "Is it really worth it to have both parents working, given the costs of day care?"

5) Planning for retirement. Allvine and Larson tell couples that retirement doesn't just happen, couples must make it happen. Building retirement wealth is covered.

Especially for couples without high earnings, Allvine and Larson suggest couples start saving early. They write: "What you lack in money you can make up for in time. The earlier you start saving, the less money you'll need to save every year to meet your goal-compounding interest will make that money grow exponentially over time."

6) Building emergency savings and getting insurance. A detailed worksheet is provided that evaluates things such as the stability of the couple's jobs to help them decide just how much money should be set aside for an emergency.

7) Crisis management during times such as job loss.

Overall, "The Family CFO: The Couple's Business Plan For Love And Money" provides good information for couples who want to learn more about managing their money together.




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11/18/2009

Review of Man's Guide to a Civilized Divorce: How to Divorce with Grace, a Little Class, and a Lot of Common Sense (Hardcover)

A divorce is rarely a pleasant experience. And during the past several decades, more and more Americans are going through just that experience. Many factors are involved in the increase in divorces in the United States, but it seems today that the most common complaint of the spouses involved is that one of the parties to a marriage is no longer happy with the other partner. This is in contrast to the usual complaints in the past of adultery, desertion, abuse, alcoholism, and so forth, which were the main reasons for one of the spouses (usually the wife) to file for a divorce. Since the 1970s and the beginning of the "no-fault" divorce concept, divorces have been easier to obtain and the divorce statistics have risen. But a divorce, regardless of the cause or causes, remains a painful experience for most people.

This book by lawyer and human behavior expert Sam Margulies is primarily for men, hence its title. It is designed as a guidebook for men who may be facing a divorce or thinking about a divorce. Tragic and unpleasant as getting a divorce may be, Margulies argues that it is possible to have a "civilized" divorce without the rancor and pain usually accompanying that process. What? A civilized divorce? Yes, that is exactly what the author proposes and he shows how to go about it through the procedure known as "mediation." The advantage of mediation in a divorce proceeding is that, for the most part, mediation keeps the process largely out of the law courts and generally out of the hands of attorneys who depend on an adversarial method for resolving problems.

According to Margulies, "The divorce mediation movement . . . began in the late 1970s when a group of reform-minded lawyers began to collaborate with psychologists and family therapists who were appalled by the carnage they were witnessing in the divorce courts." Over the past ten years, this movement has acquired momentum although it was, in the beginning, received with great hostility by many members of the legal community. The author, who has acted as a mediator himself in thousands of divorce cases over the years, has organized this guidebook for those who seek, then, what he calls a "civilized" divorce, beginning with how to choose a mediator in the first place -- and he includes specific pointers on what to look for in a mediator when searching for one.

A "good" divorce can be distinguished from a bad one, says Margulies, by considering the following six criteria: (1) an emotional divorce occurs, that is, the parties are no longer emotionally tied to one another through negative emotions; (2) both parties rebuild their lives, that is, they have succeeded in building new lives for themselves; (3) both parties think the agreement is fair; (4) the former spouses are able to cooperate as parents; (5) the children are comfortable in each household; and (6) the former spouses can resolve disputes themselves or through further mediation, not having to resort to the legal system regarding problems in the future. If this sounds like an idealized situation, an impossible dream, an unachievable goal, the author assures us it is not, and he provides dozens of practical illustrations based on real people and real divorces with which he has been associated.

Although Margulies devotes an entire chapter to an overview of divorce law, the major thrust of his book is providing advice on settling a divorce through mediation, without getting into an unnecessary and painful legal mess. There is, for example, practical advice on how to negotiate with the other spouse, how to handle the important matters of child support and alimony, a whole chapter on budgets and possible financial entanglements, and even advice about the dos and don'ts of dating after the divorce. He gets very specific about what self-defeating behaviors to avoid during the mediation process, such as shaming and blaming, acting helpless and passive, being threatening and intimidating, making personal attacks, and cutting off communication with the other party. Furthermore, Margulies provides positive tips for helping the negotiation procedure to be successful, beginning with the initial invitation to your spouse to negotiate through mediation, and continuing with tidbits like "listen more than you talk"; "affirm conciliatory gestures" -- when your wife agrees to something you want, it is important to affirm her for doing so; "pay attention to your tone"; if you are attacked personally by your spouse, don't take the bait; acknowledge your mutual interests and focus on minimizing differences; and, above all, think on the future, not on the past.

This is exactly the book I wish someone had written and I had read when I went through my divorce over twenty-five years ago. According to the criteria for a "good" divorce listed by Margulies in the early part of his book, my divorce process was not good and the divorce was certainly not "civilized." The advice given in this book might have made a real difference if it had been available. Although I have always thought (and continue to think) that divorce is a terrible experience for anyone to go through, the fact is that it is a possible reality for all married couples and an all-too-common component of the American social fabric in this postmodern age. As tragic and undesirable as divorce may be, at least it can be rendered less painful and, yes!, even "civilized," if the advice in Margulies' book is taken to heart and seriously followed. Highly recommended for those (especially the male of the species) who may be faced with the reality of a divorce and also for those within the legal system who may be advising divorcing clients. There is a better way and Margulies offers it to the reader in an easy-to-read text and format.



Click Here to see more reviews about: Man's Guide to a Civilized Divorce: How to Divorce with Grace, a Little Class, and a Lot of Common Sense (Hardcover)