As the Spencer Tracy character observes of the Katharine Hepburn character in one of their early films, there isn’t a lot of meat on those bones, “but what there is is cherce.” The same might be said—well, anyway, I choose to say it—of this year’s must-read books: There aren’t many of them, but the ones there are simply demand to be read by advisors seeking a deeper understanding of the past, of the future, of the business and of themselves.
1 Paul Volcker has always been a particular hero of mine; he was the Fed chairman who—virtually alone and under the most intense pressure to relent—broke the back of the hyperinflation of 1979–82, then all but forced Congress into adopting a balanced budget initiative, and thereby ushered in the prosperity of the 1980s and ’90s. Like his father and namesake, Volcker was a true public servant—his family’s financial struggles during his Fed chairmanship were quite terrible—and as much as or more than any other person (including Ronald Reagan), he established the conditions for the biggest bull market of all time.
Thus I’m delighted to report that he has finally gotten the definitive biography he deserves (and while he’s still around to enjoy it). It’s Volcker: The Triumph of Persistence by William L. Silber. Silber is a professor and scholar at the Stern School of NYU, and has labored over this book for five years. The result is a financial perhaps more than a personal biography; it ends up being an immensely lucid and readable monetary history of the United States, from the breakup of the Bretton Woods formula through Nixon’s closing of the gold window to the slowly gathering but ultimately horrific inflation that ensued—with Volcker emerging as Horatius at the bridge.
It may seem impossible to today’s advisors that well within the lives of their older clients (and colleagues) the world operated on a system of fixed exchange rates anchored by an American dollar that was itself convertible into gold at a fixed rate. The crackup of that system becomes in effect the education of Paul Volcker. And as we watch him struggle to master this uncharted territory, we can get our own extremely practical and useful monetary education. This is a splendid book, written by a scholar who loves, understands and honors Volcker, and who invested five years so that posterity might fully appreciate the significance of his achievement. If an advisor could only read one of the books in this column, Volcker should probably be it.
2 It has been a constant theme of my newsletter this year that advisors (and their benighted clients) who are obsessed with the inevitable crisis of the euro, and with the slow growth/high unemployment environment in this country, are missing the real story, which is the explosive growth of the global middle class. (This is reflected nowhere more vividly than in the record earnings, cash flows and cash positions of the great companies, which is why the equity market has done so well in spite of doom-and-gloom public psychology.)
Thus, one of the most important books of the year is Jim O’Neill’s The Growth Map. Jim is the originator and codifier of the concept of the BRICs—the four countries whom he identified 10 years ago (Brazil, Russia, India and China) as potential engines of a vast new wave of global growth and prosperity. When Jim and his Goldman Sachs colleagues did this work, the subsequent success of the BRICs—and its galvanic effect on the global economy—were highly speculative and very much open to question. Yet in every case, reality has exceeded their initial projections.
Jim invites us in this new book to consider the maturing of the BRICs as well as the possibilities inherent in what he calls the Next Eleven, led by South Korea, Mexico and Turkey, with Indonesia and the Philippines in a second tier. But beyond that, he suggests we rethink our whole concept of “emerging markets,” preferring to characterize them as new growth markets, and to look at them not just as the next wave of low-cost manufacturers/exporters, but as massive new consumer markets, with huge implications for global trade and investment.
Along the way, we get to know an unaffected, down-to-earth, delightful guy—a fellow one would really like to know personally. I cannot recommend this very accessible treatment too highly.
3 You will certainly want to look seriously at the 2012 book Abundance: The Future Is Better Than You Think by Peter Diamandis and Steven Kotler. Theirs is not so much a unified theory of accelerating progress (along the lines of Matt Ridley’s indispensable The Rational Optimist) as it is a survey course in the literature of exponential improvement across several key fields, including artificial intelligence, information technology, robotics, energy, public health and even clean water. (The section on water is easily the best thing of its kind I’ve seen, and is alone worth the price of this book.)
Having lived their entire lives seeing nothing but exponential growth—any middle schooler with an iPhone 5 commands orders of magnitude more computing power than NASA had the night that Apollo 13 exploded in 1970—advisors and their clients still eagerly surrender to the counterintuitive idea that all the exponents have suddenly gone linear, if not nonexistent. This book (like Jim O’Neill’s, in its way) is thus as much antidote as it is elucidation.
4 Virtually all the literature of self-help is mind-numbingly vapid, and virtually all self-help books are the same vapid book. A rare and spectacular exception is Steven Pressfield’s classic The War of Art, which turned loose in me The Game of Numbers—the book about prospecting which I had been trying not to write for nigh on 40 years. (Full disclosure: Pressfield and I—born 40 days apart in 1943—have since become fast friends.) In 2012, Steven released the sequel to TWOA, titled Turning Pro.
It is a work of the same coruscating honesty as TWOA, and it’s as wonderfully, relentlessly, unsparingly challenging as is the original work—perhaps, in its own bracing way, even more so. Throughout, there are Steve’s very personal stories, which to me were what rendered TWOA so intensely credible—you couldn’t for a moment doubt that he had walked the floors of hell in search of his own authenticity and professionalism.
“What we get when we turn pro,” Steve says, “is we find our own power. We find our will and our voice and we find our self-respect. We become who we always were but had, until then, been afraid to embrace and live out.” Turning Pro is simply indispensable to the advisor struggling—as who of us is not?—to close the gap between his performance and his potential. Treat yourself to the peak experience of reading both books together, in sequence. You can do so on one rainy afternoon, and I’ll be surprised if the experience doesn’t change your life, as The War of Art changed mine.
5 Not a new book, but a wonderfully successful 2012 revision of an older one: Alexandra Armstrong is, as I assume everyone knows, the doyenne of American financial planning. I know of no one in the profession who commands (and deserves) more respect. Her friend Mary Donahue, PhD, is a practicing psychologist focused on family and women’s issues. What unites them is their experience of widowhood: Alex’s mother was widowed in straitened circumstances when Alex was 8, and Mary—who married a considerably older man, and acknowledges that he and she should have gotten her better prepared for this probability—was left financially clueless when he died.
Almost 20 years ago, Alex and Mary teamed up to write what was then, and remains today, absolutely the best resource for widows between the covers of a book, On Your Own: A Widow’s Passage to Emotional and Financial Well-Being. This year, the book became available in its fifth—and by far best yet—edition. (Every time I’m sure this book can’t possibly get any better, it does.)
The financial comfort and clarity offered by On Your Own are by no means its only virtues; it really speaks, as the subtitle implies, to the full spectrum of a woman’s needs. The financial journalist Terry Savage once wrote, “If someone you care about is widowed, don’t send flowers—send this book!” That’s especially good advice for the person who is or may become the widow’s financial advisor. I can’t think of a more appropriate or more genuinely helpful gesture you could make toward someone dealing with widowhood than to give her this humane, wise, practical book.
Books Of The Year 2012
December 2012
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It's great to have the Widows book to help my lady friends through this passage. Every month is a different form of healing when someone dies... It helps to face it and embrace it, so we can erase it and get through it!