Sunday, December 21, 1997

Sunday, December 21, 1997

Sunday, December 21, 1997

Personal finance books arrive with wealth of money-making secrets

By TERESA MCUSIC / Knight-Ridder Newspapers

Here are my favorite personal finance books. (Something we'll need to look at when we see all of our holiday bills in January.)

-- "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" (Longstreet Press, 258 pages, $22), by Thomas J. Stanley and William D. Danko.

These two writers and academics spent 20 years studying the wealthy in America and how they got that way. The studies include interviews with more than 500 millionaires and surveys of thousands more.

Among the "secrets" of the wealthy, Stanley and Danko found that they are practical people who are conservative with their spending habits, living well below their means. With no dependent dragging, either from adult children or unhealthy parents, millionaires also tended to be good at targeting market opportunities and choosing lucrative occupations.

Not rocket science, but advice many could learn from.

-- "Everything You've Heard About Investing is Wrong: How to Profit in the Coming Post-Bull Markets" (Times Business, 193 pages, $24). Written by bond investment guru Bill Gross, the book says the "Era of Money" with double-digit returns is about to be replaced with the "Era of Six Percent."

Gross notes that the long bull runs enjoyed in both the stock and bond markets were caused by a unique combination of sharp increases in corporate profits and near-historic drops in inflation. Both caused compounded rates on money of 15 percent to 20 percent.

Depressions and market crashes are not in his forecast, however. Instead, Gross sees the economic environment producing yields of around 8 percent for stocks and 6 percent for bonds in the next three to four years. --"The Wall Street Journal Book of International Investing: Everything You Need to Know About Investing in Foreign Markets" (Hyperion, 330 pages, $24.95).

Last year, Americans invested close to $1 trillion in stocks and $600 billion more in bonds of companies in foreign lands.

Authors John A. Prestbo and Douglas R. Sease, editors at The Wall Street Journal, discuss how investing in the global market can outperform domestic markets, as well as how to get into these new markets.

The book is thorough and detailed, but highly readable. It's also an interesting look at the amazing mix of countries making up this global marketplace.

-- "Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor" (Scribner, 320 pages, $27.50).

"Folly and discipline are the key elements of Warren Buffett's philosophy of investing -- other people's follies and Warren's discipline," write insiders Mary Buffett and David Clark in their book about the Nebraska-based investor who is worth about $20 billion.

One way this book distinguishes itself from other looks at Buffett is from its perspective. Mary Buffett was married to Warren's son, Peter, for 12 years. Now chief executive of a film editing company in Santa Monica, Calif., she collaborated with David Clark, a longtime friend of the Buffett family and a portfolio manager and attorney in Omaha, Neb.

Together, the team tackles Buffett's simple, yet multi-faceted investment strategy, which has given him an annual rate of return of 23 percent for three decades.

The technical term for Buffett's strategy is "business perspective investing," but it boils down to nothing more than sound, rational, educated guesses of how individual companies will perform in the future.

Buffett looks at the numbers on a company and invests as an "owner" would, the authors write. He wants a company with a consumer monopoly of some kind with continuous per-share earnings growth. And he holds onto it for a long time.

That's my list. Happy money-making.

BLURBS:

-- "Entrepreneur Magazine Guide to Raising Money," by Entrepreneur Media; John Wiley & Sons, $19.95

There are a number of financing outlets besides your parents and credit cards. This book, researched and written by the staff at "Entrepreneur Magazine" shows you how to find financing -- everything from seed capital for development and research to expansion funding. A discussion of the Small Business Administration lending program is also included, as are public offerings and Internet financing.

n "Marketing Your Consulting and Professional Services," by Dick Connor and Jeff Davidson; John Wiley & Sons, $34.95

This third edition had to be written, the authors tell us, because the marketplace is changing so rapidly. Although targeting a special group of clients for your services is still the most profitable way to build a business, those target markets are trying to squeeze out profits with less. This could be to the consultants' favor, however, as outsourcing becomes even more obvious. Finding your niche and serving it is the focus of this book.

-- "Fabled Service: Ordinary Acts, Extraordinary Outcomes," by Betsy Sanders Josey-Bass, $15

Betsy Sanders, formerly a Nordstrom vice president and general manager and now a consultant, drew heavily from her Nordstrom's experience for this book. Providing fabled service such as Nordstrom's is the point of the book. Sanders discusses how this goal is attained by listening to the customer, designing the company's whole system around the input and empowering it by leadership.

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(Teresa McUsic reviews business books for the Fort Worth Star-Telegram.