Reject Status  -  Embrace Wealth

Borrowing on former Federal Reserve Chairman Allen Greenspan's admonition against the stock market's mania in late 1996, Professor Shiller provides an Economist's perspective on the housing boom that America was experiencing during 2003-2005. In short, he predicted much of what has occurred in 2007 and 2008 . . . and will likely occur in 2009. News sources have turned to the Case-Shiller Index of housing prices since the housing debacle began to better understand the depth of the national problem. In his book, Shiller drives home the cold, hard facts of economics and housing prices: they could not be sustained at the rates that were being reported (at least in many metropolitan areas). Dr Shiller expounds on nearly a century of data that indicates long-term housing prices barely climb enough to keep up with the annual inflation rate in many areas; and in the better advancing areas, the annual average gain in price is not but a few points ahead of inflation. This is a recipe for disaster where people were buying, trading, and borrowing for homes based upon double digit price growth expectations. If you'd like to understand just what a housing-based debacle the United States has gotten itself into, you should read Shiller's book to comprehend the baseline for where we ought to be.

Every individual who earnestly seeks true wealth must read this book. The most compelling reason for this moral imperative is that the authors shatter multiple, commonly-held myths about who among us in the United States is truly wealthy. The hype and glitz portrayed on television is seriously misleading; and the spending excesses (think Luxury SUV) contrived on credit by many people would otherwise deceive a majority of Americans into thinking that wealth is simply beyond their grasp. Nothing could be further from the truth: there is a comparatively small group of Americans who are willing to forego spending excesses and use their resources to grow wealthy. Professors Stanley and Danko demonstrate through hard-nosed facts just how this is being done in the United States.

 

Professor Sowell gives an unapologetic account of too many peoples’ misconceptions about Economics. As quickly as page 2, he derides those people who whine about not having enough money, when they clearly do not understand the concept of scarcity (complaining to a New York Times reporter about their financial woes while lounging in their backyard swimming pool). Basic Economics is written specifically for the non-Economist; the concepts are all economic… but it lacks the typical mind-numbing jargon one has come to appreciate with math-centric Economists. Without a doubt, the reader will gain a clear understanding of the role prices play in our economy, the meaning of scarcity and alternative uses of resources, and many other fascinating financial facts… like why landlords have, at times, freely abandoned property that they owned in New York City.

Mr Bach’s seminal contribution to the personal financial world is his clear and compelling case of the middle, or lower-middle income couple who became millionaires by automating their retirement savings. The automation process is itself impressive; however, it is the riveting account of the American couple with no specialized financial education and no treasure trove to draw from (relatives, a lottery ticket, etc.) that will quickly endear the reader to this author’s writing and message.

 

 

 

Professor Benjamin Graham is best known as the sole mentor to billionaire investor Warren Buffett. Graham was also an outstanding investor in his own right, having established a record on Wall Street that was matched by extremely few in the 20th Century. Graham lays out the fundamentals on stocks and bonds in The Intelligent Investor, a primer that no financially savvy individual should miss. He provides guidance as to how to treat investments; and it is this guidance that you simply cannot get from the typically financially-interested “advisor” that you might hire today.

 

 

Professor Thorstein Veblen was a man ahead of his time. In his 1899 classic, he coined the phrase “conspicuous consumption”; this is a phrase that resonates throughout the United States today. Veblen recognized that people attempt to impress strangers with objects of success, so as to confer upon themselves a certain status. Veblen also recognized that this leads to a self-defeating cycle of spending. In the 21st Century, it most often leads to a cycle of debt-based, credit card spending excesses. [Caution: This classic on personal finance was written in 1890s prose. Additionally, Veblen spends a fair amount of time dissecting ancient societies and “trophy wives”, etc., before getting to the main financial issues. However, the main points are so important that the book still comes highly recommended.]

Mr Kiyosaki speaks to the reader in a refreshingly frank manner through his character, Rich Dad. Alternatively, Poor Dad, which is Rich Dad’s alter ego, is an ostensibly successful, highly paid, individual who never quite understands money, capital, or our economy. Rich Dad, by contrast, is wise on the workings of investments, capital, lending, and general entrepreneurship. By reading this book, you can learn how one true investor views the world; this stands in sharp contrast, at times, with the worldview of many high-income, but financially ignorant people who call themselves “investors”… simply because they have money available for someone else to place for them.