Saturday, March 8, 2003
by Marvin Weiss
For investors who are quite rightly scared by stories of major New York Stock Exchange companies whose managers are charged with fraud (WorldCom and Enron, for example), theft from their companies (Tyco's Dennis Kozlowski), or tainted by allegations of insider trading (Martha) and more, this book is a kind of recovery pill. Mr. Weiss, who makes a business out of providing conflict-of-interest-free ratings and research on stocks and mutual funds, lists scandals, rates what he considers the large caps most vulnerable to price collapses and disclosure issues.
Mr. Weiss' good advice is mixed with confected dialogues, which add nothing substantial to the solid research he has done. With scandals and schmoozing finished, he gets into the title issue - what to do when the market stinks. His advice: get out of debt, buy solid stocks and bonds with good ratings but maybe a touch of mild scandal that's sinking prices, maybe buy a little gold and some insurance from a solid company. Then get out of junk bonds and sell long term bonds. Mr. Weiss says that all bonds go down in price when interest rates go up. He is wrong on one point however: U.S. Treasury Inflation Protected Securities and Government of Canada Real Return Bonds, both of which increase payments when the relevant country's consumer price index rises, tend to rise in price with increasing interest rates. He also advises that one can make money in options, which is true, but the advice is only suitable for investors who can follow their time-limited puts and calls closely.
In the end, this is a good book that could have been better with less dialogue and more research in financial instruments. Mr. Weiss is a good yarn spinner, but he should stick to the non-fiction that his research supports.