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It's that every other weekend again, which can mean only one thing: It's time for The Business Press Maven to shift his keen-edged eye from the high crimes and misdemeanors of the business media to the similar range of offenses committed by book publishers. So gather the children around. It's story time.
Great prose is obviously lacking in business books, but pit the right ones against each other and you can spark good discussions about what makes a sound investment. In fact, I really want to use a sort of literary steel-cage match between two books (one new, one a classic) to poll you readers on which investment method is right and why.
Russell Cleveland, who has been managing money since Diplodocuses were roaming the corner of Wall and Broad, just released a book called
(Greenleaf Book Group). The most central part of an investment decision, in the world according to Cleveland, is to bet your money on a smart CEO. Because it's impossible to predict what will happen to a business, Cleveland trumpets the need to find a manager with the Midas touch -- hence, the title.
But Peter Lynch, no slouch as a
money-managing legend, made the case a generation ago in his investment classic
One Up on Wall Street
(Simon & Schuster) that investors are better served the other way.
Lynch says that you should find a business that can be run by an "idiot." Why? Well, any day, an idiot can come in and take control. You need one that is idiot-proof.
Questions abound on both sides.
To Cleveland: Can you even find a genius? (Present company excluded, of course.) How do you know when you have? To Lynch: If an idiot comes in to take over the corner office, shouldn't you bolt? A stock is a liquid asset. Who needs an idiot in charge? Or are they so prevalent that you have to plan for one?
Let's let these two business books fight it out in the steel cage while you -- the bloodthirsty audience -- weigh in with your opinions, complete with examples from personal investment experience, if possible.
I'll publish some of your best thoughts, analysis and examples in my next book review, two weekends from now. And I'll modestly declare whether Cleveland is the genius and Lynch the idiot, or vice versa.
Don't you love literary debate?
When is a book, so thick that it could be deployed as a barricade to turn back an invading army, worth taking a look at? Notice I say "take a look at." This is not something you would ever want to read. Even as a cure for insomniacs, it's not worth it; nights are better spent pacing. But I'm actually granting
The Complete Guide to Executive Compensation
(McGraw-Hill) by Bruce R. Ellig a "Help" label, The Business Press Maven's increasingly recognized designation that stands for the fact that a book can be of productive use to an investor.
Granted, you'll have to be a successful investor enjoying a pretty rich compensation package yourself to even afford this 600-page tome with a list price of $129.95. But executive compensation is simplified by both sides in the debate over just how crazy some of these packages can be. This guide, beyond thorough, will give you an uber-itemized sense of everything that goes into these packages that waste so much shareholder money, if you are on that side of the debate, or that give executives what the market bears, if you are on the wrong side of the debate.
Speaking of what the market bears, compensation committees (many of which are handpicked by the CEO -- some free market, huh?) often use this book to give them a sense of what's what. And the book, it is important to note, is about more than CEO pay; it also covers a range of executives.
How detailed is it? Almost comically so. It has a table to explain, in part, that kidnap and ransom insurance is a lower priority than an ordinary term policy. Yet another table offers verbal conversions of numerical performance ratings, complete with a full description of what it all means.
So, we are told that a 4 rating can convert to "Outstanding," which can be taken to mean "Significantly surpassed or surpassed over major obstacles." A zero rating, strangely enough, can means one of three things: "Acceptable," "Marginal" or "Unacceptable."
Given all the space in the book, wasn't there enough to give "Acceptable" and "Unacceptable" their very own numbers? The Business Press Maven felt a little like Rob Reiner in
, wanting to ask, in a variant of Reiner's puzzled questioning about why the amplifier did not just go up to 10, why Ellig doesn't make the performance ratings go up to 6.
Well, the length doesn't mean that everything makes total sense, even when Ellig explains himself. In the preface, he suggests reading the last chapter first, raising the question of, uh, why he didn't put it first. I'd give his decision a zero rating, but it could mean too many things. The larger point, of course, is that this book, the update of a classic, is a good reference for investors looking to understand, beyond all the polemics, what their company pays out and why.
It also, by the way, is a good tool for job hunters, looking to negotiate a package. While you are interviewing, make sure to tell them you are the Midas investors are looking for, not the idiot they are fearing.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.