6 Smart Books: An Economic Roadmap

The rich may be popping their heads out of burrows to start spending, and the markets may be on the rise, but even in a recovery, you can always use an economic roadmap. Here, among new books our editors and writers have chosen, are a common-sense guide to protecting your portfolio and advice on how to fix the financial system. We’ve also got a guide to offbeat sightseeing for nerds with wanderlust, a look at how we squander our food, a novel about the Mexico and the McCarthy era and, in case you were thinking of isolating yourself, Stephen King’s newest thriller, in which a Maine town confronts what happens when a mysterious force cuts it off (literally) from the rest of America.

By Robert Pozen
Reviewed by Robert J. Hughes

To everyday consumers, “too big to fail” has become a dubious mantras. Where is the fairness in a government bailout of large banks and corporations that leaves regular people wondering when things are going to turn around for them.

Here, author Pozen, chairman of MFS Investment Management, a lecturer at Harvard Business School and a contributor to The Wall Street Journal, provides an analysis of the financial arrangements the government has used to bolster the economy, with proposals for shaping the economic landscape, all of which may help investors better understand the shifting marketplace. (SmartMoney is a joint venture between Dow Jones and Hearst. The Wall Street Journal is a unit of Dow Jones.)

In four parts and 14 chapters, Pozen details complex economic issues in clear prose: the U.S. housing slump and its affect on the global financial crisis; the slump’s impact on stock and bond markets; last year’s bailout of financial institutions, and the future of the American financial system.

This is a book for investors who want to understand the details of our financial landscape, and who also want to consider arguments on restricting mortgage-lending practices, whether financial derivatives and hedge funds should be regulated or the revival of loan securitization, among others. Pozen also includes a helpful glossary of terms that should help even seasoned investors.

By Jason Zweig
Reviewed by Alexandra Scaggs

This is a little book with big advice. Jason Zweig, who writes The Wall Street Journal’s weekly “Intelligent Investor” column, doesn’t promise investors the moon, but in language that everyone can understand, he offers solid, common-sense steps to protect and improve their portfolios.

In "The Little Book of Safe Money," Zweig breaks down the specifics of broad investment areas — financial assessment, types of investments and investment psychology. But his broad theme is that the single most valuable holding in an investor’s financial arsenal is his or herself. Investors’ potential income will outperform all of their other holdings or investments, Zweig emphasizes. That means investors should hedge against themselves; bankers, for example, shouldn’t invest mostly in financial stocks.

He also has readers take a second look at many super-popular investment classes. Ultra-leveraged ETFs? Only for professionals. Hedge funds? Only if you do serious research. And emerging markets, which many regard as a failsafe in a recovering global economy, don’t translate into hot returns. “If you have an uncontrollable urge to jump into the developing world,” he writes, “book a flight to Rio.”

Such advice is consistent with the big idea of Zweig’s book: If an investment looks to good to be true, it probably is. And he offers a useful process to help readers remember it.