BOOK REVIEW: Financial advice and business of living

OPINION:

THE LITTLE BOOK OF BULLETPROOF INVESTING: DO’S AND DON’TS TO PROTECT YOUR FINANCIAL LIFE

By Ben Stein and Phil DeMuth

Wiley, $19.95, 205 pages

Reviewed by John R. Coyne Jr.

By any standard, Ben Stein’s career has been remarkable. Television - Fox News, CNN, CBS’ “Sunday Morning,” “Win Ben Stein’s Money,” a cult-classic movie, “Ferris Bueller’s Day Off”; a splendid early Hollywood-days memoir “Dreemz;” novels, columns for the New York Times; contributions on culture and finance to the Wall Street Journal, Barron’s, Fortune; author of “Ben Stein’s Diary” for The American Spectator; lawyer and graduate of Yale Law (which automatically qualifies him for the Supreme Court); and while still in his 20s, primary drafter for President Richard Nixon of the first and last comprehensive national energy plan, and the first and last coherent plan for health care reform.

He was among the first to expose the junk-bond rackets of the 1980s, and in his extensive writings on business and finance, has been an outspoken critic of executive double-dealing.

Mr. Stein’s economic expertise may derive from lessons taught by his father, Herbert Stein - a rare economist, not only brilliant but level-headed, able to communicate basic principles in commonsensical terms that even English majors could understand. The son shares that ability, and it characterizes each of the seven books written with his co-author, Phil DeMuth, a widely-published registered investment adviser with a Ph.D in clinical psychology, who writes with strength, clarity and wit.

“There’s a wealth of common sense contained in this new entry into Wiley’s popular Little Book series,” writes John Bogle, the revered founder of the Vanguard Group. “It gets the essentials of successful investing right.” At the center of these essentials is the authors’ “Tangent Portfolios” approach to investing, for which they’ve established a website (www.tangentportfolio.com) to serve as a guide for “simple, doable, conservative portfolios that have stood the test of time.”

Throughout the book, the authors mix financial advice with observations on the business of living. “Divorce is a swamp,” they write, but “if you marry right basically your life will be right.” But be aware “that children are expensive,” and can be disappointing. “The final laugh occurs when the daughter with the half-million-dollar education gets a job as a masseuse.” Do keep in mind, they conclude, “that children today are luxury goods.”

But no parent ever gives up on those “luxury goods,” and there’s solid advice for children willing to listen: “Do regard college as part of life, not a vacation; Do get as much education as you can, especially if it is in a field that leads to gainful employment; Don’t waste time with losers; Don’t do drugs or drink alcohol.”

And Do save. Saving, the authors believe, is as essential as sensible investing. “As difficult as the ’buy and hold’ is on the investing side, so is the ’saving’ on the accumulation side.” Thrift is a cardinal virtue: “Warren Buffet still lives in the same stucco house he bought in 1957 for $31,500. His sidekick, Charlie Munger, didn’t splurge by buying a new car until he was in his fifties, by which time he was a billionaire.”

Among other dos and don’ts: “Don’t assume that just because you are capable of managing your finances by yourself you will be better off in the long run if you do; Do trade as infrequently as possible; Do buy and hold, don’t buy and sell; Do park assets where they will suffer least at the hands of the taxman; Don’t take Social Security as soon as you are eligible; Do postpone retirement as long as possible.”

In the end, “Life is undeniably difficult, and we all wish we had some easy way of escaping from the disappointments and anxieties it presents. The best way your authors have seen involves putting one foot in front of the other while maintaining faith in a higher power. Your mileage may vary.”

But having bulletproofed your investments to the extent that exogenous events allow, the day to retire will arrive, and with it books, hobbies, sports, “time for friends and family, and time for meditation and solitude. This will also be your chance to volunteer,” the authors conclude, “to give something back, to help those less fortunate than yourself.”

It’s not an easy journey, and along the way you may not win Ben Stein’s money. But this little book should help you get there.

John R. Coyne Jr., a former White House speechwriter, is co-author of “Strictly Right: William F. Buckley Jr. and the American Conservative Movement” (Wiley, 2007).