A few friends came out with excellent books during the past two years, and it is worth their mention. A lot of friends do garbage work, so the mere mention of these books is meaningful. This is part two of some.
Yiannis G. Mostrous, Elliott H. Gue, and David F. Dittman‘s The Rise of the State
Yiannis and team argue that the state will continue to increase its role in the economic sphere, making it an important (and valuable) consideration for financial decisions. The two most obvious examples of the state’s more pronounced relationship with markets are (1) TARP-like bailouts that occurred in the US and is ongoing in Europe to stop contagion and (2) sovereign wealth funds. The list goes on, of course, and most of The Rise of the State is dedicated to infrastructure, energy, and what might poorly be referred to as development plays that are a consequence of the state’s pro-active role in investment.
The ground that The Rise of the State covers makes it a nice complement to the group’s newsletters, including The Energy Strategist, Global Investment Strategist, and the always fun Cocktail Stocks, as well as Yiannis and Elliott’s first book, The Silk Road to Riches (co-written with Ivan Martchev). With the exception of David’s work, which tends to focus on Canada or general market and legal issues, the team’s efforts often concentrate on this infrastructure-energy-development triangle, with frequent spotlights shown on consumer goods.
Unlike the newsletters, though, The Rise of the State fills in the triangle’s outlines with an explicit thesis regarding the state that is long overdue: that, recently, the state has been under-recognized as a significant market player and understanding the state’s behavior and motives can lead to excellent returns. Also, the book takes a longer-term view–years, not weeks and months–of the market and the book’s recommendations, making it a complement to the newsletters. Ultimately, the book serves to reassure readers who are nervous regarding the US financial situation that crashes and state meltdowns have occurred before that other states take their place, move forward, and make money for those who have invested wisely.
The idea behind the book and the investment strategy and recommendations the authors make–both of which I have tracked for years–are excellent. In fact, I recommend the book–and the newsletters–to anyone interested in guided investment decisions, as well as those investors particularly concerned with about the United States and keen on the rise of the East. Keep in mind, though, that the book’s time horizon on investments is longer than most newsletter subscribers are accustomed and it is not just a list of tickers for you to buy (although there are many recommended stocks in each chapter).
My issue with the book is its dual character: part thesis on the evolution of markets and finance and part exploration of stocks and which ones investors should consider buying. Ideally, this book actually would be two paired together, allowing the authors to fully explore each dimension and allowing the reader to digest the material within the relevant scope. As it is, the book begins as a polemic about the rise of the state (Chapters One through Four) and then switches to a more modular series of chapters on specific and varying topics (e.g., oil, water, coal, demographic changes and their consequences). Each chapter starts by carrying through the thesis but switches to relevant financial plays. True, this organization is effective and efficient, but it may leave readers wanting more–more of the argument, more information, more data, and more stock recommendations.
In the end, criticizing the book for leaving the reader so hungry at the end is high praise. After all Yiannis and crew has made us salivate and provided a few excellent dishes. Perhaps a third book will satisfy that remaining hunger; in the mean time, it is up to the reader to make good use of what s/he has been provided.