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The Books on Business: Best stock pickers do their own homework

Sunday, July 21, 2002

"The Faber Report: CNBC's "The Brain" Tells You How Wall Street Really Works and How You Can Make It Work for You" by David Faber with Ken Kurson. Little, Brown, 2002.

As Wall Street continues to tank, dragging millions down with it, what more profitable reading than The Faber Report, a blunt analysis of the powerful and unsavory world of investing, written by CNBC's renowned Wall Street correspondent? David Faber uses his take-no-prisoners approach to disembowel investment banking firms, expose methods of corporate deceit, flay the conspiring accounting firms, and generally lay bare how investor billions are made and lost (mainly lost) through greed and incompetence. He does this in the service of explaining to the ordinary investor how to stay above water in the shark tank of the investment world, which he does with blunt honesty, a sharp wit, and lots of colorful words such as "sleazebag," "schlub," and "slimeball."

Faber is a consummate investigative reporter, and his message to investors is that, in order to carefully invest in a company or a mutual fund, they can use the same techniques that he uses to track down a scoop. He then explains these practices in clear and minute detail, with many examples involving recent scandalous stories -- Enron, Tyco, MCI, Lucent, Global Crossing -- and how they might have been foreseen. Of course, the average investor could never share Faber's extraordinary access to special informants, but much of the information that he uses is very much within reach today. He gives an eye-opening line-by-line analysis of what parts of a company's SEC filings -- available to all on http://www.sec.gov/edgar.shtml -- clearly indicate overstated earnings and other shenanigans. He mentions using http://www.google.com to do a search on a CEO's name and the word "fraud" -- if there are many hits, you know there is a problem. He shows how a prospectus, when read carefully, discloses "every risk and dirty deal." Simply checking the discount bin at Kmart can give a good clue to a company in trouble. (Not to mention using tools like the free databases now available through the Carnegie Library -- http://www.carnegielibrary.org/clp/databases.html -- that will yield hundreds of telling articles on corporate backgrounds.)

Faber is fed up with analysts, because he thinks they are dishonest and compromised, and is high on short-sellers, because they are geniuses at sniffing out the truth about corporate misbehavior. But he also thinks the skills and information to do reasonable company analysis are within the reach of everyone; he quotes an owner of a large investment bank as saying that he could teach his dog to be an investment banker. He also quotes Mark Twain: "A gold mine is a hole in the ground with a liar on top." The Faber Report shows you how to pry off that prevaricator and see for yourself.

"The MouseDriver Chronicles. The True-Life Adventures of Two First-Time Entrepreneurs" by John Lusk and Kyle Harrison. Perseus Publishing, 2002.

With all the flair and emotion of two imaginative young men on a quest, this story takes the reader on an exhilarating ride of the development and debut of an original new product. Lusk and Harrison, "regular guys" fresh out of The Wharton School, chronicle the process of bringing their innovative idea -- a PC mouse shaped like the head of a golf club -- from inception to sale on the store shelves, during the wild high-tech ride of the late 1990s. Along the way it reveals the thrills, fears, hard-fought experiences and hundreds of lessons for the first-time entrepreneur.

This diary vividly describes the pair's unconventional approaches to testing and developing the MouseDriver. They practiced quality control by dropping their newly minted PC mice on their kitchen floor to see how much damage was done. Packaging for their product was discovered during a safari to the jewelry department of Nordstrom. They learned about warranty language by buying a small item and studying its warranty card. During their journey they found that the Yellow Pages came through more often than their vaunted network of Wharton contacts. Lusk and Harrison came to believe in the maxim, "good enough is better than perfect."

They described their humbling experiences at trade shows where they shared a third of a booth with two other companies, sort of like a timeshare. They also practiced the art of bartering. At one trade show, Kyle offered to quickly and efficiently connect the wiring for all the exhibitors in exchange for having his PC MouseDriver instead of the standard mouse at all the booths. Thus their mouse with its logo was incidentally on display everywhere.

Other tricks served them well. Their business card had a suite number that smartly masked the fact that their tiny apartment doubled as corporate headquarters. To finance their venture, once they got some initial capital through investments from friends and professors, they relied on credit cards instead of banks for immediate cash. However, because they promptly paid off their sizable bills with money from their sales, the credit card companies reduced their annual interest rates from 18 percent to 9.9 percent.

This cagey approach to financing typifies the sort of unconventional thinking that permeates the MouseDriver Chronicles, making it a compelling treatise on how to break the rules and still succeed in the business world of the new millennium. For more news on this engaging company and its product, http://www.mousedriver.com, will show you a nifty mouse for any PC user who also happens to enjoy golf.

"Remember Every Name Every Time: Corporate America's Memory Master Reveals His Secrets" by Benjamin Levy. Fireside Book, 2002.

Imagine this scenario: You are at an important business or social gathering and you hear yourself mumbling apologetic phrases like "I know we've met before, but I just can't remember your name." Despair no more; help is on the way, thanks to Benjamin Levy, an entertainer and memory expert who works for (and coaches) many of the world's top executives. He is often asked to attend large corporate functions where he briefly introduces himself to each guest, and at the end of the evening he demonstrates, to everyone's amazement, that he remembered the name of every single person he met! How is this possible? According to Mr. Levy, individuals who claim to have "no memory for names" simply haven't developed their innate skills for doing just that. He'll show you how you can improve your skills if you make a concerted effort to learn -- and practice -- the techniques outlined in this remarkable book.

The first step to remembering faces -- and attaching names to them -- is increasing your awareness of faces in general. The author suggests focusing on a different facial feature for a week each month -- eyebrows one week, noses the next week. While you are doing this, think of descriptive words that can help you distinguish the subtle differences between the same features on various individuals. And don't worry about staring! Your focus will only seem like a flattering display of interest.

He offers several effective techniques that will enable you to understand the person's name, put it in a context and firmly implant it in your memory by the end of the conversation. For people with such names as Bill, Mike or Mary, you'll learn how to link a face and a name with a graphic visual image that will make these people unforgettable. The process goes something like this: Bob -- nose -- bobsled. Color photographs of individuals are included in the text, along with "tests," so that you can measure your progress at remembering the names of these new "friends" when they subsequently reappear in random group photos.

Benjamin Levy passionately believes that remembering names and faces is the greatest skill you never learned. He provides you with the information that can dramatically transform your career and your personal social life. Now, the rest is up to you!

Also recommended are:

"The Everything Get Out of Debt Book" by Cheryl Kimball and Faye Kathryn Doria, CFP. Adams Media Corporation, 2002.

"How the Bond Market Works" by Robert Zipf. New York Institute of Finance, 2002.

"The Ordinary Business of Life: A History of Economics from the Ancient World to the Twenty-First Century" by Roger E. Backhouse. Princeton University Press, 2002.

Contact the business librarians, who also answer questions about business, money, and work, at (412) 281-7141 or at http://www.carnegielibrary.org/clp/libctr/business/.

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