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The Economic Time Bomb: How You Can Profit from the Emerging Crises Hardcover – January, 1989
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From Publishers Weekly
Noted investment guru Browne offers cogent and practical advice on how investors can shield their capital in turbulent economic times. As an added plus, readers are treated to a clear-sighted and direct analysis of the economic issues confronting the U.S. today. Browne convincingly argues that the trade deficit, the stock market crash and America's new status as a debtor nation are all, in reality, "non-problems." Normal economic forces will simply, and nearly painlessly, correct these "imbalances" without the need for hasty and ill-considered government interference, Browne maintains. In fact, he opines, government interference may well detonate the economic time bombs he discusses. Despite his title, Browne does not predict economic catastrophe, but warns that the conditions for one exist. To protect an investor's capital, he has devised a diversified "Permanent Portfolio," counseling investments in gold, bonds and stocks which, in his view, should preserve an investor's capital in any economic climate. The book will interest investors large and small.
Copyright 1988 Reed Business Information, Inc.
From Library Journal
Browne wants to help investors preserve their money through what he sees as three impending crises: in the inflation-recession monetary seesaw of the Federal Reserve Board; in federal deficits; and in weakness in the banking system, especially in the savings and loans area. Since these are interrelated, if one fails, they will all explode into an "economic time bomb." Browne's answer to this uncertainty is a "permanent portfolio," aimed at withstanding and making money in any economic climate; it includes 25 percent common stocks, 25 percent gold, 25 percent cash-like investments (such as T-bills), and 25 percent treasury bonds. For those wanting to speculate or play hunches, Browne recommends a parallel "variable portfolio," made up of money that investors can afford to lose. A valuable source for the investing public. Despite its title, Meek's book has nothing to do with the October 1987 stock market crash. His purpose is to help average people manage their finances. He touches on estates and trusts, the importance of disability and life insurance, and how to choose and use a financial consultant, in conjunction with an attorney and a CPA. Common stocks, either owned individually or through mutual funds, are Meek's preferred vehicle of investing. Their long-term success is undeniable, and Meek has some jargon-free and well-written advice on buying them. Unfortunately, he sometimes gets bogged down with too many graphs when explaining his system, which is based on monetary formulas and business cycles. Still, his skeptical eye and understanding of the importance of crowd psychology will not disappoint investors looking for guidance.
- Alex Wenner, Indiana Univ. Libs., Bloomington
Copyright 1989 Reed Business Information, Inc.
Top customer reviews
This was the first investment book I'd ever read that made sense to me. I could see why his strategy would work, and it did not require me to pay close attention to the market, make charts tracking stock prices, buy and sell all the time -- none of the things that I'd watched Dad do when I was a kid, all of which had repelled me!
20 years later, even after the Big Crash, I retired in 2009 with my retirement investments substantially intact.
When I told my Dad about the program, his comment was something like "You're never going to strike it rich that way!", which was pretty much the best recommendation I could have gotten. This is a way to protect yourself against major losses, which using a "ratchet-like" mechanism to ensure steady growth of your investment capital. I rebalanced quarterly, which was comfortable for me - you can do it monthly, or even annually, as Harry recommends.
I confess that I never included the metallic gold component (although I'd have done better if I had) because back then there was no way to include it in tax-protected retirement accounts. The system still works, even with only three legs of the stool.
The book is CHEAP! Buy it, read it, and you may find that it suits you as well as it did me.
The impending crises that the author mentions can be solved only by reduction in government spending, which is unlikely to happen any time.
The "how you can profit from it" should really be "how you can avoid the negative consequences", which forms the second part of the book. The author shows how you can spread your bets among various investments to be safe.
What I did not like about the book is that the first part is a big teaser without telling you what he will say in the second part. What he does say can be summarized in a paragraph beforehand so you can keep it in mind while reading the first part. This will help the reader decide whether the author's suggestions avoid the crises he's describing or not.
Overall, I think it is worth reading and understanding (it is an easy read), but not necessarily believing in what he says/concludes.