The full title of this book by Andrew Craig is
“How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely“.
in my review posted on Amazon.co.uk, I rated the book at the Four Stars level. This means I think it is Good.
Here is my book review.
A much needed financial education which is explained well
This is an important book to read for anyone who feels the need for a financial education. The author and I share a belief that managing finance is something that must be taught better in schools since it is a vital life skill.
The author lays out some brutal truths about:
1) The official statistics for Inflation and unemployment are rigged. Inflation devastates savings unless you are very careful.
2) The demographic problem faced by the UK and many other developed countries makes it very unlikely that proper pensions can be paid in 20 or 30 years time.
3) Financial services companies often fleece their customers with excessive fees and/or poor products.
With inflation eating away at any savings you have and pensions under severe threat, the author argues that you must take responsible action and save more. He suggests 10% of your net income and gives tips on how to find this money.
The author warns about property dominated investment strategies because history shows that they are not the sure thing bet many think and he suggests ways to assess whether property is good value.
He helps to explain financial products and based on the common highlights, this guidance is much appreciated.
He then suggests investing each month in three different ways:
1) Own the world – invest in the UK, Europe, America, Far East etc.
2) Own inflation – buy gold, silver and other commodities
3) Build up a cash balance.
I was pleased to see him mention Harry Browne’s idea of the Permanent Portfolio several times The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy along with other ideas for diversifying investment portfolios to capture good returns whilst reducing risk.
I didn’t feel that he did enough to justify the vital importance of diversification in these uncertain times. He is not impressed with central banks who have been creating money through Quantitative Easing but he doesn’t present the current battle between the deflationary and inflationary forces very well. In fact, he greatly simplifies the idea that more money supply leads to more inflation. There are many different levels of the money supply and commercial banks, rather than central banks, create most of it through by granting loans through the fractional reserve system.
I also felt that he made some big claims about how easy it is to build a big investment portfolio that will comfortably exceeds a realistic assessment of inflation. If you look at graphs of stock market indices, you can see that some slumps take decades to recover from. Likewise gold can surge in price and then collapse for many years.
I’d have liked to have seen more discussion of how the extraordinary act of Quantitative Easing has stayed in the financial system and goosed financial asset values to a level where both the stock markets and bond markets could see major crashes along with low and sometimes negative interest rates. There is little advice on how to invest a lump sum (e.g. inheritance, lottery win) other than to split it into twelve instalments and invest monthly for a year.
I don’t share the authors optimism for the financial future where we can expect 10 to 15% returns per annum as we’ve seen for the last 30 or 40 years. There is a massive overhang of debt which needs to be solved one way or another, there is the issue of whether world economies can continue to grow in a finite world or whether we will see a levelling of incomes between rich and poor countries as the forces of globalisation work through. Then there are the adjustments that need to be made for climate change as the social costs of burning of fossil fuels becomes clear. It seems silly to think of a shortage of economically priced oil when pricers have fallen from over $100 per barrel to less than $30 but I still find the logic of peak oil compelling. It’s just that there’s a rush to sell what can be used before the climate change actions really accelerate.
Despite these issues about the future, I still believe that you can’t rely on the government to look after you in your old age so taking responsibility for your financial affairs is vital. This book makes an excellent start to that process and then goes on to recommend plenty of more detailed book.
It is available to buy from Amazon.co.uk and Amazon.com.
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