Financial Fiction Review: ‘The Billion Dollar Sure Thing’ By Paul E. Erdman

Love financial fiction? So do I. And I review them for you!

In this post I’m reviewing…

The Billion Dollar Sure Thing by Paul E. Erdman

The purest form of financial fiction… one of the originals!

The Billion Dollar Sure Thing by Paul E. Erdman

OVERVIEW: The Billion Dollar Sure Thing is THE original financial fiction book! It’s set in the mid-1970’s when America’s currency (which had been decoupled from the gold standard) was facing devaluation. In spite of the decoupling from gold, the US currency was still the financial standard of the day. (That much is true). In the book, the US President is concerned that various European governments are grouping together to take control of the financial markets away from the US dollar, so the President takes a financial gamble to recouple the dollar to the gold standard. Along the way, several different groups from all over the world attempt to profit from the potential financial ripples that this change will create.

REVIEW: This book, written in 1973, is Paul E. Erdman’s first book. Erdman had worked in the financial industry for many years before this book was written, so it’s not surprising that his experience and knowledge comes through. The style is classic 1970’s fiction: I don’t just mean that the telephones require talking to operators or that gold is valued at $100 an ounce… I mean, it’s slightly racist, slightly misogynistic, everyone has a mustache, and there’s always a layer of cold war anti-Russian fear lingering on every page. Just like every other 1970’s work of fiction. If you can get past that, it’s a great financial fiction book. I read this book before — many years ago — and didn’t love it at the time; I just didn’t like the old school feeling of the book, plus I barely understood what was going on. Since then, I’ve spent nearly a decade in the financial industry (or closely associated with it) and have a stockbroker’s license and an MBA… and those things really help. haha

I’ll warn you, this book is actually pretty advanced, financially. Although the author does try to explain everything, there are times when some readers may wonder what’s going on if they’re not experienced with the financial markets. This book covers currency, FOREX, shorting, and futures trading, so it can be heavy reading if you’re not familiar with those things.

Like many books of the age (which always trumpet “soon to be a major motion picture!” across the cover), the book includes plenty of international intrigue. In this book, characters zip back and forth between many of the major financial centers and power centers of the world — Washington, New York, London, Zurich, Moscow, and Beirut — as they make deals with different groups (all of whom end up being an ethnic stereotype, a la 1970’s fiction).

But what makes this book a “pure” financial fiction (in my opinion) is that it’s not about murder (which a lot of financial fiction books include in order to ramp up the conflict in the book) but it’s really just about a lot of people trying to make A LOT of money. Period. So if that’s enough of a conflict to motivate you to read the book then you’ll love this book.

I loved the deep financial aspect of the book and the purity of the financial storyline. And as you can probably infer from my earlier comments, the book does feel dated in many ways… so make sure you read it with an understanding that it’s a slice of fiction written in a very different time. (In some ways that adds some context and authenticity to the book, even if it does get distracting).

FINANCIAL FICTION QUOTIENT: As I’ve said, this book is the granddaddy of financial fiction and the financial quotient is VERY high and fairly advanced.
Here’s a quote from page 210-211 of my copy of the book to give you an example:

“… in the foreign exchange department, the phones had just begun to light up. At eight forty-five twenty traders went into action simultaneously. The Deutsche Bank in Frankfurt was offering $25 million spot. The General Bank agreed to take them at the rate of 3.3015, the absolute floor price for the dollar, a level that had never been reached before. The Deutsche Bank accepted. The Credit Lyonaise in Paris offered $50 million. They did not like the price. They would come back in ten or fifteen minutes. The Banque do Bruxelles wanted to sell $35 million three months forward. The trader consulted Zimmerer. They decided to put a 5 percent discount on the forward dollar: they offered Brussels the corresponding rate of 3.136. They did not even hesitate but accepted immediately. Two minutes later the Bana Nazionale de Lavoro was offered the same rate on $50 million. They also accepted. The traders huddled with Zimmerer. The decided to drop the three months forward rate another full percent. Then came the break.”

That’s just one small example that is fairly easy to follow. There are many others. If you like that kind of thing, as I do, then you’ll enjoy the book.

SUMMARY: Eerdman’s work is financially solid and engaging, although there are times when his experience may outpace the reader’s ability to understand. And although the book is dated, it’s still a great story of big money. If you’re into financial fiction, you should read this book just because it started the whole thing.

Click here to check out Paul E. Erdman’s The Billion Dollar Sure Thing on Amazon.

Find more financial fiction reviews here.

What is due diligence?

Due diligence is the investigation and research that an investor should conduct prior to making an investment to determine whether that investment is right for them. This is true for any kind of investment — from stocks to real estate to businesses.

It’s technically a legal obligation for some investments but I would argue that it’s essential for any investment and, in fact, for any kind of agreement or acquisition at all, whether it’s your home or car, or even whether you’re thinking about entering into a relationship with someone. (In a way, it’s all an investment — your car is an investment of money into your ability to get around; your new relationship is an investment of time and energy into a friendship or romance).

Ultimately, due diligence should answer the question: “Is this investment right for me at this moment?

Good due diligence should first seek to understand that investment (or whatever) as thoroughly as possible. Then, it should consider what the investment means to you and your own goals and timeline.

HOW TO UNDERSTAND THE INVESTMENT

To understand the investment, you need to explore it thoroughly. If it’s a stock, you need to study the stock itself, the industry, and market trends (and so much more. If it’s a real estate investment, you need to study the marketplace, the tenants and property management company, and the costs of maintaining a home in that area (and so much more). Even if it’s a potential romantic partner, you need to know what they’re hoping for a relationship, how they enjoy spending their time, whether the attraction is mutual, etc.

HOW TO CONSIDER WHAT THIS INVESTMENT MEANS TO YOU

An investment, by its very nature, requires you to trade something of value for the potential of a return. That thing of value could be money, time, effort, or many other things. So it’s important that you know what is required of you (and whether you have that to give) and what you can expect. And perhaps most importantly, you need to decide whether the expected return is what you want. Many investors buy into something without really thinking about whether it’s right for them at this moment in time; they end up putting up too much value and receiving returns that they are disappointed with.

DO YOUR DUE DILIGENCE — ALWAYS

Regardless of your investment, it is impossible to perform too much due diligence. However, there comes a point when, practically speaking, you’ve done enough due diligence to move forward. I don’t think people have a problem with the idea of due diligence; rather, I think people do too little due diligence.

(Side note: As a real estate investor, I hear a lot of people say that they’re doing their due diligence but what they’re really doing is being stalled by fear and they are allowing that fear to catch them up into a loop of “analysis paralysis”. Strangely, I only see this in real estate and business investments — never in the stock market.)

Do not leave your due diligence in someone else’s hands. Sure, your financial advisor might help you perform some of your due diligence but don’t think of them as a replacement for due diligence! Do it yourself. Be thorough. Don’t rush.

Check out some of my other writing on due diligence including:

Financial fiction review: ‘Graveyards Of The Banks’ by Nyla Nox

Love financial fiction? So do I. And I review them for you!

In this post I’m reviewing…

Graveyards Of The Banks by Nyla Nox

 

Financial fiction meets Dante’s Inferno meets The Office.

Graveyards-of-the-Banks_Nyla-NoxOVERVIEW: This is the story of a young woman in London who is strapped for cash after her anthropology career falls short, so she gets a job in an investment bank and navigates the complex inner workings of a bureaucratic, multinational hell.

REVIEW: Wow. This was an amazing, moving book. Most of the financial fiction I read is best described as thrillers or mysteries, but not this book. At first I wasn’t sure what to expect… the first couple of pages had a pace and a style that I wasn’t used to. But once I got into the writer’s rhythm, I was hooked. This book is a semi-autobiographical fiction (?) viewed through a poetic filter. And it really struck a chord with me: I have faced the exact same things that the protagonist faced — I worked the life-altering long hours, endured the crazy, condescending assholes, navigated the fiefdoms and bureaucracies and hypocrisy, and scraped by on a pittance while talking to others about millions or billions of dollars. The main character was me; I haven’t connected in a book in a long, long time. I was transported back in time to my early career in the financial world.

FINANCIAL FICTION QUOTIENT: There isn’t a huge amount of finance in this book. The main character works in an investment bank (“The Most Successful Bank In the Universe” as it’s called throughout the book) as a graphic designer who creates complex financial documents for the investment bank’s corporate clients. But what the book lacks in actual financial references, it more than makes up for in its accurate portrayal of the inner workings of a multinational behemoth of a company — including the various competing departments of bankers and designers and IT and training, the levels within each department, and the paint-everything-optimistically CEO writing encouragingly oblivious weekly emails.

SUMMARY: If you have ever worked in a large financial firm you will see yourself and the people you work with in this book. (I’ve worked in 4 large financial firms and this book painted an accurate picture of each one). You know how a show like The Office perfectly captured everyone you work with in an office setting? This book does that with the financial world, while at the same time making you feel like you’re walking through this financial hell with Dante.

GraveyardsOfTheBanksbutton

DISCLAIMER: The author sent me a free copy of the book to review.

Find more financial fiction reviews here.

9 things that are awesome even though we usually think they suck

Warning: You’re not going to agree with me on some or all of these. That’s okay. That’s actually the first one! :)

1. DISAGREEMENT

It seems like most people try to agree. They try to find common ground, achieve alignment, come together, whatever. And sometimes that’s helpful because when you work together with someone, you tend to achieve more when everyone is moving in the same direction. Agreement is ingrained in us because every story (whether book, movie, TV show, etc.) is basically about people who disagree and then discover a resolution (sort-of an agreement, even if it involves explosions). We tend to agree with our heroes.

BUT… a dissenter is good. History is built on dissenters. Businesses are founded on dissenters. Even countries are founded on dissenters. We don’t always have to agree. Disagreements (when healthy) breed discussion and growth.

2. RISK

Risk is fascinating. I love studying risk! Most people’s ideas of risk are broken. The average stock market investor tries to reduce risk. We’re wired to avoid it.

But who are the most successful investors? They’re the ones who accept some level of risk. (Warren Buffett understands that there is risk in the market and he accepts it. Even though he’s thought to be a safe and risk-free investor, he’s actually not and it’s to his benefit). And here’s a great example of how people are insanely risk averse: So many people dream of quitting their job and starting their own business but they can’t take the risk of giving up that paycheck. (By the way: I have a solution for that. If you want to start a business without the risk of quitting your job, do this).

Risk is good. Period. Yes, it needs to be managed and monitored closely and it should always be in balance with reward but risk is a good thing. (I talk a lot more about this at the blog post Ideas about risk that we have totally wrong.)

3. MISTAKES

We want to avoid mistakes because we don’t want to look foolish. But mistakes are what help us innovate. I love making mistakes. If I’m not making mistakes, I’m not trying. (Here are 5 business failures I’ve had and what I learned from them).

My advice? Do more stuff. Make more mistakes. Love those mistakes and learn from them.

4. BULLIES

This will be perhaps my most controversial addition to the list. Even before hitting “Publish” on this post I was tempted to remove it. But here it is anyway.

I was bullied in school. It sucked. I wished it never happened and I have emotional scarring as a result. (Gosh, am I actually admitting this on my blog???) And I support how bully-intolerant we’ve become as a culture.

BUT… because of bullies, I am where I am today. They solidified who my friends were (and weren’t), they were a key factor in me moving to a different city in my late teens (which launched some very positive changes in my life), they showed me that the world isn’t always fair but I need to be a good person anyway, and they motivated me to do well in life as a sort-of revenge for how they made me feel in grade school and high school. (Where are they now? I have no clue, and I’m not about to devote any bandwidth to finding out. But success is sill the sweetest revenge).

5. BAD CLIENTS

Bad clients make you work hard and then pay as little as possible while complaining about it, or they disappear with out paying. Or they leave a bad review. Or they take advantage of your guarantee. It happens and it sucks and sometimes it causes some short-term financial pain.

But but clients strengthen your “jerk-o-meter” and help you know for next time. And I’ve learned that bad clients are also an indicator of your success: When you’re just starting out and you’re willing to accept any clients, you put up with the bad ones. But as you get to be more successful, your ability to say “no” to a client — to turn them away if you don’t think it’s a good fit — is an AMAZING feeling.

6. LACK OF MONEY

I’m mostly speaking about having a lack of money in business, although I suppose this also applies to personal life as well.

Being short of cash sucks. It feels like you’re handcuffed and can’t do everything you want to do in your business. You wonder how you’ll afford a key investment or how you’ll pay your staff this money or how you’ll pay yourself this month.

But, when your business is short of funds, it is a fantastic motivator to get your ass out of your seat and start selling. It refocuses you on the important stuff. Being short of funds alerts you to the fact that your expenses seem to outpace your income, so you need to take a closer look at those expenses and trim them, and you need to boost that income. A lack of money also forces you to get creative.

Several years ago my business ran out of cash when I got a MASSIVE tax bill that I was simply not prepared for. I had to buckle down and work HARD, putting in long days every day for months in order to cover the tax bill. It was a very dark period in my business. But the result was incredible: I learned a lot, I raise the bar on what I could achieve when motivated, and it even opened up a couple of new opportunities for me.

Business tends to run in cycles: During the fat times, you spend a lot and you don’t hustle as hard. During the lean times, you spend less and you hustle hard. And so it goes like that, back and forth and back and forth (this happens in the economy, too) and hopefully you learn enough in the lean times that you make the fat times less silly, and you put away enough in the fat times that you make the lean times a little less lean. But lean times are still good.

7. DEADLINES

My entire life is built around deadlines. Every week I jam out content like a maniac because of deadlines. I hate them.

But… there have been a few clients who have said, “oh, just get me the project whenever you can” and guess what happens. The project gets deprioritized over and over and over again. And my own projects (like my first book, and now like my second and third books) get pushed farther and farther back. Deadlines give us a goal and keep us focused.

8. DEATH

The death of loved ones is very painful. When family or friends pass away, we’re left with a hole in our hearts and our lives, and sometimes even a bit of regret that we didn’t get to spend more time with them.

But death is a kind of deadline. The ultimate deadline. I don’t say that to be morbid, I’m just tying it back to my previous point. Like any other deadline, death reminds us to live now. When someone I know has died, I find myself revisiting my own life and considering whether I’m living the life I should be living.

When my grandfather passed away just the day before my 35th birthday, I was (of course) very sad at the loss (although it was not unexpected as he’d been in ill-health for a while) but it made me reflect on the way he lived his life to the fullest and inspired me to do the same. And when my friend and business colleague Rod lost his life unexpectedly, I renewed the commitment I had made in several areas of my life that he had impacted. These are just two stories but I’ve experienced more myself and know of many other stories that are similar. In fact, I’m writing a book for a business that started when a couple made a commitment to a friend of their who died of cancer — it’s a fascinating story and one I hope you get to hear someday.

9. PAIN AND DISCOMFORT

No one likes pain. We’re wired to avoid it. Just look at anyone who thinks they’re about to be in pain and we see them throw all personal pride out the window — whether it’s a flinch from a near miss, or hearing a bee buzzing around your head, or hitting your thumb with a hammer… whatever. When there’s pain or we think there’s going to be pain, we react in a primal way.

Pain hurts, discomfort is uncomfortable. (Duh). We do what we can do avoid them because our DNA is embedded with a desire to reduce pain and discomfort and increase pleasure. Nothing wrong with that. And hopefully our businesses grow to give us more time and money to enjoy the pleasures of life.

But there is good that can come from pain and discomfort. Some of the examples I’ve listed above (bullies, death, lack of money) all cause some amount of pain or discomfort and I’ve shown how they can make us better. The most successful people are not those who avoid pain and discomfort but who find a way to get through in spite of it. The best business example I can think of is selling. Selling can be hard. when I first graduated from college I went into sales and struggled at first. And then, for some bizarre reason I ended up in financial sales where I was making cold calls and even selling door-to-door. At one point during that time, there was so much discomfort that I threw up all over myself in anxiety before going out to sell. (Why am I making all these crazy admissions in this post???). But I pushed through. I prevailed. And now? I feel like I can sell anything. I can navigate my way through a sale confidently and comfortably because I pushed through the discomfort.

Or here’s another example: When you’re just starting out in your business and not sure how to do something. At first it takes you a bit of time and it seems difficult and slow. After a while, though, if you can push through the discomfort without giving, it becomes easy.

CLOSING THOUGHTS

I’ve listed many things that suck. But they’re also awesome, not because of what they are or what they put us through… but because of what we become as a result. We become better people — stronger, more resilient, with renewed focus, and a sharper desire to succeed.

So accept and embrace those challenges and push through because the other side is better.

My 17 rules for investing (regardless of the investment)

I love investing. Stocks, real estate, businesses, you name it.

Here are the 17 rules I invest by.

  1. Every investment has a return: Either money or education.
  2. Don’t be an investor: Be an engineer. Don’t invest in anything you can’t control (and learn the levers that will provide a return).
  3. Redefine your idea of risk.
  4. It’s impossible to completely derisk any investment.
  5. Invest primarily for cash flow.
  6. Define why you are going to invest in something. (For me, I almost always build my investment decisions around what a business’ sales funnel looks like.)
  7. Define what would make you sell it: List specific triggers with all possible exits.
  8. Do your due diligence.
  9. Become an expert in just a few things: You can’t fully diversify so instead go the other way and become an expert on a few things.
  10. There is no such thing as passive income.
  11. Reinvest a portion of your income into more investments.
  12. Be courageous — things will fluctuate.
  13. If you want to scale, you need a system.
  14. Master yourself and get comfortable with uncertainty.
  15. Be a contrarian.
  16. Decision, action, and commitment are the 3 qualities of an investor.
  17. There is no perfect time or perfect investment. There is only “pretty good right now for me.”