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The Capitalist Code

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I have been a fan of Mr. Stein as a current events commentator and editorial author for years. It was no surprise to me that I enjoyed this informative book as well. 

Written with an intended audience of readers who are younger than me, the book does a good job of covering the basics of managing one's own finances. Using his "pre-Dad" advice, the author introduces some fundamental investing and money-management concepts in a casual, conversational tone. Never does he go dry in tone or too preachy in presentation.

This would make an excellent introductory book for a twenty-something youth who is just starting out on their independent road of life and wants to make sure they actually have some "golden years" of retirement.
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Because of his memorable role in Ferris Bueller's Day Off, Ben Stein is "the most well-known teacher of economics in the world." Many who know him only as an actor don't know that Stein is actually an economist and lawyer by education and training, or that he has authored or co-authored a shelf full of books.  In his latest, The Capitalist Code: It Can Save Your Life and Make You Very Rich, Stein covers some basic truths about investing and the economy, hoping to inspire young people to take the long view and prepare for their future.

Stein's advice is solid, and his good humor is unflappable.  I love how positive he is.  He starts out appealing indirectly to the social justice warrior, antifa, occupy young people, or anyone else who disparages capitalism.  The reality is that capitalism allows all of us, young and old, to be owners of businesses and take advantage of the stock market.  "The real story is that it's raining money . . . from corporate earnings, and if you don't put out your bucket, you are making a mistake." 

Of course he advocates getting started early: "From the earliest possible age you can do so, buy and hold common stocks in a large variety of public corporations in the United States of America and hold on to them until you retire and need the income they provide by selling them."  The simplest, most efficient way to invest?  Index funds.  Compared to owning a business directly, or investing in real estate, index fund investing avoids the hassles, the overhead, the taxes, the liabilities, the payrolls, pretty much all the negatives of business ownership or landlording.  

Stein is a big advocate of doing what you love, but is frank about the need to have money.  When you're sick, have unexpected expenses, need income for retirement, one person you can depend on is the younger you who had the discipline and foresight to invest in stocks, a practice that can, in fact, save your life and make you very rich.  Sound advice, indeed.

Thanks to NetGalley and the publisher for the complimentary electronic review copy!
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Capitalist Apologist rampant on a field of green

“Corporations don’t start or wage wars, at least not large wars,” says Ben Stein in The Capitalist Code.  This is typical of the apologies he makes for the system, in a remarkably naïve and superficial overview of how to survive in the capitalist system. Another is “Probably the worst thing the modern corporation does is oil spills.” I could go on, but you get the idea. He lives in a wonderful world where he benefits from the work of others. And you can too.

Stein of course is well versed in economics, and that makes reading this all the more painful. He wrote it at a less than basic level, to attract millennials who supposedly have no smarts or inclination in this area. This adds insult to injury.

Stein’s prescription is buy stock and hold forever. It did well for him and his idol, Warren Buffet. He ignores all the data that precious few investors do well, or that even fewer companies survive. It is a self-help book and he doles out standard-copy advice. Things like save before you spend, and have plenty of liquid assets before you buy a home. But the main point is to buy stocks, preferably index funds and ETFs that represent a broader swath than just a single firm. Stein repeats this mantra endlessly.

It’s a short little book that you can read in two hours, which does not excuse it. There is a slim column down the middle of the page, as if it were meant to be read on a phone. And lots of blank pages among the 125 or so of text. If you want financial advice, there is better out there.

David Wineberg
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In THE CAPITALIST CODE, Ben Stein gives the reader some valuable money lessons. These lessons are delivered in a funny, easy fashion, and liberally sprinkled with personal anecdotes and observations. 

The key point is this: Free market capitalism is an incredible machine for making wealth. Corporations “rain money” year after year.  If you don’t participate, you are making a huge blunder. It doesn’t take a genius, but it does take a plan—a “little bit of knowledge and an even smaller amount of action.”

The author cites some alarming statistics, noting how poorly prepared many folks are: For example, 80% of  millennials have no plan whatsoever for retirement savings. They are saving NOTHING, which the author notes  is “not a formula for sleeping well at night.”   Similarly, the average person says they need about $50,000 per year for retirement; but only has savings to achieve 20% of that number.

A few points along the way:

+ Education: “There is a clear, unequivocal , if generalized, connection between the amount of education that a man or woman achieves and the amount he or she earns.”

+ Spending: “You must arrange your life from the very get-go so that you are spending less than you earn.”

+ Picking Stocks: You don’t need to “play the market” and try to pick stocks. Just buying and holding index funds is a simple, effective method that beats money managers most of the time.

The author provides a “bullet point” summary in the very last chapter of the book:

1. Free market capitalism is a fantastic wealth-producing system.

2. This system allows individuals to amass wealth.

3. Free market capitalism is not an evil, blood-draining system.  Instead, “There is no freer, more diverse, and more equal opportunity employer than capitalism. . . .If you can produce a large amount of excess over your costs, you get well paid. And if you produce very much more than you cost, you get rich.” 

4. You must acquire wealth: “A highly disproportionate amount of the good things in life accrue to those who have financial capital. The easiest way is to own index funds. 

5. Hold onto these funds as long as possible.

6. Take advantage of huge tax subsidies for deferring investment gains

So all in all, I found THE CAPITALIST CODE to be a fun, practical read. I was already familiar with his points, so there wasn’t much new for me, but I still enjoyed his perspective on the subject. And of course, his witty observations.

I thought this one line summed up the book succinctly: “Life can be faced by moaning and complaining or it can be faced by study, work, optimism, and faith in the free capitalist system.”

Advance Review Copy courtesy of the publisher.
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