Book mention: Shell Shocked

I can’t call it a book review, because I didn’t read Shell Shocked: How Canadians Can Invest After The Collapse, by John Stephenson. I only got part way through the introduction before I put it down in disgust. I’ll explain what I found objectionable about the book, but I expect everyone will choose for themselves whether or not to pick it up.

It started with a bad impression. I am a financial advisor, so I receive a great deal of unwanted email (spam). I’ve gotten to the point that I hate spam and I will refuse, on principle, to work with groups that send me unsolicited messages. J.Wiley, the publisher, sent me two spam emails about this book. I think they were expecting me to buy it and hoping that I would buy in bulk as a gift for clients. That underlines the fact that they were doing it with their own interests in mind. I consciously made an exception to my “boycott spammers” rule, because I was curious about a book that my clients might end up reading and asking me to comment on. A client asked for my thoughts about The Great Depression Ahead, by Harry Dent. I got it from the library and my wife read a little of it, but there were so many things wrong with the arguments that he laid out, that I refused to waste time on it.

With Shell Shocked, I read the introduction. The author was not off to a good start. He began as a manager at the ill-fated Enron. He says that something felt “not quite right,” but the bankruptcy caught him by surprise. Then he became a portfolio manager, and the market crash of 2008 caught him by surprise. In all fairness, most people were caught off-guard by these two events. It’s normal to be surprised by world-changing events because they cannot, by definition, be predicted. (If they could, they wouldn’t be world-changing.) But this is coming from an author who claims to be predicting the future according to the sub-title: How Canadians can invest after the collapse.

One red flag doesn’t cause me to put down a book, only to be much more critical of the arguments and how they are presented. For example, I read Insure Your Investments Against Losses: Strategies for investors who can’t stomach losing their hard-earned cash, by Robert Goldin. I believe that the author is irresponsible for developing unrealistic expectations by presenting ideas that are unworkable in the real world. His examples are fictitious and are not grounded in reality. People who try to follow his advice (who are hopefully few in number) are in for a huge disappointment (and probably financial loss).

It was bad enough that Shell Shocked was published in 2009, during the market crash. I am not familiar with publishing timelines, but that didn’t leave the author much time at all to write and revise his text, then have researchers corroborate his research. Maybe he didn’t do any research. A passage in the introduction gives that exact impression. The author points out that now is a great time to find investment opportunities. But he tries to back up the point by stating that the Chinese character for crisis is made up of “danger” and “opportunity”. Wait, what do Chinese characters have to do with the stock market?

Maybe the author was drawing on the deep well of ancient Chinese wisdom. After all, they did invent paper money. But let’s remember that they didn’t invent the stock market, so that doesn’t hold. Further, the Chinese stock market crashed worse than the markets in North America during 2008 and 2009. But before we even consider that, it turns out that the Chinese word “crisis” (weiji) can’t be broken down into component syllables. That would be like taking the English word “mankind” and breaking it down into “man” and “kind”, then coming to the conclusion that all men are kind. Further, “ji” only means opportunity when paired with another syllable. The Chinese have never considered “crisis” to be a pairing of “danger” and “opportunity”, since it’s a neologism. It’s much more likely that some public speaker or business book author thought it sounded catchy and started this myth. You can find more information here: http://pinyin.info/chinese/crisis.html.

The above referenced website is the first result when searching Google for “Chinese crisis opportunity”. It’s really not that hard to find, but authors neglect to question their assumptions all too often. And if the author of Shell Shocked bought into this myth so easily, what other myths does he believe unquestioningly? My answer was that I refused to read the book to find out.

To be fair, I agree with the conclusion that is presented on the dust jacket of the book. Canada is a great place to invest. It’s not without troubles, but we have some great companies and great resources within our own borders. Another popular view is that Canada will benefit from increasing trade with China. As long as our relations with China remain friendly and they continue to need the raw materials and the business knowledge that we have, in order to increase their economic activity, our economy will benefit. You don’t have to read a book based on flawed assumptions to agree.

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