Title: New Market Mavericks
Author: Geoff Cutmore
Publisher: John Wiley and Sons Ltd
ISBN: 047087046X
Price: £24.95
Reviewer:Colin Eastaugh

Cutmore's book is a thoroughly entertaining tour of the investment industry in 2003. The author has interviewed eight individuals: four hedge fund managers, two technical traders, fund of funds manager and a stock market historian - all men (there is an element of train spotting about studying the money markets). It is interesting to note that only one is based in central London, and he is based close to Buckingham Palace rather than the Bank of England. The advent of better communications and improved technology has meant the globalisation of investing. Why commute into London when the information can be sent to your home?

What the book also brings home to the reader is that the euphoria of the late 1990s has passed, what we now have is a more circumspect attitude to investing. This is probably the most important message that comes from reading the book. Forget making money, just attempt to keep the money that you have. Philip Manduca, hedge fund manager, states “work very hard, and for as long as you can because you need to generate income”.

Although Manduca is the most pessimistic of the people interviewed, no one states that making money from investing is easy, or that there are techniques which are guaranteed to make the reader money. All the interviewees make the point that one should always have a stop-loss price, in some cases as low as 1%, but all cases one should contain one’s losses. “It is the lack of losses, and not always the gains, that singles out the good investor".

The Russian debt crisis of 1998 is referred to more than once, a lot of people lost a lot of money when the Rouble was devalued and the Russian government defaulted on foreign debt. As a result not only should stop-losses be in place, but exposure to any particular market should be monitored closely.

In fact the book could be described as a series of issues that investors should worry about:

• The American budget and trade deficit.


• The inflexibility of the labour market in Europe.


• Does China’s growth in the East represent the same threat to the US that the US did at the turn of the nineteenth century to the British Empire?


• Pension and demographic crisis.


• The increase in the value of commodity prices.


• Possible deflation.

So forget share tips, be very conservative with your money. The back cover of the book is therefore disingenuous, the book does not show readers ways to succeed in today’s uncertain equity market environment, neither does it demonstrate ways of making money when other investors are following the crowd and neither does the book provide detailed case studies. In fact there are very few examples in the book.

Notwithstanding the dust cover, it is a very good read – the article on David Schwartz, stock market historian, is definitely worth reading. I disagree with nearly all the sentiments of Schwartz but one is entertained. Schwartz has data on stock prices going back many many years. He comes up with some – in my eyes – strange statistics. For instance April historically is the month to invest money in the stock market, unfortunately in the last eight years up to 2003 there have been four ‘good’ Aprils and four ‘bad’ Aprils. As an appendix Schwartz gives for each day of the year which days are the best to invest on – avoid 21 February. He spends 12 hours a day analysing the market and yet his stock market investments are extremely small.

One of the strengths of the book is the human side of investing, for instance one of the hedge fund managers requires his employees to work in a temperature of 56 degrees. Each chapter includes a pen picture of the individual being interviewed. One of the weaknesses of the book is that much of the information is either contradictory or rather vague, for example gold is probably going to be a good investment in the years ahead. Perhaps that is the final message from the book, there is no simple solution, keep an open mind, and for goodness sake, keep a close watch on preserving your capital.

Colin Eastaugh is an amateur stock market investor, a fundamentalist rather than a technical analyst.