Economics can be an excellent conversation piece on everyday events, over cocktails, he argues, on the strength of his experience as a teacher in the University of Southern California.

“With cocktail economics set in motion, my classes initially became livelier — even entertaining… It has been more than 25 years since I began using this method.”

The book seeks to discover investment truths, and it begins by adopting a top-down approach, or the big picture. “Intrinsic to this strategy is the belief that the separate asset classes – such as the stocks of large or small companies, or the shares of domestic or international corporations – each act in ways that are uniquely attached to the full range of economic variables.”

For instance, timing is everything, says Canto. “When the nature of an economic shock and the elasticities of the different companies, industries, and asset classes with respect to that shock are determined, a simple investment strategy emerges: Buy the stocks of the companies or asset classes that will benefit from the shock and avoid those that will not.”

However, investment forecasts based on a sound rendering of the macroeconomic environment will not be correct every time, cautions the author.

“Sometimes the forecasts will be off.”

It’s just like the weather, he analogises. “Sometimes it rains when the weatherman predicted sun, and other times it is sunny when the forecast called for showers. But the farmer out in the field always has a hand up on the weatherman. When he sees black storm clouds on the horizon, he can make the safe assumption that bad weather is coming and pull his tractor into the barn.”

This is the information advantage, of educated rendering of the variables to the decision rules, says Canto.

“The better you get at it, the easier it will be for you to timely apply a macroeconomic analysis to your decision rules for when and how to adjust your investments,” he assures.

For a sober reading.

Financing consumption is more lucrative than traditional goods-producing industries, notes ‘Credit Card Nation’ by Robert D. Manning ( www.basicbooks.com ). “In fact, General Electric’s GE Capital (consumer credit) division generates higher profits than its core manufacturing divisions.”

In the easy credit system, the author sees ‘a more serious threat to the myth of economic virtue than earlier industrial regimes.’

The new ethos of consumer credit, says Manning, is undermining the historical balance between production (work) and consumption (leisure).

“For example, during the downsizing frenzy of the late 1980s and early 1990s, credit cards became the social safety net of the unemployed. This new source of unrestricted credit offered workers greater bargaining power over their next form of employment; they no longer were compelled to accept the first job offer.”

A popular survival strategy from layoffs then was ‘to apply for as many credit cards as possible before getting a pink slip so that job seekers would have more time and financial resources for securing the best possible position after being axed.’

Unputdownable.

Risk management

Do not wait for the fire to start before building the fire station, advises Clive Shearer in ‘Everyday Excellence: Creating a better workplace through attitude, action, and appreciation’ ( www.landmarkonthenet.com ).

“Consider what could go wrong and what you might do about it,” he says in a chapter on managing risk effectively.

“Risks include an inadequate project budget, an ambiguous scope of work, unclear lines of responsibility, and too much on your plate at the same time.

There might also be a lack of resources, miscommunication, an uncoordinated team, and a contentious client.”

The best thing you can do is to stay alert, instructs Shearer.

“Manage the annoyances before they grow. Do not ignore them, shunt them aside, or close your eyes and pretend that they do not matter very much.”

Insightful takeaways.

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