The issue of finance is very critical to the daily operations of business organizations. Therefore, everyone must be financially well informed. That’s why it’s important to read this book, How to Read the Financial Pages, by Michael Brett. Brett is a freelance financial journalist, former editor of The Investor’s Chronicle, and a frequent speaker on financial topics.
According to Brett, for more than a decade, this text has been an excellent first-choice buy for anyone wanting a thorough but friendly foundation on finance and investing. This author says by removing the mystique from the world of investing and finance, the text is a layman’s guide to reading and understanding the financial press and the markets and events they cover.
Brett adds that without any financial knowledge, the text provides a valuable explanation of how the world of finance works, from money markets to commodities markets, investment rates to takeover bids.
This text contains 23 chapters. Chapter one is entitled “First Principles.” Write about money here, according to Brett, and you’re bound to get stuck with jargon. He says that the simplest terms and concepts need to be covered at the beginning because they will keep coming up. “Fundamental to all financial markets is the idea of making a return on money. Money must work for its owner,” states this author.
In summary, he says that money can be deposited to earn an income and can be used to purchase goods or goods that are expected to increase in value but are not, or it can be directly or Invested indirectly in securities of the stock market, which normally generate income, but also report capital gains or losses.
This author emphasizes that there are many variations on each of these themes, but you must keep the principles in mind and the variations fit together. Regarding markets and interest rates, Brett explains that there is a market for every type of asset and/or many of its derivatives. He adds that there is a money market in London and it is not a physical marketplace as deals take place over the phone and the price a borrower pays for using money is the interest rate.
In Brett’s words, “There is a market for currencies: the forex or foreign exchange market. There are markets for commodities. And there are government bond markets and corporate stock markets: the main domestic market here is the London Stock Exchange, which you read in the financial press affects those markets, their movements and the assets that are traded on them.”
He claims that the important point is that no market is completely independent of others and the unifying factor is the cost of money. This author says that if interest rates go up or down, there will likely be a wave of movement through all financial markets. He clarifies that this is the single most important mechanism in finance and underlies much of what is written in the financial press: from discussions of mortgage rates to reasons for movements in the government bond market.
“Money is directed to where it will generate the best return, based on the level of risk the investor prefers to take and the length of time they can freeze their money,” asserts Brett.
Chapter two is based on the subject of money flow and money people. According to this author here, when a financial journalist describes someone as “a prominent figure in town,” he or she probably means what he or she says because the man may be a high-ranking member of the banking community. Brett adds that when a journalist describes someone as “the city’s controversial financier,” he “probably comes as close as he dares under the defamation laws to calling them a financial spy!”
But what exactly is this “city” that houses these characters and many more? asks this author. He says it is, of course, a geographic area on the east side of Central London, often referred to as the Square Mile, adding that ‘The City’ is more often used as a convenient umbrella term for the commercial institutions at the heart of Britain’s financial system is used . Brett explains that they don’t necessarily operate within the square mile of the City of London, although a surprising number of them do.
He says they provide the financial services that oil the wheels of industry and commerce. According to him, one of the more common criticisms of the city is that it is too remote from Britain’s own productive industries. Brett says while some parts of the city have always been international, the big change over the last 20 years is the internationalization of even the most traditional domestic institutions like the London Stock Exchange. “The city is an important source of invisible revenue for Britain’s balance of payments. Financial services generated net overseas receipts of nearly £32 billion in 1998,” he reveals.
In chapters three through ten, this author examines concepts such as corporations and their accounts; the investment rates; refinement of the figure; stocks and the stock market; what moves stock prices in normal times and the crash of ’87; IPOs; Issuance of further shares and redemption of shares; and bidders, victims, and legislators.
Chapter 11 is entitled “Venture Capital and Leveraged Buyouts”. To meet diverse financing needs, Brett says there has been a rapid growth of venture capital funds, organizations that provide financing to unlisted companies, sometimes a mix of equity and loans, but often just one or the other.
The author states: “Because it is intended to fund private companies, this type of equity financing is often referred to as private equity. Many of the venture capital funds are offshoots of existing financial institutions: clearing or merchant banks, insurance companies, or pension funds.”
He points out that another tax-deferred investment vehicle to encourage venture investing in private companies is the venture capital trust. A venture capital fund must have at least 70 percent of its investments in unlisted trading companies: Broadly the same type of company that would qualify for the Enterprise Investment Scheme, Brett adds.
This expert emphasizes that the venture capital trust itself is an ordinary investment and must be listed on the stock exchange.
In chapters 12 through 19, the author analytically examines concepts such as pay, perks, and inverted capitalism; government and corporate bonds; banks, borrowers and bad debts; the money markets; foreign exchange and the euro; international money; financial derivatives and commodities; and insurance and Lloyd’s after the troubles.
Chapter 20 is titled “Commercial Property and Markets Crashes.” According to this author, commercial real estate (ie office buildings, shops, factories and warehouses) has been one of the most important investment opportunities for insurance companies and pension funds. Brett adds that by the end of the millennium it was less popular than it used to be.
However, he says there is no central marketplace for commercial real estate, stressing that the “market” is largely organized by the major chartered appraiser or real estate agencies. Brett explains that these firms offer a range of real estate investment services. “They advise on real estate portfolios, often manage portfolios on behalf of institutions, prepare valuations, negotiate rentals, purchases and sales and help with the financing of project developments,” adds the author.
In Chapters 21 through 23, Brett turns his intellectual searchlight on concepts such as savings, pooled investments, and tax breaks; city surveillance; as well as the financial pages for print and internet.
The book is stylistically successful. For example, the book is well presented and the language is standardized and simple, improving understanding of the subject despite the technical jargon. The stylistic success is to be expected since Brett is a freelance financial journalist and thus a financial communicator.
The depth of research in the book is also commendable.
However, the definite article “The” forms a structural redundancy in the title of the book. That is, the title should have been “How to Read Financial Pages”, not “How to Read the Financial Pages”.
Overall, this text is a masterpiece of financial education. It comes highly recommended to anyone willing to financially expand their knowledge.