OPINION:
THE CAPITALIST CODE: IT CAN SAVE YOUR LIFE AND MAKE YOU VERY RICH
By Ben Stein
Humanix Books, $19.99, 173 pages
This is a book about investing, aimed primarily at potential young investors — although investors of all ages can benefit from it — written by a longtime and notably successful investor.
I met Ben Stein in 1973, when we worked as speechwriters for President Richard Nixon. He was dedicated to the president, whom he calls “the peacemaker,” and for whom he produced, along with the numerous and varied writings turned out by White House writers, the draft of a national energy plan, something that hasn’t been done since, and the first — and last — draft of a coherent health care plan, that had it been enacted, would have significantly altered the terms of the national debate.
Through Watergate and the years beyond, Mr. Stein remained fiercely loyal, defending President Nixon in the media and visiting him frequently in San Clemente for extended conversations on statecraft and politics. (Many of us believe that he’s uniquely qualified to write the book that has yet to be written on the real Richard Nixon.)
He would become a regular contributor on business, politics, government, finance, culture and the arts for a variety of publications, among them Barron’s, The Wall Street Journal, The New York Times, Fortune, The American Spectator, as well as a making regular appearances on CBS and Fox and hosting his own TV show, “Win Ben Stein’s Money.” He is also widely remembered as the economics professor in the classic movie, “Ferris Bueller’s Day Off.”
In the 1980s, he was one of the leaders in exposing the junk-bond frauds. He has received the Malcolm Forbes Award for Excellence in Financial Journalism, and is in demand today as a respected speaker on finance, investing, politics and culture.
In “The Capitalist Code,” the latest in a series of books aimed at younger readers with whom he has established a unique rapport, his intention is to talk about basic investing in a down-to-earth and commonsensical way, the prose always direct and straightforward, never abstract or complex.
To begin with, he tells his readers, “You are being sold a false bill of goods. When your professors and your school mates tell you that capitalism as we see it in the United States right now is an evil, exploitive system, they’re lying and they’re hurting you.” (He also calls out politicians like Sen. Elizabeth Warren, who directly profit from the system they shrilly attack.)
“In fact, the system of democratic capitalism as now practiced in the U.S.A. is the best, brightest, and most hopeful plan for organizing human economic activity that there has ever been. This is true both for you as an individual and for your whole generation.”
“In this life,” Mr. Stein writes, “the acquisition of assets that produce income is life or death. The absolute surest, simplest, easiest way to do that is by owning a diversified index of stocks.”
How do you get started? “The woods are filled with men and women who will take your money pretending they can pick stocks consistently. With only a few exceptions, they’re not leveling with you. I intend no disrespect to stock pickers [or] money managers. I know lots of them and they are uniformly fine fellows and women. They really want to help you.”
“The sad truth is that they almost never do.”
Go to an investment firm — Vanguard, Fidelity, Oppenheimer, Merrill Lynch, for instance — tell them “that you want to open an account that holds as its primary asset an index fund. That index fund will hold all five hundred stocks in the Standard & Poor’s 500 Industrial Stock Index. You will own a microscopic part of all the largest companies in America.”
Buy it, add money to it periodically, and hold it. How long should you hold it? “The preferred holding period is forever.”
How valid is this approach? Consider this brief analysis: “My friend, Ben Stein, has written a short book that tells you everything you need to know about investing (and in words you can understand). Follow that advice and you will do better than almost all investors — and I include pension funds, universities and the super-rich — who pay high fees to advisors.”
The analyst is Warren E. Buffett, the man widely considered the most astute and widely admired investor of our times. It goes without saying that his recommendation of a book on investing should always be taken very seriously.
• John R. Coyne Jr., a former White House speechwriter, is co-author of “Strictly Right: William F. Buckley Jr. and the American Conservative Movement” (Wiley).
Please read our comment policy before commenting.