Business Adventures Buchzusammenfassung - das Wichtigste aus Business Adventures

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Zusammenfassung von Business Adventures

Name: Business Adventures
Rating: 4.2 (121 reviews)
Author: John Brooks

John Brooks

Twelve Classic Tales from the World of Wall Street

4.2 (121 Bewertungen)

29 Min.

Kurz zusammengefasst

Business Adventures by John Brooks is a collection of twelve stories based on historic business events, providing insights into the unpredictable nature of the corporate world and lessons we can learn from past failures and successes.

Themen

Erfolg Memoiren

Inhaltsübersicht

Business Adventures
in 12 Kernaussagen verstehen

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Kernaussage 1 von 12

What’s in it for me? Get an in-depth view of some of the most influential economic, financial and business moments of the past century.

After reading these blinks, you’ll understand why Bill Gates claimed that Business Adventures – which he received as a gift from Warren Buffett – was his favorite book of all time.

After all, where else could he have found out what the launch of the world’s ugliest car, a wink from a General Electric company executive, and the fall of the Piggly Wiggly supermarket chain have in common?

These and the other events described in this book represent several major developments in US business history, the repercussions of which can still be felt today. They paved the way for things like the end of insider trading and an employee’s right to work for whomever he or she pleases.

In these twelve exciting and surprising case studies, you’ll find:

how Wall Street almost killed off Piggly Wiggly,
why shareholder meetings of large companies are usually a complete farce, and
how a misinterpreted wink landed some GE executives in court.

As the 1962 Flash Crash showed, investors are irrational and the stock market is unpredictable.

How much can a person miss in three days? Well, if you happened to be a stock market investor who fell into a three-day coma on May 28, 1962, you might have woken up to almost no noticeable change in your investments, but you also would’ve slept straight through the chaos of the 1962 Flash Crash.

This three-day turmoil neatly illustrates how bizarre the behavior of Wall Street bankers can be, and how investors are guided more by their mood than actual facts.

On May 28, 1962, the mood on Wall Street was distinctly glum after six months of stock market decline. There was a lot of trading going on that morning, and the central office was running late in updating stock prices, as this was done manually.

Investors panicked when they realized they could only know a stock’s true price with a time lag of some 45 minutes, by which time they assumed the true price had fallen. Consequently, they rushed to sell off their shares, which created a downward spiral in prices. Their expectations became self-fulfilling, causing a crash that annihilated $20 billion in stock value.

But just as emotions triggered the crash, they also helped move along the recovery: investors considered it common knowledge that the Dow Jones Index, which measured the value of the general stock market, could not go below 500 points. So when the value came close to that limit, a buying panic broke out as everyone expected prices to go up. Three days after the crash, the market had fully recovered.

After this bizarre event, everyone was searching for rational explanations. But all stock exchange officials could come up with was that the government needed to pay more attention to the prevailing “business climate,” i.e., the mood and irrational expectations, of the financial market.

This inherent irrationality translates into the market’s unpredictability. In fact, the only thing that can be predicted about the market is, to quote famous banker J.P. Morgan: “It will fluctuate.”

The story of the Ford Edsel is the epitome of a product launch gone wrong.

Have you ever heard of the Ford Edsel? Originally intended to be Ford’s flagship product in the late 1950s, the car not only ended up being one of the most spectacular product failures of all time but is also frequently cited as one of the ugliest cars ever made.

How could a company as successful as Ford fail so dismally?

The federal income tax system should revert back to its 1913 state.

Warren Buffett is one of the richest people on the planet, and yet he admits that his tax rate is lower than his secretary’s (whose income, naturally, amounts to far less than his). Sound like a cruel joke?

Well, it’s the perfect example of how unfair the US federal income tax system is. To understand how it got so bad, let’s examine the increasingly twisted development of the system since its inception.

Insider trading was finally reined in after the Texas Gulf case of 1959.

Imagine your uncle works for an oil company and he calls you up one day to tell you to invest in his company’s stock, as they’ve just struck oil and will only announce it tomorrow. Sounds like, if you bought the stock, you could end up doing time for insider trading, right?

That would hold true today, but it wouldn’t necessarily have been that way before the Texas Gulf case.

The story of Xerox demonstrates how quickly achieved success can vanish equally as quickly.

In the early 1960s, the automatic copy machine was a huge hit and the product’s developer, Xerox, suddenly became the market leader. But, within just a few years, the company experienced a huge downfall. Let’s take a look at Xerox’s rollercoaster ride in three stages.

First, there was initial success against all the odds.

In 1963, the New York Stock Exchange rescued a brokerage in order to prevent a financial crisis.

In late 1963, the brokerage company Ira Haupt & Co. was in trouble. It no longer had sufficient capital to trade in the New York Stock Exchange (NYSE) and its membership had to be revoked.

The reason for this predicament was that the brokerage, which traded in commodities, had made a disastrous deal. It had bought cottonseed and soybean oil to be delivered at a later point in time and used the warehouse receipts as collateral to borrow money from the bank. Unfortunately, it turned out that the receipts had been doctored and the oil did not actually exist. Ira Haupt & Co. was suddenly the victim of large-scale commercial fraud and unable pay back the massive debt.

Executives can blame immoral or criminal actions on “communication errors.”

These days, whenever a company is mired in a scandal, they’ll claim that nobody did anything wrong – that the true culprit is “communication problems.”

For example, if a company dumps toxic waste into an aquifer, it’s not out of greed, but because “The board failed to properly communicate the new environmental strategy to the local managers.”

The owner of Piggly Wiggly, the world’s first self-service supermarket, almost killed it in a stock market battle.

Unless you live in the southern or midwestern United States, chances are you’ve never heard of Piggly Wiggly. Either way, in 1917, it patented the concept of the self-service supermarket. It was the first supermarket to, for example, provide shoppers with shopping carts, put price tags on all the items and have check-out stands.

Piggly Wiggly still operates today, but is relatively unknown due to the actions of its eccentric owner Clarence Saunders, who went to great lengths to fight financial speculation.

The example of David Lilienthal shows that business savvy and a clean conscience can co-exist.

When a highly influential government bureaucrat jumps over to the business world and leverages his old government connections to make money, many people are likely to accuse him of being a sell-out.

But in the case of David Lilienthal, this wouldn’t be an appropriate accusation.

Stockholders rarely wield the power they have at their disposal.

Who do you think are the most powerful people in America? In theory, it should be the stockholders.

Especially given the fact that they own the largest corporations in America and these giant companies wield such great power in American society that many political scientists have suggested that the United States resembles an oligarchic feudal system more than a democracy.

Thanks to Donald Wohlgemuth, you can change employers even if you’re privy to trade secrets.

If one day you were to receive a highly tempting job offer from a competitor of your current employer, you’d be able to accept it, right?

Actually, your right to do so was not always so clear, and you have a research scientist named Donald Wohlgemuth to thank for setting the precedent that allows you to do as you please.

In 1964, speculators attacked the pound sterling, and even an alliance of central bankers could not defend it.

In the 1960s, of all the currencies of the world, the British pound sterling was perhaps one of the most prestigious due to its old age and high value. So when the pound came under attack from financial speculators in 1964, central bankers around the world felt obliged to defend it.

The roots of the attack go back to the Bretton Woods Conference of 1944, when the major economies of the world decided to build an international monetary exchange system where all currencies were exchangeable at fixed rates. This meant that, to maintain these fixed rates, governments had to often intervene in the currency exchange market by buying or selling currencies.

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Worum geht es in Business Adventures?

Business Adventures comprises twelve riveting case studies of key developments in business, economics and finance. While they concern events and companies you may never have heard of, the case studies are highly entertaining and the lessons learned from them are still applicable today.

Wer Business Adventures lesen sollte

Anyone interested in the highlights of modern economic history
Decision-makers in the private or public sector who want to avoid the follies of those who came before them

Über den Autor

John Brooks (1920–1993) was a journalist and author, known primarily for his work as a long-time contributor to The New Yorker magazine, where he wrote articles similar to the ones talked about in Business Adventures.

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