The book read: Business Adventures by John Brooks
This book is a wonderful wonderful read about extremely interesting stories and scandals that happened throughout time, to the most powerful companies in the world. There is always something to learn from others mistakes!
Each chapter tells a different story, about a different event that occurred in a different company. Of the 12 stories, there were only a few that didn’t blow my mind. This is one of my all time favorite books! Read below to find a little bit about what each chapter has to offer.
Chapter 1: The Fluctuation – talks about the stock market crash of 1962 compared to the crash in 1929 (depression)
- Fluctuations in the market will always be present, their strength is what changes.
- The 1962 crash did not copy that of 1929, it crashed in one day. They believe due to the increase of sold stocks from women, people in rural areas and foreign investors on that particular day (so interesting!).
- Mutual funds saved the market because they had accumulated so much cash on hand, they were able to sell stocks at the customers price without lowering it.
- Within the next few days the stock prices steadily rose back…unlike 1929 where the reverse happened, again and again.
Chapter 2: The Edsel – Ford Motors took a chance in releasing the new Edsel model after no company had attempted to release a new car in a long time. (It ended up being a failure!)
- “A customer who gets poor service on an established brand blames the dealer. On an Edsel, he will blame the car”.
- Ford’s other cars sold so well, that the new one would have to surpass the expectations. They talked it up way too much.
- The car market had a small crash in 1957 before its release, and Ford spent too much money advertising.
- They worked the car up to be something no one has ever seen before, which is true of the design, but it handled just okay compared to any similar car on the market. Many of the cars had defects and workers in the other Ford divisions were hoping for its downfall.
- I think the biggest reason it failed was that Ford expected the consumer to find great what they said was great…”A rig for customers to take what we want them to take.” “When it comes to dictating, the consumer is the dictator without peer.”
- All Edsel executives now look back and are happy they went through the experience…all motivated people who worked hard and well together. You’re going to take bumps now and then as long as you don’t get defeated inside.
- “Failure can have a certain grandeur that success never knows.”
Chapter 3: Federal Income Tax – how it came to be
- These laws should reflect national characteristics – income tax to some extent should be a national mirror. How does the reflection look? – Maistre
- Avoid income taxes by investing in the bonds of states, municipalities, port authorities, and toll roads.
- Find ways to convert ordinary income into capital gains…Tax Evasion.
Chapter 4: Texas Gulf Co. – Insider trading scandal within a mining company.
- Officers and friends/family of them made investments in the company, controversially, before the news was public – that they had discovered a massive mine of silver, zinc, and copper.
- This scandal paved the way for new laws set on, when is an ethical amount of time for them to wait to be able to purchase securities. ONE OF MY FAVORITE CHAPTERS!
Chapter 5: Xerox’s story
- Communication between people, by whatever means, far from simply accomplishing its purpose, invariably breeds the need for more!
- In a society that sociologists are forever characterizing as “mass”, the notion of making one of a kind things into many of a kind things showed signs of becoming a real compulsion.
- There is no possible protection from technology except by technology.
- When you create a new environment with one phase of technology, you have to create an anti-environment with the next.
- After Xerox’s stock dropped 42 points in one week, one executive, Joe Wilson’s comment was, “Well, you know, opportunity rarely knocks twice.” It was hardly talked about in the office and within a month the stock rose to an all time high. (positive attitude is key).
- Company success qualities – idealism, tenacity, courage to take risks, enthusiasm.
Chapter 6: Making the Customers Whole
- Haupt & Co. Firm went insolvent due to holding so many vegetable oil contracts for Allied Co. on credit, to find that the commodities were fraudulent…they owed some 9.5 million to customers who invested in the oil company and about 6 million to banks. Because of the fraudulent actions, the stock exchange auditors did not catch, the exchange felt publicly responsible for the loss to millions of innocent investors.
- The exchange agreed to fund Haupt & Co. in relieving its customers, taking from the treasury reserve (about 1/3 of its balance!).
- The banks agreed to defer much of the loans it gave. The exchange felt guilty for allowing the fraud to happen…without the kind gesture, it could have greatly panicked the public on investing at all. All member firms of the exchange came together to save Haupt & Co. to basically save the market/themselves.
- I think its an absolutely beautiful story of people coming together to save an industry!
Chapter 7: The Impacted Philosophers – price fixing in the electrical industry
- GE, the leader of the price fix, would host meetings that the competitors would attend to set prices for the industry and decide who would get what market share.
- “Successful industry business is making more products for more people.”
- GE was sued multiple times and still continued to host the price fixing (I assume they probably still do today!)
Chapter 8: Clearance Saunders – founder of Piggly Wiggly, attempts to create a corner in the stock market.
What’s a corner? Investopedia’s definition: “To acquire enough shares of a particular security type, such as those of a firm in a niche industry, or to hold a significant commodity position to be able to manipulate its price. An investor needs deep pockets to be able to corner a market.”
- Clearance creates a corner and greatly manipulates the stock price, personally, but ultimately ends up failing (karma…).
- He has a come back by opening 2 different grocery store brands, but both don’t sustain.
- Piggly Wiggly gets sold out.
Chapter 9: A Second Sort of Life – about the life of David Eli Lilienthal, perhaps the most controversial figure in Washington, post war, 1950.
- He was an investor, entrepreneur on wall street, after having government jobs. A very rich man, to say the least.
- He says our national security relies on industry bigness and that big companies don’t destroy small businesses but rather tends to support it and that a big-business society does not depress individualism, but encourages it by reducing poverty, disease, and physical insecurities and increasing the opportunity for leisure and travel.
- Businesses need idealistic objectives and should not be profit obsessed!
Chapter 10 – 12: I didn’t take notes meaning you can probably skip them……Remember, you don’t need to read every page of a book if you don’t see its worth.
Read this book friends, you’ll learn a lot!
You can purchase here:
Business Adventures: Twelve Classic Tales from the World of Wall Street