Anyone who negotiates, or seeks to persuade others, must work hard to find just the right words. Furthermore, in light of limited attention spans, those words must be concise, winning, and to-the-point. Me too. My book Negotiating Your Investments comes out this week and it is incumbent upon me to explain what it is about and why it is useful.
As its title suggests, this is a book about using negotiation tools to improve investment results. It is really three books, though, that together create a new way of looking at investing.
The first section of this book is about negotiating. It does not even mention investments. After teaching and studying the subject for over two decades, I can show you negotiation as it is taught at Harvard, Wharton and elsewhere. The subject is remarkably useful. It has also deeply enriched my life. So it is with pleasure that I invite you, the reader, to partake in it with me.
Two things about negotiation are worth mentioning as I try to draw your interest toward the subject. First, the definition of “negotiating” is much broader than you might think. My students often end up concluding, at the end of a semester of study, that most things they do are subject to negotiation techniques. The second thing is that anyone can become a better negotiator. And with enhanced understanding and skill will come great value that can be measured in dollars, or satisfaction, or happiness. Thus, the first section of this book can help you improve many of the interactions you are involved in every day of your life.
The second section begins with an assertion. When you invest, you are actually engaging in a series of negations. As a result, almost everything learned in the first part can be applied directly to your investments and financial life. Become a better negotiator and you will, necessarily, be a more successful investor.
All investor-negotiators face a series of institutional challenges. Four of them receive their own chapters in this book: conflicts-of-interest, asymmetric information, the problem of whom to trust, and finding true professionals to work with. Each of these is critically important. Taken together, they form the biggest obstacle an investor must overcome. Approaching them as a negotiation problem can lead to far more successful outcomes.
Those four challenges precede a host of other actions and difficulties facing an investor. The very best way you can address those is as a skilled negotiator would. Section two of the book goes on to walk you through that process. At its conclusion, you will know all the things that a good investor-negotiator must do. Among these are prepare, gather knowledge and information, comprehend the underlying science, anticipate diversions, and be completely ready to “hold your own” in the conversations that lay ahead. To do this requires a solid understanding of the economics and finance that apply to investing.
The third section of the book offers you the economics you need to know. As I often say lectures, “Economists know a great deal, yet, most Americans invest as if none of that knowledge existed.” You need to know what economists know. The final section of this book will teach it to you in ways that are clear, informative and, I hope, entertaining.
Each section of this book is worthwhile reading. The entire book will make you as good a negotiator as Odysseus, as wise as Solomon, and as rich as Croesus. Even if the preceding sentence exaggerates slightly, I hope you will give it a good look.