- A Conversation With José D. Roncal and José N. Abbo authors of The Big Gamble: Are You Investing or Speculating?
A Conversation With José D. Roncal and José N. Abbo authors of The Big Gamble: Are You Investing or Speculating?
Norm Goldman, B.A. LL.L, is the
Publisher & Editor of Bookpleasures, which he created in 2002.' Practicing law for over 35 years enabled Norm to transfer and apply to
book reviewing his many skills that he had perfected during his career in
the legal profession and as a result he became a prolific free lance
book reviewer & author interviewer. To read more about Norm Follow Here
Today, Norm Goldman Publisher & Editor of Bookpleasures.com is pleased to have as our guests, José D. Roncal and José N. Abbo authors of The Big Gamble: Are You Investing or Speculating?
José D. Roncal has over 20 years of experience in
international business and finance, having worked and traveled
frequently in six continents. Specializing in telecommunications and
information technology industries, Mr. Roncal has served such
well-known multinational companies as NCR, AT&T, Verizon
Communications and the U.K.-based blue chip company, Cable and
For more than 15 years, he has lived around the globe as a Chief Financial Officer, focusing on mergers and acquisitions, joint ventures, strategic alliances and spin-offs among other strategic activities. He is a well known transformational and corporate turnaround specialist and inspirational leader, with a proven track record in developing high-performance operations.
Mr. Roncal has authored numerous articles on business strategy, finance, accounting, capital markets and the global economy. He holds an MBA from Thunderbird University and a BA from Florida International University, both in the US, and has attended various senior executive programs at Oxford University in the United Kingdom.
José N. Abbo has two decades of experience in the capital markets. Mr. Abbo has authored numerous articles and speaks frequently on the financial markets and the global economy. He has researched and written for such well-recognized publications as The Economist Intelligence Unit and America Economia.
In 2000, Mr. Abbo published Divisando Wall Street Desde el Sur de America, a comprehensive guide for the Spanish-speaking community that explains the workings of the stock market. He makes regular guest appearances on various radio and television programs and has served as an expert witness in financial trials and forensic cases.
Based in Panama, currently Mr. Abbo is VP of International Capital Markets Analysis for the Panama office of Credit Suisse. He holds a degree in Professional Management from Nova University and has served as an MBA tutor for Tecnológico de Monterrey/ Thunderbird University Panama-based Global MBA programs.
Good day José D. and José N. and thanks for participating in our interview.
How did you decide you were ready to write The Big Gamble: Are You Investing or Speculating and what was your main reason for writing your book?
We kicked several ideas around, and finally decided to write about the telecom industry, and the business lessons to be learned from the old AT&T, which seemed to us a good example of a company that fell victim to what you might call “creative destruction” under Schumpeter.
As we were researching AT&T, though, it hit us. Here was a “blue chip” company your grandfather might have bought with his eyes closed three decades ago. But now, to survive deregulation and technological innovation, it had to be thrown a lifeline by Bellsouth, one of the “Baby Bells” that came out of the AT&T split-up back in 1982. So, we thought: Here is the big mistake people make when trusting their funds to so-called ¨investments¨ that in reality come with no guarantee of return. People thinking they are playing it safe for the ¨long term,¨ but are actually gambling. They’re betting that because a company is “blue chip” today, it will be a blue chip forever. All around us are countless examples, such as Polaroid, Eastman Kodak, Xerox and of course, General Motors.
We decided to write “The Big Gamble,” because so many people confuse investment with speculation, and speculation eventually turns into outright gambling. The result is what we call “financial dementia,” among the masses — and that feeds into economic bubbles like the dot-com bubble in the ‘90s and of course, the more recent real estate bubble that’s been so devastating to the global economy. The purpose of the book is to set the record straight and to warn people to be careful not to confuse investing with speculation and gambling.
Are you worried about the state of to-day's economy and do you think we are headed for a depression? As a follow up, do you have any suggestions as to how we might get out of the present mess and do you feel the US Government is following the right path?
Yes, because the U.S. housing and credit crisis has triggered a global recession that has decimated consumers’ assets, wealth and income. The rapid fall-off in consumer demand has had a severe impact on global economies, corporations and markets. Wall Street greed has resulted in such consumer panic and mistrust; it’s not surprising that we are seeing the lowest level of consumer confidence in the U.S. in decades.
I do not believe we’re headed for a depression, though, as the Fed and Treasury have reacted fairly quickly. Plus, while he was in office, we had the advantage of Ben Bernanke’s expertise and his economic understanding of the Great Depression. The Fed, Treasury and the U.S Government have, in effect, nationalized many banks and corporations with the first round of bailout funds. Congress is now trying to ignite economic growth and consumption with a $900 billion stimulus package, but so far they have done it in a nontransparent manner. There’s little likelihood that any of the initial $350 billion taxpayer dollars doled out will ever be truly accounted for. Hopefully future handouts will be tied to accountability and include eventual payback of all those taxpayer dollars.
To get out of this mess, I strongly believe that the U.S needs to form a Global Task Force including the major developed and developing economies. This group should be comprised of finance ministers, economists, and retired corporate executives — a team that can set a clear global roadmap and call the shots in a coordinated way.
Unless there’s a U.S. effort to give recovery efforts a global scope, “economic nationalism” may slow the recovery dramatically. One example is the “Buy American” provision in the current stimulus package, which, if it remains in place, may generate a backlash among our major trading partners. I believe the Obama administration will follow the right path based on his proposed infrastructure and tax relief programs — he’s supported by a team of first class economists.
One thing to keep in mind is that the Depression of the 1930s evolved under a completely different political, financial, technological, economical and social environment than we have today. Perhaps what we will see is, after a period of high octane driven credit growth, a long period of negative to slow growth, for about five years, which could be as harmful as a Depression. This could really have an impact on the long term wealth of people.
The Fed is doing all it can to save the banks, but the financial system as we knew it just five years ago has imploded. The foundations of a world economy built on ¨shadow banking¨ are crumbling. That means we need to pay attention to the social fabric as well, not only in the U.S. but around the world. It may start to show cracks as a consequence of the current situation, and give rise to political upheavals, similar to what happened in the 1930s.
Do you believe that we should still invest in the stock market in view of the disaster that has set in over the past several months?
Yes – Speculators are already “bargain hunting” and betting that the market has bottomed out. However, I would caution average investors to stay on the sidelines and preserve their capital until the middle of 2Q 2009. This severe recession has changed long-held concepts regarding investments—as we predicted in our book—to the point where even defensive stocks have lost their appeal. Companies that provide basic goods and services, which typically fare well during downturns, are experiencing deep declines. No wonder investors flew to the safety of Treasuries to protect their principal — even when they were yielding zero or negative returns in the close of 2008. So-called defensive stocks have performed more like cyclical stocks based on declining numbers. Avon products are down 42.6%, Sara Lee 41.3% Pepsico 29% and Pfizer is down 25%, to name a few. This is compared to an overall Dow down 33.8% on the year and S&P 500 down 38%.
This severe decline in share values has created the opportunity to grab shares of companies with strong balance sheets and low P/E ratios during Q2, 2009. This should yield decent returns once the market rebounds, but you need to watch prices daily as “long-term” has lost its meaning. Many so-called investors have learned the hard way that it is all speculation.
It is important that people understand the stock market is no place to invest, it is a place to speculate. That way they can approach the market more rationally and be aware of not only the good but also the bad before jumping in. Stock markets perform a valuable function as a way of transferring risk to those who are willing to take those risks. But there is always risk involved, and so-called investors must not be blind to that fact of economic life.
What was the most difficult part of writing your book?
Roncal and Abbo:
Our endless ideas and imagination took us down many different paths. We are both obsessed about the capital markets and entrepreneurial activities, so you can imagine the endless discussions in the beginning about how to approach the book. We knew all along we wanted to write something related to speculation and risk taking. The second part was the extensive research involved, which required sacrificing so many weekends and a lot of family time, since we both have regular jobs. Finally, as the book was going to press, events surrounding the real estate bubble, credit crisis and Wall Street meltdown required frequent updating as a result of “breaking news.”
Can you explain some of your research techniques, and how you found sources for your book?
Roncal and Abbo:
Our research was made easier by the fact that we both were well versed on the subject of speculation. Together we’d already read at least 100 books on speculation and profiles of all sorts of speculators. That gave us a great head start. Books, journals, periodicals and loads of internet research were the main sources for our book
How has your education informed your writing?
Roncal and Abbo:
We are avid readers of the financial markets, the economy and business in general. The building blocks started during the high school years and then college, but the urge to write developed as we became more informed and more knowledgeable about the investment world.
Can you tell us how you found representation for your book? Did you pitch it to an agent, or query publishers who would most likely publish this type of book? Any rejections? Did you self-publish?
Roncal and Abbo: We self-published but it was not an easy ride. If anyone is serious about self-publishing a book, be prepared to spend countless hours, not only writing and rewriting, but obtaining reviews, pitching for endorsements, preparing for launch, marketing, and selling. Make sure you find a publishing house that will give you the support you need in packaging, marketing and promotion, not just production. A self-publisher must wear many hats. We recommend the book “The Complete Guide to Self-Publishing,” by Tom & Marilyn Ross, and “Red Hot Internet Publicity” by Penny Sansevieri.
What are your hopes for your book?
Roncal and Abbo: Our mission with this book is to challenge the way people view the established and institutionalized meaning of the word “investment,” especially if they hope their money is in a safe vehicle that will yield a profit.
We want to encourage everyone to re-evaluate their expectations of a so-called investment and see, as we maintain, that they are in fact speculating and taking a risk. If they are willing to take a risk, they should make sure that the risk is a calculated one, recognizing that there is no guarantee they will get their capital back, much less make a profit.
Will there be any unique ways you'll be marketing your book that is different from how others authors market their books?
Roncal and Abbo:
As self-publishers, we need to be very careful about our marketing spend. So we decided from the beginning to use “viral marketing” on the Internet. That involved developing a Web site with a companion blog, and regularly posting articles on eZine and elsewhere to drive traffic to our Web site. We also have had good results with broadcast PR releases announcing the book, the fact that it was endorsed by Donald Trump, and the results of a survey we conducted in which nearly 50% of visitors to our site predicted that the election of Barack Obama would shorten the recession.
Where can our readers find out more about you and your book?
Roncal and Abbo: Your readers can be directed to: www.financialspeculation.com They will find complete background on the authors, a book excerpt, and blog postings that update the book “on the fly” based on unfolding current events. They can register and download our FREE REPORT, “12 Keys to Speculating in Tough Times.”
Is there anything else you wish to add that we have not covered?
Roncal and Abbo: Just to thank you for the opportunity and invite your audience to read this book, which Donald Trump has called a “Great Read!”
Thanks once again and good luck with your book.
Click Here To Purchase The Big Gamble: Are You Investing or Speculating?