Investment Decision Making in the Private and Public Sectors.

• Author: Dantini, Bob

Beenhakker, Henri L.

Westport, CT: Quorum Books, 1996. (264 pp)

Reviewed by Bob Dantini, County Treasurer for Snohomish County, Washington, and a GFOA member.

Investment Decision Making in the Private and Public Sectors reveals a subject so complex that one quails at the prospect of an entire book devoted to it. However, author Henri Beenhakker does a brilliant job in summarizing the details into a manageable book loaded with numeric examples and illustrations.

Beenhakker, a principal economist at the world bank and adjunct professor at John Hopkins University, is the author of four texts and has dozens of articles published in leading business and economic journals.

How many texts have you read where you were not able to follow the contents because of the complexity of the material and jargon? This is a book that is very readable. Beenhakker simplifies matters by making a simple assumption: the audience has no prior knowledge of the various disciplines discussed in the book, i.e., statistics, accounting, economics, and operations research. He discusses in some simplicity how the disciplines are interrelated and integrated into the investment planning process.

In the first part of the book the reader is guided through the 101's of the disciplines that are used throughout the text. In the discussion of accounting, for example, Beenhakker explains different financial statements and ratios, then provides the reader with various industry standards that are used for comparison purposes. The author explains how to evaluate stocks and bonds and discusses when the stock market or shares of similar companies are under- or over-valued. I was particularly impressed with the insight into the complex world of derivatives. The author does a masterful job of explaining forward contracts, options, swaps, and currency contracts. In light of the Orange County disaster, this is a section I would strongly recommend to anyone with the slightest interest in the topic.

The second part of the book gets to the heart of the real issues. In times of shrinking government, tight budgets, mega-mergers, and globalization, today's elected officials, public servants, and private executives must decide how to effectively plan, manage, organize, and tackle complex issues. The book provides a roadmap for financial stewards to guide their entities knowledgeably and expeditiously...