The world according to Peter Drucker
Though 2005 is scarcely a third over, it's not too early to entertain a nomination for investment book of the year.
My candidate is ''The Daily Drucker," a compendium of wisdom from the writings of Peter Drucker, the famed management guru who turns 96 this year. The book, which went on sale from HarperCollins Publishers Inc. in October, caught my eye on new-and-noteworthy lists shortly after New Year's.
Some may question my choice of category, since Drucker's ostensible topic is how to run an organization, not where to invest your money or how to pick a mutual fund. That objection is easily overcome.
Drucker's real subject is understanding what is happening to everybody -- business managers, investors, and people of all sorts -- in a blossoming ''knowledge society" where new technology, massive quantities of information, and other upheavals have left most of us stressed and confused.
''The upward mobility of the knowledge society comes at a high price: the psychological pressures and emotional traumas of the rat race," he writes. ''There can be winners only if there are losers. This was not true of earlier societies."
You needn't be a lifelong student of Drucker's work to see him as a great thinker and writer about this melee. Much of what he has to say is as applicable to markets and financial decisions as it is in the executive suite.
The format of ''The Daily Drucker," along the lines of a daily meditation book, is well suited to an age when snacking has become as standard a way to consume ideas and information as it has for food.
The entry for Jan. 2 discusses a preoccupation of all investors, the future. ''Futurists always measure their batting average by counting how many things they have predicted that have come true," Drucker says.
''They never count how many important things come true that they did not predict."
Instead of playing a guess-the-future game, Drucker says, better to look for and try to understand changes that have already begun to take place -- the ''future that has already happened."
Suppose, I thought as I read those words, we consider how the standard business cycle has changed in the last 20 years. Recessions have become milder and farther apart, perhaps because everybody involved in the process from the Federal Reserve on down has learned something from past mistakes.
The change also owes a lot to better and faster information flows. So why should stocks or interest rates follow a standard old cyclical script?
A key Drucker theme is the importance of continuous learning. For an investor, that may mean questioning, over and over, every formulaic approach to money management, whether it be a standard asset allocation model or something like the case for index funds.
Drucker doesn't argue so much for optimism as for realism. ''Face reality," he says. ''Today's new realities fit neither the assumptions of the Left nor those of the Right."
The world according to Drucker is no theoretical flight of fancy. It's everybody's new place of residence, whether we are ready for it or not.
Chet Currier is a columnist for Bloomberg News.
