What Business Book Publishing and the Stock Market Have in Common
If you follow the stock market closely enough you know that today’s market is a study in volatility. But that wasn’t always the case. When I bought my first stock in 1974—Gulf Resources at 14 1/4—only about 15 percent of American households were invested in the market, and trading volumes were anemic. Markets were sleepy. That changed a decade later. By the late 1980’s, despite the crash of ’87, stocks became all the rage. Everyone seemed to get in the market, volumes ballooned, and stock market investing became a global phenomenon. The great bull market, which started in 1982, continued with a vengeance in the 1990s. In fact, the great bull market that commenced in 1982 did not end until the dot com crash of 2001-2002. So how is the stock market like the business book market?
The great bull market in business books also started in 1982 with the publication of Peters’ and Waterman’s In Search of Excellence and Ken Blanchard’s The One Minute Manager. From that point on business books became a booming industry, with many of them, including the two aforementioned titles, gracing The New York Times Bestseller List. However, like the stock market, business books were not new. The father of modern management, Peter Drucker—who I devoted an entire book to in 2009—had been writing a whole genre of business titles since 1946. However, there was a vast difference between Peter Drucker and Tom Peters, co-author of In Search of Excellence. Peters was considered cool, a by-product of a new era in which CEOs were the new American heroes (think Lee Iacocca and Jack Welch). Business books, like stocks, were no longer considered to be something for only a slim slice of the population. Business books were now considered hip, and they seemed to be everywhere. They even became fodder for cocktail party conversation.
Fast forward to today: in 2012, volatility in the stock market—as measured by something called the VIX index—has become the norm. The financial markets are characterized by turbulence. The same is true for business book publishing. The demise of bookstore chain Border’s has been a great loss for the publishing industry. There are now fewer places to “place” books, which has had a chilling effect on the book business (in all genres, not just business books). In addition, the proliferation of free information on the Internet and the fragile state of the U.S. economy has made business book publishing a very tumultuous industry. Layoffs have become the norm in book publishing (and on Wall Street). Perhaps the greatest comparison between the two industries is its unpredictability. No one knows what tomorrow will bring. Who could have known that Border’s would fold and Amazon would emerge as a major book publisher? Who could have known that eBooks would become such a major force in the industry after starting out in the 1990s as a major flop? The stock market and the business book market have one more important link: they tend to move together. Business book sales rise when the stock market goes up. It’s a case of rising tides lifting all boats.
I could go on, but you get the idea. One thing is for sure: both turbulent industries will bring us plenty of surprises in the months and years ahead.