Novice investor learns it takes more than a stake to make a bundle

A Fool and His Money, by John Rothchild. New York: Viking. 251 pp. $17.95. The subtitle of this book is ``The Odyssey of an Average Investor,'' and that pretty much describes what it's about, except that Rothchild does very little investing.

Sure, he does a little buying and selling of some stocks, options, and other financial instruments, but nothing that could be called investing, where his money would, over a reasonable length of time, grow or shrink with the companies whose stock he owned.

His idea is to start with a fairly modest stake and, by giving himself enough spare time to really examine and understand how the markets work, make a bundle. That Rothchild doesn't make a bundle - his original $16,000 shrinks to $800 - is testimony to the difficulties the average investor can face.

In the year he spent at it, Rothchild did learn a great deal about the stock, bond, and options markets. He traveled to New York, Chicago, and Washington and had access to areas of these markets most investors never see. On the floor of the New York Stock Exchange, he watches as an order is passed from a broker to a trader to the specialist who handles that company's stock. At the Chicago Mercantile Exchange, he watches his own order for two Japanese yen options filled in the Japanese-yen-options pit.

He even tries to glean some ``inside'' information, though his efforts to interview arbitrageur Ivan Boesky are (fortunately, in hindsight) unsuccessful.

These forays into the markets are educational. Seen from a layman's perspective, they provide a greater understanding of how various markets work, and how the professionals in them and the regulators who watch over them keep things running smoothly.

The book is readable, so the education is fast, but it should not be seen as a guide to investing. Near the end, Rothchild muses that he would have done better by keeping his money in the bank.

But, of course, that wouldn't have resulted in a book, which Rothchild may need to recover his $15,200.

Thomas Watterson is on the Monitor staff.