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In the Money, continued

Economics 101

Todd Buchholz '86 runs a multimillion-dollar hedge fund and writes regularly on the economy for the Wall Street Journal, two outstanding credentials for a man who loves to teach people about economics and investing.

Todd Buchholz "I spend my day trying to figure out the links--connecting the dots," said Buchholz, a former White House economic adviser and now president of Victoria Capital, a hedge fund based in Bethesda, Md.

When George W. Bush got elected, for example, Buchholz had to consider how a new president would impact world markets. "What does that mean for defense spending? For defense stocks? Does it mean Greenspan is more likely to cut interest rates--or to cut interest rates sooner? And, if Greenspan cuts interest rates, will the Bank of England follow? If the Bank of England cuts interest rates, will that help the British pound against the dollar? Will it help Airbus sell more airplanes than Boeing?"

Such reasoning is at the core of Buchholz's everyday work with Victoria, and also a way of thinking he wants readers of his columns and three books to adopt.

"It's a big Rubik's cube that's constantly changing," he said. "When you think you've got it solved, suddenly, the colors switch. There's never a final game. To my mind, it's always interesting, always challenging, and not simply about numbers."

Ever since he was an undergraduate economics major at Bucknell University, Buchholz has been honing his finance skills and finding new ways to teach basic economics. He enrolled at HLS, unsure of what he wanted to do. All he did know, he says, was that law school would benefit him.

"I felt that society was supported, and in some ways controlled, by an underground structure," he said. "I thought that in order to be a successful participant in either the private sector or the public sector, it made sense to go down into the basement and figure out what that structure was--that being the legal structure. I wanted to learn to think like a lawyer and to make decisions weighing precedents against the black letter of the law and common sense. Plus, I had always enjoyed public speaking and felt legal training would be helpful with that."

During his HLS days, Buchholz was an economics teaching fellow at Harvard College, work that earned him the Allyn Young Teaching Prize. He later studied economics at Cambridge University and wrote his first book, New Ideas from Dead Economists: An Introduction to Modern Economic Thought. In the book, Buchholz applies long-standing economic theories to modern issues, making the thoughts and writings of the great economists of the past relevant to the economic and social matters we face today.

The book led him to the White House. He had worked closely with Martin Feldstein, President Reagan's chief economic adviser and head of the major introductory economics course at Harvard. Feldstein encouraged Buchholz to get involved in the 1988 presidential campaign. That work yielded him a job as a director of economic policy at the White House.

Working in the White House was, Buchholz said, both "exhilarating and frustrating" because George H. W. Bush had begun his term as a very popular president but was unable to sustain that popularity through the end of his term.

In addition to running Victoria Capital and contributing regularly to the Wall Street Journal, Buchholz is a contributing editor for Worth Magazine and a frequent guest on ABC's World News Tonight. He provides monthly commentary on PBS's Nightly Business Report and speaks to companies about the economy and corporate strategy.

Buchholz's third book, Market Shock: Nine Economic and Social Upheavals That Will Shake Your Financial Future--and What You Can Do About Them, which describes various modern trends and how they affect financial markets, is aimed at the average investor.

"We now are a country of capitalists," Buchholz said. "Most families own stock. Most people these days turn to the financial pages before the sports pages. We now seem to have a much greater interest in understanding the financial markets, as well as the economy. We are all now responsible for ourselves and our financial futures."

Writing on the economy lets Buchholz continue his teaching, as he helps people understand the forces that impact their financial well-being.

"I've tried to figure out fresh and witty ways to explain economic, financial, and political events," he said. "These subjects don't have to be dull. They don't have to be rote. I try to draw on popular culture to make these ideas more fun and accessible. There's still a bit of a teacher in me, and I get satisfaction from being able to express ideas in ways that open people's eyes."

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