Review of Rich in America: Secrets to Creating and Preserving Wealth (Hardcover)

"Rich In America: Secrets To Creating and Preserving Wealth" by Jeffrey S. Maurer studies clients of U.S. Trust to learn about wealthy Americans.

"Rich In America" focuses upon the top 1% of Americans based upon net worth ($3.75 million) or income ($300,000 per year).

We learn that about a third of these wealthy people earned their money through lucrative corporate jobs; about a third earned their money through private businesses; and about a third earned their money from professional practices.

Most of the affluent attributed their financial success to hard work. Time was also a factor. Only 7% worked ten years or less to obtain their financial status, while the average time worked to obtain their status was 21 years. About a quarter of the wealthy needed 30 years to attain their success. Today, the average, wealthy person still works 48 hours per week. So, I guess, the first "secret" to creating wealth is to work hard for a long time.

Most respondents said they felt they gave up time with family, friends, and hobbies to obtain their current financial success. We also learn other interesting statistics, such as 7.1 million households (6.6% of the population) have a net worth above $1 million. And, throughout the last 20 years, the largest gains in income and wealth have predominantly gone to the richest 1% of the population.

Maurer points out that creating wealth and preserving it are two different things. He writes: "There is an old saying: Concentrate to become rich, and diversify to remain rich."

While Maurer argues that saving (the average respondent saved 23% of his/her income) and compounding help build wealth, he says "...you can forget the notion that investing alone will make you wealthy. ... All those books that say you can make millions in real estate or the stock market overnight are not accurate, but you probably knew that already."

"Rich In America" goes on to argue against simple buy-and-hold investing (which I like). He says you need professional financial advisors today. He also argues that a private banker is nice. At this point, for awhile, the book reads like a promotion for the financial planning services industry, with a special focus on the advantages of U.S. Trust.

Maurer likes hedge funds.(Incidentally, if you read the current 2004 issue of Forbes, which features the richest 400 people, there is a good demonstration of just how rich many hedge fund managers are. Partially due to the excessive fees, I'd argue hedge funds should be avoided by the average investor, even the average, wealthy investor.)

After the promotional digression, the book returns to surveying core topics, such as:

-Taxes ("Do not let the tax tail wag the investment dog[,]" writes Maurer.
-AMT
-Estimated Tax Payments (with which nearly every businessperson quickly becomes familiar)
-Stock Options
-Insurance
-Retirement Planning
-Estate Planning

"Rich In America" does a good job covering some topics not covered in basic financial planning books--topics wealthy people might find especially interesting. For example, in addition to learning the basics of life insurance, we learn about directors' insurance (in case you're on a board of directors) and kidnap insurance (before taking that trip to scenic Baghdad). We also learn that U.S. Trust typically recommends at least $10 million in liability insurance for its clients worth more than $5 million dollars. We learn about starting your own foundation.

My favorite section of "Rich In America" deals with concentrated stock positions and how to diversify such a position. Topics covered include:

-Zero-Premium Equity Collars (huh?)

-Varying Forward Contract (You agree to deliver some of your shares in the future and you receive cash today, locking in some present value, which sounds like it could have been handy if you have billions of dollars in hot IPO Internet stock headed for a correction. There is no discussion about how this relates to restricted IPO stock, where you're locked in from selling before a certain date.)

-Tax-Efficient Diversification through Indexing and Loss Harvesting (You start off with your concentrated stock, you wind up with a diversified portfolio, and apparently no capital gains taxes are due. Sounds like a tax evasion scheme to me. Before I'd try something like this, I'd find out what the IRS says about it!)

-Charitable Remainder Unitrust (CRUT. You probably never knew you needed one.)

Of course, if you think one of these is handy, you need professional advice. But, I'd be careful. Don't assume that just because a plan is pushed by a big, respected firm that it's deemed OK by the IRS. PBS Frontline had a nice feature about tax shelters (search google for "tax shelters Frontline" and you'll probably find it), where entrepreneurs who sold firms for millions and who should have paid millions in capital gains taxes were sold tax shelters by KPMG where apparently no capital gains tax was due. The IRS disagreed. It was kind of humorous watching these entrepreneurs whine and say they trusted the big firm.

As Maurer writes: "There are many truisms to live by in the world of investing. Probably the most important is simply to be sensible. Anything that seems too good to be true probably is. There are no real shortcuts. When some salesperson appears on television and promises that he or she can quadruple any investment in 30 days, the only person whose wealth is truly going to quadruple is that of the salesperson."

Overall, "Rich In America: Secrets To Creating and Preserving Wealth" is an informative book that helps us understand many aspects of financial planning as they relate to the affluent.

Peter Hupalo,
Author of
"Becoming An Investor"



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Review of The Successful Investor Today: 14 Simple Truths You Must Know When You Invest (Hardcover)

I was very impressed with this book and give it an A. Swedroe's investment advice is excellent and the writing style is very easy and fun to read.

I read all 4 of Larry Swedroe's stock investingbooks in the last few weeks, and although they are excellent books and I agree with most of his recommendations, he tends to re-use the same information in each book.To keep this book straight in my mind, compared with the other 3 books, this review is structured along his Outline of the book.

Truth 1: Active Investing Is a Loser's Game: It Must Be So

Larry lays out the case why active investing always loses to passive investing.

Truth 2: The Past Performance of an Actively Managed Fund Is a Very Poor Predictor of Its Future Performance

He does a good job of citing many studies demonstrating that past performance is not a good predictor of future performance.

Truth 3: If Skilled Professionals Don't Succeed, It Is Unlikely That Individual Investors Will
Truth 4: The Interests of Wall Street and the Financial Media Are Not Aligned with Those of Investors

He points out why passive investing is not promoted by Wall Street and the financial media.

Truth 5: Risk and Reward Are Related: Great Companies Provide Low Expected Returns
Truth 6: The Price You Pay Matters
Truth 7: The Most Likely Way to Achieve Above Average Returns Is to Stop Trying to Beat the Market
Truth 8: Buying Individual Stocks and Sector Funds Is Speculating, Not Investing
Truth 9: Reversion to the Mean of Earnings Growth Rates Is One of the Most Powerful Forces in the Universe
Truth 10: The Forecasts of Market Strategists and Analysts Have No Value, Except as Entertainment
Truth 11: Taxes Are Often the Largest Expense Investors Incur
Truth 12: Knowledge of Financial History Is Critical to Successful Investing
Truth 13: Adding International Assets to a Portfolio Reduces Risk

Although I agree with the author's claim that foreign stocks help reduce portfolio risk, I do have trouble believing or following his recommendation of 20 to 40% asset allocation in foreign stocks. I feel more comfortable with a 10 to 20% allocation to foreign stocks.

Truth 14: There Is No One Right Portfolio, but There Is One That Is Right for You

He points out that investing is not an exact science, and the optimum portfolio is difficult to achieve. Each person must get comfortable with the risks and complexity of their allocations. He also gives a convincing argument for skipping mid-cap stocks in favor of only small and large cap stocks.


Conclusion
A: The Enron. Debacle: Lessons to Be Learned

It was interesting to see how some of the supposedly smartest brains in the investing world loaded up on Enron stock, including the Janus funds.

Appendix B: More Investment Truths You. Must Know to Be a Successful Investor
Appendix C: Investment Vehicle Recommendations

Great list of investment choices to implement you asset allocation plan.

D: The Home Financing Decision:To Borrow or Not


Nice analysis of an issue than many investors struggle with.He combines a nice financial analysis with the "able to sleep at night" test.



All-in-all, a great book for serious investors who manage their own portfolios. To me, his four books are very similar. If you choose one of the four books to read, I think you will get 90% of his message versus spending the time to read all 4 books.

I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, the Coffeehouse Investor, and the Bogleheads Guide to Investing.



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Review of Origins of the Crash: The Great Bubble and Its Undoing (Hardcover)

Roger Lowenstein is one of the best financial reporters around, and he has done a fine job of taking the public information about stock market influences since the 1970s and connecting them to the 2000-2002 stock market crash in the United States.

I know of no book that touches on so many subjects including:

-Retirement money moving into mutual funds

-LBOs creating pressure on CEOs to get their stock prices up

-Leveraging of public companies to improve stock price

-The rise of free market economics as a policy influence

-401(k) plans creating a chase for fast results

-CEO stock options rising through the roof

-Michael Jensen and Joel Stern providing arguments in favor of excessive payments to executives

-Rise of the CFO as a "profit engineer" to produce most of company earnings results

-Lack of e.p.s. hit for stock options

-CEO pay skyrockets in the absence of performance due to lax consultants and boards

-New stock options being granted after stocks drop

-Cozy boards that inappropriately keep CEOs in place

-Managed earnings (especially by GE and Coca-Cola)

-Reduced disclosure

-Special Purpose Vehicles (to keep losses and debt hidden from investors)

-Security analysts having conflicts of interest

-SEC didn't do enough

-Accounting firms have conflicts of interest

-Derivatives are too unregulated

-Too much money to Venture Capital funds

-IPO boom

-Pro forma earnings

-Overinvestment in telecommunications

-Unrealistic expectations for the Internet and Internet companies

-Fraud by Enron, WorldCom and others.

Mr. Lowenstein also goes on to describe the current reform efforts including Reg FD and the Sarbanes-Oxley legistlation, and finds that we have not really cured the problem.We will inevitably have another bubble and crash ahead.I agree with that view.

At bottom, Mr. Lowenstein understands very well that too much financial incentive for executives is bad for everyone.The temptation is simply too great to bend the line . . . or to cross way over it.The average compensation in major public companies is excessive now, so the ultimate cause of inappropriate behavior is still in place.As a consultant, I have repeatedly seen honorable people make lousy decisions when the size of their bonus and stock option potential was larger than they could deal with in an unemotional way.

The book's main weaknesses come in two areas.First, Mr. Lowenstein views from the problem as an outsider and gets almost all of his information from the media.As a result, he doesn't give you the real pulse of what was going wrong in the companies.It would have been helpful if he had contrasted the Enrons and WorldComs with companies that were led by executives who have done an outstanding job running their companies during the same years (while being exposed to the same temptations and conflicts) such as Michael Dell, Tom Golisano, James Morgan, Jake Gosa, Bob Swanson, and Bob Knutson.

Second, he is sometimes careless about details.Joel Stern's Economic Value Added (EVA) is described as "Equity Value Added."The Innovator's Dilemma by Professor Clayton Christensen is described as being a bad influence on Citicorp by discouraging executives from improving their existing operations (nothing could be further from the truth).

In the end, I was impressed by his understanding that feeding greed with unlimited incentives is a bad idea.That's the bottom line on this crash.

As I finished the book, I was left wondering how we can cure this tendency to provide too many financial incentives to do the wrong thing.Simply policing those who are provided with the incentives more closely will probably not work by itself.



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Review of Bull's Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market (Hardcover)

This book asks where the stock market will be in ten years' time, and how you should invest as a result of that. It's potentially important, because discussion of long-term investment strategy (as opposed to next quarter's earnings) is so rare - yet obviously critical for investors.For that reason, I'm going to write a more detailed review than most of the others you'll find here.I'll summarize Mauldin's key arguments, briefly discuss his recommendations, and finally give you an honest appraisal of whether you should buy the book.

SYNOPSIS.In the first half of the book, Mauldin sets out to prove that in ten years' time the US stock market will likely be no higher than it is now, and possibly significantly lower.The stock market's future level will be determined by (a) earnings growth and (b) the value the market places on those earnings (ie. P/E ratios), so Mauldin focuses on these two elements. First, he argues that earnings growth will be disappointing.Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%. Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically.He assembles a battery of arguments to prove his case.Secular bull markets have never started from times when the market's P/E ratio was as high as it is today.The market is currently overvalued according to multiple measures, and will likely revert to its historical mean.The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios.Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market.With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower.

If the market will be flat or down over the next decade, how should you invest?That's the subject of the second half of the book.Mauldin recommends that you buy value stocks or a mutual fund run by a value-oriented manager, since value stocks have historically outperformed growth stocks. Stocks that pay dividends are particularly attractive, as a large part of the total return from the stock market has come from dividends.You should also assemble a laddered bond portfolio, buy real estate, and buy gold or gold stocks if you have the expertise.His key recommendation, however, is that you should put your money into hedge funds, since hedge fund results are not dependent on the market rising.

HOW CONVINCING IS HE? Mauldin supports his argument that the stock market will stagnate over the next decade with data, academic studies and a reasonable description and rebuttal of opposing viewpoints.He comes unstuck, however, with the practical recommendations in the second half of the book.Three quick examples:(1) The first half of the book suggests there's a reasonable likelihood of deflation.In that case, cash would be a better investment than most of Mauldin's recommendations.(2) If the stock market is really heading down, as Mauldin suggests with his assertion that the market's P/E ratio could go to 10 or below, the best strategy for most investors is simply to buy long-term index put options; but he doesn't mention this.(3) Hedge funds have lousy tax efficiency, so returns for taxable investors would be a lot worse than Mauldin seems to suggest. These points deserve more discussion than this space allows, so I'll address them in more detail (and provide practical alternatives) on the TechUncovered web site. Suffice it to say that despite his honesty, Mauldin's viewpoint is likely skewed by his profession: acting as an introducing broker to hedge funds.

SHOULD YOU BUY THE BOOK? Despite these criticisms, Mauldin asks important questions and assembles and summarizes a lot of material.But here's the problem.Much of the content has been reproduced from Mauldin's free emails, which are available on his web site, and some of the key arguments are available for free elsewhere, such as Grantham's letters and Bogle's speeches.(I've provided links to these sources on the Market Resource Page on the Seeking Alpha web site.) Worse, unlike the emails, the book has been poorly edited.A couple of the chapters are co-written with a colleague, and read like stand-alone hedge-fund marketing material, while others repeat points in earlier chapters.So the book misses the opportunity to integrate the content of the emails into a readable, methodical argument. Whether you decide on the email archiveor the book, though, Mauldin is definitely worth reading.



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Review of Investor's Guide to Economic Fundamentals (Hardcover)

This book is excellent, as it delivers exactly what its title suggests.The book is expensive, as it is priced as a textbook.However, after reading it I feel it provides an excellent value.And, I will keep it in my personal library of quantitative books. Although the book is short, it is so hard packed with information that it takes a while to digest.Confirming the intensity of the information conveyed Amazon stats discloses that its Fog Index is 14.7 (years of formal education suggested to understand the book) and its Flesch-Kincaid Index is 11.5 (corresponding to the reading grade level).Those metrics are relatively high.However, the book is very rewarding if you want to learn the subject and manage your own capital in a better informed manner.

The book is divided into two main sections.The first section comprised of 10 chapters makes for an excellent foundation in macroeconomics, international economics, monetary and fiscal policies.The author always makes the topic relevant from an investor's standpoint. Thus, he presents the material in a practical way.Some of the subsections are particularly interesting including explanation of the implication of different yield curve shapes, the sustainability of current account deficits and fiscal budget deficits, the differentiation between the cyclical and structural components of the U.S. budget deficit, the detailed analysis of various emerging markets crisis (Asia, Russia, Brazil, and Argentina) during the nineties.In each cases, the author demonstrates an outstanding knowledge of the historical events and the underlying economic factors.

The second section includes 7 chapters covering each a specific investment (stocks, bonds, real estate, etc...). He explains how an investment is valued, what are the main drivers affecting its value, and how economic indicators and factors affect the value and attractiveness of that given investment. The author does a very good job of disaggregating the different components of economic return associated with each investment.By reading this section, you will learn in great detail how to value stocks, bonds, real estate and other assets.

The author also wrote a short third section that serves as a summary, synthesis, and conclusion. Within this section, he compares how all the different asset classes respond to various economic events.He also builds a rational expectation of real returns for stocks, bonds, and real estate going forward.He also outlines the many different investment styles of the investment pros and the challenges that each investment style faces.Overall, I strongly recommend the book.



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Review of Marshall Loeb's Lifetime Financial Strategies (Hardcover)

this book covers just about every financial topic there is. a must have for sure!



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Review of You Can Never Be Too Rich: Essential Investing Advice You Cannot Afford to Overlook (Hardcover)

Dismayed by Wall Street? Looking to learn all the things your broker has never told you, or, better put: doesn't know about? His insights and vision of the entire financial picture are all well executed and integrated into a book that is packed with punch. The only thing I don't exactly agree with in the book are his views on diversification: too much diversification lowers one's overall returns, and he does address this, countering this by his explanation of "flavors of the day," which to him, represents the only part of a portfolio that is somewhat actively traded. I'm not too sure about the total "buy and hold" approach - in these days of highly troubled stock markets, I doubt many could bear watching their accounts go down in value, and many I'm sure will want to sell out and not hold "their children" for the long haul. That said, his "systematic" approach to investing offers the reader a simple STRUCTURE and PROCESS which is far better than most shoddy financial advisors that probably couldn't tell you anything about their system of investing, which is why, when push comes to shove, I give this book a top rating - while I dont exactly agree with all his views on investing, Mr. haft does offer something that most financial advisors couldn't: have a firm grasp on his subject matter, stick with a solid approach and doesnt deviate from it. Furthermore, I have to say, the chapters on Life Insurance, Structured CD's (referred to as growth CDs) and Annuities has opened my eyes into investment products that I never thought of integrating into my portfolio, but now after reading this book, I am absolutely convinced I should consider. Be sure to read the section about what he calls The Private Pension: his introduction to the subject (where he compares it to a Peanut Butter and Jelly Sandwich) is a true gem, and the strategy is something everyone should understand for their retirement goals. Really, a valiant effort and something I'm sure everyone can get a lot of benefit from.



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Review of A World of Wealth: How Capitalism Turns Profits into Progress (Hardcover)

I find it very easy to accept the Washington Times review posted here.It is a very good overview of Mr. Donlan's book.Too good, perhaps, as it almost convinced me not to bother writing one of my own, but this book deserves some comments.

Tom Donlan has done an exceptionally good job of describing the capitalist system and its operation in terms that are, at one and the same time, sufficiently sophisticated to attract specialists, yet intelligible to a much broader public.Mr. Donlan's viewpoint is very obvious; he's "pro-capitalism" and not ashamed to say so, yet he does not beat you over the head with it.When discussing climate change, for example, he presents Vice President Gore's viewpoint and his own, but without the overly-emotionally, anti-intellectual verbiage so common these days from both sides of this issue.Rather, he discusses what Gore's conclusions may mean in terms of the capitalist system's response.As he says, "Global warming is not just an environmental problem; it is also an economic problem."Donlan rightly emphasizes a subject that will become increasingly important as we move from debate to action.

"A World of Wealth" is not a polemic so much as it is a patient and intelligent explanation of a system that most of us think we understand, but few of us can explain in any detail.By focusing on how capitalism and free markets work in a straightforward manner, Donlan brings us back to the basics of the system that has provided is with so much wealth to enjoy and to squander.His emotional commitment to capitalism is clear, but it is his plain-spoken analysis that makes this book worth reading by anyone, socialists included.

I enjoy reading books on finance and economics.Books like Mohamed el-Erian's "When Markets Collide," Nicholas Taleb's "Fooled by Randomness," and Robert Shiller's "Irrational Exuberance" inform me and provide deeper insight into important ideas and trends.But I would liken Thomas Donlan's "A World of Wealth" to Fareed Zakaria's "The Post-American World".They stand in a somewhat different class.They are intelligent, thought-provoking, and deal with very important topics, yet they are also eminently readable and understandable by anyone with a decent education, regardless of their technical training.This should be no surprise.Both Zakaria (formerly editor of Foreign Affairs and currently editor of Newsweek International) and Donlan are professional journalists and both have many years of editorial experience for publications that demand excellence.They know how to communicate their thoughts clearly and succinctly on topics of great importance.That is worth the price of a book like "A World of Wealth" in itself.



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Review of You've Lost It, Now What? How to Beat the Bear Market and Still Retire on Time (Hardcover)

Investors contemplating retirement, but stunned by losses sustained in the extended bear market that began in the spring of 2000, will find hope and encouragement in Wall Street Journal columnist Jonathan Clements' "Now What?". This is a do-it-for-yourself repair strategy for baby boomers with badly damaged bubble portfolios. First, face facts, we are told: You've got a "bone-head" portfolio, and it's not likely to come back in value, so sell your losers. Forget the "foolish beat-the-market fantasy" promoted by Wall Street's brokerage houses and money management firms. Invest to capture market returns with stock index funds. Diversify with stocks, bonds, and real estate. Specifically, you should own large and small US stocks and foreign stocks. For the bond portion of your portfolio, use inflation indexed treasuries and short-term corporate funds, and to boost your income, consider high yield bond mutual funds. Clements recognizes that "this will be the decade of the dividend and interest payment". So, REITS (real estate income trusts) with their high, single-digit returns, should represent 10-15% of your portfolio. In all this, Jonathan Clements is in good company: W. Bernstein, C. Ellis, B. Malkiel, L.Swedroe, B. Schultheis, et.al., have recently written (or updated) books with similar conclusions. Clements' contribution is in the timeliness of his insistence that boomers can salvage their own retirement plans by acting to keep investment costs in check, diversifying, and saving "like crazy". Indeed, the investment process should be simple to follow. "Why are we such sluts for sophistication?" Clements asks with exasperation. Readers may be skeptical that a fifty-year old, in an example, who hasn't saved a "nickel" for retirement can accomplish much by age sixty-five. But this late starting investor is not the book's primary focus. 'Gilding the Golden Years' (Chapter 7) is one of the author's better chapters. Investing may be "simple", but it is also an art, so this frequently quoted columnist's portfolio advice is of value. Clements is clearly intrigued by a strategy of establishing multiple sources of investment income during retirement. In addition to income from social security, 401k-style plans, pensions, and humbled securities portfolios, investors might consider an immediate annuity, a reverse mortgage, or even part-time work. After all, if it's true that investors should take no more than five percent of their investment assets each year for income, working part-time to earn five thousand dollars is like having another hundred thousand dollars in retirment assets. And an unconventional idea like a reverse mortgage may take on a new practicality for today's generation of soon-to-be retired. Investors paralyzed by their recent bear market experience will find sound, helpful advice in this book.



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Review of Ruff's Little Book of Big Fortunes in Gold & Silver: A Middle Class License to Print Money (Hardcover)

A good introduction to investing in Gold, Silver and mining stocks. The author is knowledgeable as well ashumorous and entertaining. No shrinking violet either! It helps that I was already a huge believer and practitioner of the methods he puts forth though. An enjoyable read and well worth the money. But I will caution that , as is usually the case with these types of books , there's a lot of cross-promotion laced throughout , from ads for his own newsletter , to other ancillory services. Some things kind of stick in my craw , such as statements like "There is no best- or worst-case scenario in which I can conceive of gold and silver being losers. You can mortgage the kids and bet the farm!". Some claims I find questionable: "If you add up the dollar value of all the gold and silver supplies in existence, plus the market value of all the stocks of the mining companies, it would total far less than the market capitalization of Google or Microsoft." Don't know what is meant by this. Google has a market cap of about $123 Billion. The giant mining conglomerate BHP Billiton has a market cap close to the same , at $112 Billion. Microsoft has a $271 Billion cap. But 'According to the World Gold Council (and others) there are between 4-5 billion
ounces of gold remaining in the world...' (off the web). At $600/ounce that's a value approaching $3 Trillion right there. One last thing I note with confusion is that in a the chapter on potential scams , he admits readily that a company he founded which he describes as having been a coin and bullion dealer, was subsequently sold to a scam artist, and people were hurt. He says he feels a sense of accountability , and that the buyer's intentions were unbeknowst to him , and internet searches do seem to show that he had nothing to do with the problems that arose from this entity. But , the confusion arises from the fact that he repeatedly says he got out of the metals markets in 1980 and was even bearish until recently. "...I ignored the metals for 22 years..." So the question then is how/why he founded a coin and bullion dealership which appears to have been founded in 1985.
In any event , bullish as he is , the author offers very sound advice of avoiding undo leverage, watching out for fraudsters,and diversifying among investments within the realm of metals.
Recommended.



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Review of The ETF Book: All You Need to Know About Exchange-Traded Funds (Hardcover)

Let me say at the outset that I am NOT a professional investor, that I HAVE invested in individual securities as well as mutual funds for forty years, that I now, as a retiree, restrict myself to annuity income and mutual fund investments (mostly passive), and that I have not yet purchased ETFs, though Ferri's book convinces me ETFs could perform a useful function in my portfolio.

If, like me, you have not yet invested in ETFs but want to know how they are constructed, how they function, and what role they might serve in your portfolio, then Rick Ferri's book is the FIRST place you should go for a comprehensive guide to understanding ETFs.

Ferri's book can be read in, or through depending on the reader's interests.By this I mean his book divides into four free-standing, but continuous, parts.The first part deals with ETF Basics--the history, mechanics, and potential benefits and drawbacks.Part Two, a real eye-opener for this reader, focuses on index construction and provides an index strategy box akin to how Morningstar analyses mutual funds.Part Three broadens the discussion to styles and choices--from broad domestic/global indexes to equivalents of slice and dice strategies.Part Four shows, in detail, how investors can incorporate ETFs into their asset allocation plan--whether they are inclined to passive, active, or a combination of portfolio strategies.

Thankfully, Rick Ferri goes to great pains to communicate clearly with his readers.To my mind, he has no axe to grind, although as a professional portfolio manager he advocates passive investing.Ferri provides many alternative portfolios (passive, active, combo) spread along a continuum of life-cycle investing.

It certainly speaks well of this fine book that it receives the ringing endorsements of the likes of Don Phillips, David Blitzer, and Anthony Rochte, Senior Managing Director of State Street Global Advisors.Robert Uphaus



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Review of Wisdom on Value Investing: How to Profit on Fallen Angels (Hardcover)

Finally!A book on investing that's written in plain English and does not try to predict the future.From start to finish the author encourages the reader to utilize solid systems, creative original thought, and never again rely on a "me too" mentality.This book will accurately expand your view on your investing.

The book provides valuable information to give you the confidence and systems to make sound and sensible decisions when choosing investments, never again having to rely on the alleged experts to lead you down the wrong path or over the cliff.Never make another investment decision based on fear.

Anyone serious about investing, from the complete novice to the seasoned veteran, will benefit from reading this book.And for those who are not fearful of breaking out of the herd ... it's a real keeper!



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Review of The Goldwatcher: Demystifying Gold Investing (Hardcover)

Having spent significant time in the past three years studying and thinking about gold as an investment, I can say unequivocally that the first 10 Chapters of this book are the best 'balanced and unbiased' summary that I have come across of the things I consider topically relevant.I consider it 'must reading' and recommend it to anyone interested in gold and the gold market.



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Review of Beating the Market, 3 Months at a Time: A Proven Investing Plan Everyone Can Use (Hardcover)

I got a couple of useful ideas fromthis book, but overall I was disappointed. The most useful ideas are (1) market sectors that outperform over one three-month period are more likely to outperform over the next three-month period, and (2) how to use ETFs to implement a timing-rotation strategy based on the first idea. The disappointments: (1) This is a thin book: 218 pages with large print. Take away the notes and index and it's 196 pages. (2) There seemed to be some internal conflict in just how to use allocations to create proper portfolios. After a while, I was not sure just what was being recommended. If I got it right, four different investment strategies ended up being recommended, and then blends of those were discussed. I got confused. Partly this may be the result of the book having two authors, and they apparently wrote different chapters independently. I'm not sure everything got reconciled. (3) The end of the book wandered into retirement topics, healthcare costs, social security...in other words, non-investing topics. This was unnecessary, annoying, and one wonders whether it was done because they needed more pages.



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Review of The Volatility Course (Hardcover)

Readers would buy this book assuming that they will be able to master the concept of volatility, and use it in their options trading, but this is far from being the case.
One would expect a book that deals with an advanced concept such as volatility, to take it as a given that the readers are already familiar with all the basics such as "an option gives the buyer the RIGHT not the OBLIGATION" etc.Iestimate that about 2/3 of the book deals with such beginner stuff.
On top of that, the authors don't even try to conceal that their primary purpose in writing the book is to deliver traffic to their premium web service.
I did learn a few things about volatility, but I was left with the feeling that I was tricked



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Review of Discover the Upside of Down: Investment Strategies for Volatile Times (Hardcover)

This book was an absolute disappointment.The author promises "investment strategies for volatile times", but this volume provides little more than a collection of loosely organized, poorly written war stories and anecdotes about the market, with no real strategies to speak of.To add insult to injury, the author attempts to ShamWow readers by pointing them to a website where Coby offers a proprietary indicator he calls the "Grail".Save your money.



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Review of Create Your Own ETF Hedge Fund: A Do-It-Yourself ETF Strategy for Private Wealth Management (Wiley Finance) (Hardcover)

Disclaimer: I'm a subscriber to Mr. Fry's investment website.

Outside of my 401k I stick to dollar cost averaging into low cost index funds. It's proven and good for the 'lazy' investor. But in the tax sheltered setting of my 401k I use some knowledge and a bit of common sense to invest wisely and avoid needless fund fees that sap returns. Dave's methodology has opened a new and exciting door to investing.

Dave has good practical advice on how to 'hedge' in the traditional sense using currency, commodities, and other unique ETF solutions. This has proven particularly useful in the current economic environment. His broad experience in the world of personal investing comes through clearly in a well written and witty text.

That said, I think the book is geared as an explanation of the new world of ETFs and a companion to the subscriber website and not an investment 'cookbook' solution in and of itself. (I take my direction through 'consensus' of several sources and Dave is more often on the mark than not.) Yet, if you've marveled at the choices in ETFs recently, and are looking for some guidance on how to utilize them, then this is a worthy read.You will come away with new and viable ideas on how to invest.

Even if you're not a fan of technical analysis, Dave's daily blog (links above) offers some insight into current market conditions with easy to understand charts and comments. Also you'll find Dave's comments on ETFs and financial markets in articles on many of the top financial websites.

Regards,



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Review of Duration Analysis: Managing Interest Rate Risk (Hardcover)

From Preface:
[1987]

"Professional managers, using duration concepts, manage investment funds worth billions of dollars in fixed income securities. Duration analysis has come of age.It represents a methodical approach to prudent investments in bonds and mortgages.Whether duration analysis appeals to all investment managers or not, it will likely continue into the 21st Century.

This book contains:
* a complete development of the fundamentals
* a detailed description of leading applications
* technical appendixes
* an up-to-date summary of published empirical research on duration analysis
* some caveats dealing with callability and credit risk
* some indications of the direction of future research

The book is intended to be a guide to the many-splendored wrinkles of duration analysis as well as an accessible exposition of the fundamentals and their applications.

Chapters include:

I - Duration and Changes in Valuation
1 - Income Streams, Discount Functions, Yield to Maturity
[Interest Rate as an Index Number; Interest Rate as Rate of Return; Constant Time Price for Money; The Yield to Maturity (Internal Rate of Return)]
2 - Bond and Mortgages
[Bonds: General Valuation, Par Bonds, Discount Bonds, Premium Bonds, Amortization, Value as a Function of Yield to Maturity]
3 - Duration and Changes in Prices and Yields to Maturity
[Yield to Maturity and Price Changes; Coupon Rate and Price Changes; Maturity and Price Changes; Percentage Price Changes and Duration]

II - Investment and Strategies, Duration, and Risk
4 - Investment Accumulation and Duration
[Duration of Portfolio, Duration Window, Planning Period, Dynamic Immunization Strategy]

5 - Measuring Risk and Return
[Expected Excess Returns and the Variance of Returns; The Optimal Duration Decision; Approximating the Efficient Frontier, The Fishburn Risk Measure]

III - Applications
6 - Contingent Immunization
[Potential Return, Trigger yield Contours, Risk and Returns]
7 - Funding Multiple Liabilities: Dedicated Portfolios
[Redington's Problem, Examples of Redington's Dispersion Condition]
8 - Duration and Operations in the Futures Markets
[Futures and Forward Contracts; Interest Rate Futures; Hedging and Duration]
9 - Depository and Other Financial Institutions: Duration Gap Management
[Net Worth and Interest Rate Risk; Capital/Asset Ratio and Interest Rate Risk, Net Economic Income and Interest Rate Risk; Net Return on Assets and Interest Rate Risk; Illustrations of the Impact of Interest Rate Changes;]

IV - Empirical Estimation and Simulations
10 - The Term Structure of Interest Rates
[Forward Rates, Examples of Forward Rate Computations; Yield Curves; Implications of Coupon Biases; Measuring the Term Structure]

11 - Duration and Stochastic Processes of the Term Structure
[Stochastic Process, Duration as Elasticity, Multi-variable Random Shifts]

12 - Empirical Research
[Immunization Studies; Regression Studies]

V - Non-Interest Rate Risk
13 - Some Caveats on Callability and Credit Risk
[Callable Bonds, Default Risk]



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Review of Investing Smart: How to Pick Winning Stocks with Investor's Business Daily (Paperback)

Being a student of William O'Neil's CANSLIM method of stock selection I found this book tiresome to read mainly because I know the subject matter so well.Dr. Sethna was certainly long winded and rambling in his writing style and could have said what he did in a third of the space he used.If you desire to learn about William O'Neil's methods purchase his book, "How to Make Money In Stocks."Lastly, Investor's Business Daily has added many new features since Dr. Sethna wrote this book so some of the information he shares about the paper is dated.

Product Description
Using Investor's Business Daily as his major source of investment information, Dhun Sethna tripled his portfolio in five years. In Investing Smart, Sethna shares what he's learned about picking stocks with the nation's fastest growing newspaper, unlocking the powerful money=making information in every edition.

You'll discover where to look for winning stocks every day. . .which indicators to watch to avoid losses. . .the psychology of market behavior. . .and much more. The book delivers straightforward explanations of the complex and powerful forces which drive stock prices. All in all, it gives you the tools you need to invest wisely.

From the Back Cover
Unlock the money-making power of Investor's Business Daily today!

"Investing Smart is a book about doing and discovery, about discovering the thousands of newer companies with revolutionary new ideas and new technologies, and innovative new products, that make up what I like to call "The New America." After all, it is the discovery of these winning (companies) and their trends that smart investing is all about."­­From the Foreword by Willian J. O' Neill, Chairman and Founder of Investor's Business Daily

This book is the definitive must read for all investors looking to substantailly increase their portfolio results. In it, investors will learn the investing secrets used by many of today's most successful investors and money managers to achieve unparalleled results.

Investing Smart unearths the money-making opportunities found throughout Investor's Business Daily's exclusive tables, charts and screens. In this easy-to-understand presentation, you'll gain profitable insight into the nature of markets, the psychology of trading, and commonsense ground rules for making the right investment decisions­­at the right time.

You'll discover:

• The best sources for identifying emerging stock market leaders
• How and when to buy or sell stocks
• How to manage any portfolio­­large or small
• The best way to interpret the economy's vital signs
• The psychology of market behavior­­and much more

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