Archive for the 'Book Reviews' Category
I’ve heard a lot of people recommending this book, so I picked up a copy of The Richest Man in Babylon by George S. Clason at the library. It’s been out a while, so chances are there is a copy out there, or try getting a copy used. The book is compact, and my edition was only 144 pages long.
Overall, the book was more inspirational than educational, much in the same vein as Rich Dad, Poor Dad. It is told as a set of Babylonian short stories, with Old English writing style including phrases like “Which desirest thou the most?”. Truth be told, it got a bit annoying after a while. However, there were some good rules set out in the book, which include “start thy purse to fattening”, “control thy expenditures”, “make thy gold multiply”, and “make thy dwelling a profitable investment”.
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I just got this in the mail recently and finally got a chance to read through it. It’s titled “Investing Essentials”, by Kenneth Morris and Virginia Morris. It’s actually barely a book, more like a pamphlet (20 pages long including glossary). It looks like a condensed version of Wall Street Journal Guide to Understanding Money and Investing, by the same authors.
From the cover it is:
“An easy-to-understand, easy-to-use primer that helps to take the mystery out of mutual funds, stocks, diversification, risk/return, liquidity, and tracking performance.”
I’d say that pretty much sums it up. If you are already familiar with the basics, this won’t be of much interest. It would probably be great for the beginning investor or a teenager interested in the markets. Either way, it’s free from Fidelity, just click here and fill out the form. No purchase or account with Fidelity required. Give it as a gift? I’m not sure when I filled it out so I can’t say how fast it comes, but it does come.
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It only took me two days to read Rich Dad, Poor Dad by Robert Kiyosaki & Sharon Lechter, as it is relatively short and an easy read. And Kiyosaki likes to say things over and over… and over. This supposedly non-fiction book deals with the conflicting teachings of his “Poor Dad”, his real educated paycheck-to-paycheck father, and his “Rich Dad”, a middle-school drop-out who is a millionaire. There are two basic themes that I got out of the book, after wading through the hokey stories:
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It took me a bit longer than I thought, but I finally wrapped up Common Sense on Mutual Funds by John C. Bogle. Overall, I liked the book, but not as much as some of the others I have read. The first three Parts have to do with Investment Strategy, Choices, and Performance. Basically, costs are most important, you can’t beat the market on average, and Indexing is best. This part of the book was so-so, it wasn’t superbly organized. I felt like The Four Pillar of Investing did a much better job presenting Indexing as the best approach to long-term investing, with A Random Walk Down Wall Street a close second and a better overall primer.
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While A Random Walk Down Wall Street was more of a primer on investing in general, The Four Pillars of Investing by William Bernstein focuses on forming your portfolio. The four pillars are investment theory, history, psychology, and finally investment business.
The book uses statistics and research to support it’s conclusions, which are (briefly and in my opinion) that:
1) Markets go up and down, but timing it is hard if not impossible, and any success one may have is basically luck.
2) As risk increases, so does the return. (Ex. Small-cap stocks vs. Large-cap stocks.)
3) Yes, many actively-managed mutuals fund beat the market every year, but there is no way that you could pick them ahead of time. This year’s winners are just as likely to be next year’s losers. Stick with index funds with the risk-return profile that you desire.
4) The stockbroker makes most of his money on commissions and spreads. Mutual fund companies are similar.
5) Proper diversification in low-expense ratio products can bring you the best chance to keep your money and make it grow.
The book is pretty easy to read, with minimal math. I also briefly browsed Bernstein’s previous book, The Intelligent Asset Allocator, which has a similar focus but is very heavy in the math department. I’d read this book first and see if you thirst for the mathematical underpinnings. I didn’t. I’m forming my asset allocation now and will post it soon.
Overall Rating: 
(ratings explained)
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I just finished up A Random Walk Down Wall Street by Burton G. Malkiel. This book became famous in 1973 for suggesting that a bunch of monkeys throwing darts at the Wall Street Journal could beat out most professional managers. And that theme, supported by a lot of statistics spit out by a lot of grad students, endures today. As the Amazon editorial review simply puts:
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