Editorial Review

What if there were a way to cut through all the financial mumbo-jumbo? Wouldn’t it be great if someone could really explain to us—in plain and simple English—the basics we must know about investing in order to insure our financial freedom?

At last, here’s good news.

Jargon-free and written for all investors—experienced, beginner, and everyone in between—THE INVESTMENT ANSWER distills the process into just five decisions—five straightforward choices that can lead to safe and sound ways to manage your money.

When Wall Street veteran Gordon Murray told his good friend and financial advisor, Dan Goldie, that he had only six months to live, Dan responded, “Do you want to write that book you’ve always wanted to do?” The result is this eminently valuable primer which can be read and understood in one sitting, and has advice that benefits you, not Wall Street and the rest of the traditional financial services industry.

THE INVESTMENT ANSWER asks readers to make five basic but key decisions to stack the investment odds in their favor. The advice is simple, easy-to-follow, and effective, and can lead to a more profitable portfolio for every investor. Specifically:

• Should I invest on my own or seek help from aninvestment professional?
• How should I allocate my investments amongstocks, bonds, and cash?
• Which specific asset classes within these broadcategories should I include in my portfolio?
• Should I take an actively managed approach toinvesting, or follow a passive alternative?
• When should I sell assets and when should I buymore?

In a world of fast-talking traders who believe that they can game the system and a market characterized by instability, this extraordinary and timely book offers guidance every investor should have.

Reviews

Elegant summary of the core of personal investing
One of the advantages of a college education with a major in finance is that you learn the fundamentals, and, more importantly, you learn the boundaries of the universe in terms of what the field includes and what it excludes. Spend an hour or so reading this book, and you will also get that comfortable feeling that comes from knowing that you understand what personal investing is really all about. You will get the "big picture" and how it affects you.

I have been a full time faculty member teaching at the college level for the past 35 years and must say that the authors have managed to capture the essence of personal investing in about as few pages as I have ever seen and with a clarity that is very rare in books on this topic. I intend to make it required reading for both my undergraduate and graduate personal finance classes.

I might also add that any negative reviews posted to this site are likely to come from Wall Street brokers who make their living by exploiting the general public's ignorance on investing. These brokers don't like books that clarify and illuminate rather than mystify and obfuscate basic principles. As a lifelong educator, I applaud Goldie's and Murray's nobel effort to help readers educate themselves so as not to be fooled by the same Wall Streeters who disgraced themselves in 2008 and nearly destroyed our economy with their greediness. Anyone who feels they don't know enough about investing should read this book. It is a gem.

The title says it all - The Answer
You won't be getting this book from your broker for Christmas. You don't need to read a bunch of "Beat The Market!!!!!" books to develop a sound approach to investing. Evaluate your personal investment goals and timeframe, take a gut check on your appetite for risk, and accept that risk and returns are correlated. The authors make a compelling, data driven argument in under 100 pages that describes a "no regrets" approach to investing. Market timing, stock picking, commodity speculating, etc. ultimately benefit the trading pros over the average investor. Choose your asset allocation model with a few simple principles, then buy diversified global capitalism for your equity component with low expenses. And hold it. Done. You won't be the big winner in any given year, but you will likely out perform 95%+ of investors who buy the proven myth that they can beat the market. There are many purveyors of this snake oil, but few truth tellers. Murray and Goldie get it right, and this book is so short and to the point that you must read it.

the investment primer for everyone
I just read The Investment Answer this morning in under an hour and it is brilliant -- comprehensive without being overwhelming, easy for a broad audience to read and understand, and most importantly, easy for anyone to execute.

Over the last 30 years, this is the model we have used to invest, and it has served us very well. But we have not been able to articulate this sensible plan to friends and family (especially our children) in a way that was understandable and compelling. The temptation to "take the bait" from Wall Street is strong. Many friends and colleagues who are more "sophisticated" investors suffered the sad outcomes so elegantly described in the book.

Gordon and Daniel -- thank you, thank you for writing this book. I am placing my order for 10 copies to give away to family and friends this morning. You have accomplished what few have -- a lasting legacy that will positively impact many families for a lifetime!

All you need to know for a successful investment experience
Like losing weight, successful investing is based on a few simple concepts. However, also similar to losing weight, the concepts are not always easy to implement. It takes discipline to execute the simple concepts of eat less and exercise more. It also takes discipline to execute the simple concepts of diversification and rebalancing. Dan Goldie and Gordon Murray have done a terrific job of breaking down successful investing to a few core concepts. They explain the concepts in layman terms, always keeping it short and simple. The beauty of this book is the brevity yet clarity of each concept covered. You do NOT need to read a 300+ page book to understand investing. There is now this book, which is under 80 pages...but even a quicker read than you might think because of the font and graphs. I read the entire book in two hours one evening. I have an undergrad degree in Finance and Economics and have spent about five years combined time earning my CFA and CFP(r) designations. YET, if you simply commit to spending two hours reading this book, you will be privy to all the key investment principles that took me 20 years in the business to discover. Not only do I give this five stars, but I plan on buying 50 books and giving them away to every relative and friend I have. Disclosure: I don't know either author nor have I met either one. I'm just in the same industry and delighted that someone actually wrote the book that I wish I had written.

The book that I wanted to write!
Dan and Gordon have written the book that I've wanted to write for years, but never found the time. It is clear and concise. I read it in less than an hour.

The authors do a great job of explaining the difference between an independent investment advisor and a salesman working in Wall Street's broken business model. This is something that the vast majority of investors do not understand.

Even novice investors will find this easy to understand. Perhaps even more important, it debunks the myths that prevent most investors from achieving success. Read it and buy another copy for someone that you care about.

Perfect, Bite-Size, Investment Book for Any Level Reader
This book is a perfect culmination of: Goldie's experience with frustrated clients due to Wall Street gimmicks, explanations of why Wall Street's solutions are substandard, and an academically, exhaustive, investment remedy for every investor. BAMM!

The authors' abilities to "cut to the chase", and quit the "beating around the bush", leaves the reader feeling refreshed and informed. Simple examples and compelling stories will resonate well with all levels of readership.

If you are looking for a way to quit worrying about your investments, ignore CNBC & WSJ, and "drop" that confused feeling you have about investing, this is your book! Grab a cold Coke, relax, and enjoy yourself for the next hour of your life. You will forever thank the authors for presenting the information in such a light manner. I bet you will refer the book to at least 3 of your friends.

Run, don't walk, to get this book!!
Several years ago, Gordon sat my husband and me down to show us the beta version of this book. We'd been friends for years and he felt strongly that we needed to know how to protect our money. His arguments were so clear and compelling that we moved our investments from a traditional retail broker to an investment advisor with an investment philosophy based on the concepts in this book -- efficient markets, modern portfolio theory, diversification, and asset allocation.

For the first time, we felt confident that we and our investments were in good hands. Then the recession hit. Our portfolio did less badly than many and rebounded faster than most. And with this book, we understood why.

Run, don't walk to buy this book or download the pdf version. It will give you the peace of mind and sense of control that ONLY happens when you understand how the financial world really works. With what we learned, we felt ready to act in our own best interests. You will too.

Women should read this book!
Like me, many women were not handling their family's investments and are now seeking to take control of this aspect of their lives. Now that I manage my own investments, I wanted to make wise and purposeful decisions. I didn't want to just take the path of least resistance. This book helped me ask the essential questions and seek answers that suit my objectives. I finally feel in control of my finances!

The best basic investment book you'll ever need
I read Dan and Gordon's book cover to cover in about 45 minutes last weekend. It is chock full of very good data and excellent advice on how to invest money successfully, something most investors do not achieve. I plan on giving the book to each one of my children to help them better understand how to properly invest their own money.

Read this book before you invest
I wish that someone had written such a succinct treatise on investing before I first started investing my money. I could have avoided some very counterproductive forays into commodities, oil and gas ventures, and other highly suspect "investments". Read this book before you implement your investment plan. ... Read more

Editorial Review

Stop buying stocks!

An investing strategy that works

when buying individual stocks doesn’t

• Why buying stocks is an even worse strategy than you thought
• How to cut costs and risks, earn solid returns, and sleep at night
• By top Reuters financial journalist David Gaffen, founder of The Wall Street Journal’s MarketBeat

Millions of people have sacrificed their futures to disastrous stock performance. But you don’t have to “suck it up” and accept massive losses. Never Buy Another Stock Again offers you a common-sense approach to investing that helps you earn solid returns with less cost, less risk, and less fear.

Top financial journalist David Gaffen identifies portfolio components and asset classes that make sense when individual stocks don’t…shows how to avoid trendy new investments that are just as bad as stocks…helps you use cash wisely, carefully profit from ETFs and index funds, and offset the risks of any stocks you choose to keep.

Want to build wealth that won’t be washed away by the next stock price collapse? Never Buy Another Stock Again!

Reviews

Common-sense (and yet rarely given!) financial advice
This book is the most common-sense investing advice a personal investor can get.

David Gaffen is a financial journalist who lived the day-to-day of the rise and fall of the markets in the 2000s while writing for the Wall Street Journal (among other outlets). He brings a firm command of that micro-level detail to a macro-level argument: don't buy individual stocks. Yes, Apple and Google made you rich if you got in cheap. But you probably didn't. That is why they gained so much value: everyone else bought them. And when you buy a stock because it gained so much value -- or just because Jim Cramer told you to -- you are more likely to catch the wave downward than upward. Remember those high-flyers that everyone touted like Enron? Worldcom? Global Crossing? Lehman? What are the chances you picked Apple and Google, but avoided all of these?

So, if not individual stocks, what should you invest in? Gaffen will give you sage advice that isn't trendy, isn't fancy, and won't make you rich overnight. It's not a magic formula (and it's nothing Gaffen himself is selling, as is the case with so many of these types of books). It's just a mixture of old-fashioned common sense, combined with some insight on little-discussed but highly important factors such as fund fees and other transaction costs, as well as some advanced views on the relative strengths of different sectors of the market (corporate bonds, munis, ETFs, commodities, etc.). Beginning investors will find the overviews highly useful, and more experienced investors will still gain some valuable insights.

Even better, this book manages a neat trick: it is a feast of facts, figures, and analysis while being a speedy and fun read, thanks to Gaffen's knack for pop-culture references that don't feel forced or artificial. In sum: a great, and very useful, read. ... Read more

Editorial Review

More than one million hardcovers sold
Now available for the first time in paperback!

The Classic Text Annotated to Update Graham's Timeless Wisdom for Today's Market Conditions

The greatest investment advisor of the twentieth century, Benjamin Graham taught and inspired people worldwide. Graham's philosophy of "value investing" -- which shields investors from substantial error and teaches them to develop long-term strategies -- has made The Intelligent Investor the stock market bible ever since its original publication in 1949.

Over the years, market developments have proven the wisdom of Graham's strategies. While preserving the integrity of Graham's original text, this revised edition includes updated commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today's market, draws parallels between Graham's examples and today's financial headlines, and gives readers a more thorough understanding of how to apply Graham's principles.

Vital and indispensable, this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.

Reviews

Classic Investment Book Enhanced for Todays Investors
When I first came across the first edition of this book in my local library in 1959, I was a teenager. Back in those days there were only a handful of books about the stock market. And I've read all of them during my junior high and high school years.

This latest updated 623-page paperback (the index alone is 33 pages) version updated by Jason Zweig is a welcome addition to this classic. The original chapters are intact, but with footnoted comments by Zweig. Moreover, he provides his own commentary on each chapter contents in a separate chapter following each original chapter. He provides extensive research, charts, tables and commentary that updates the book to the present years. He is not afraid to take on the big guns of Wall Street and show how wrong they were in some of their extremely bullish predictions during January-March 2000, when the market was at its peak.

The first nine chapters cover investing basics that all investors could benefit from. There are many truisms spouted on Wall Street that are not really true. These chapters provide the investor with a realistic picture of how Wall Street works and what investors need to do to come out ahead.

Chapters 10-20 focus strictly on fundamental analysis, stock selection, convertible issues and warrants, and other subjects. Investors who plan to invest directly in stocks should make sure to read these chapters. However, for readers more interested in investing in mutual funds, and in particular index funds, they need not concern themselves with all the detail in these chapters unless they have the time or interest in the subject matter presented.

In conclusion, the combination of pioneer Ben Graham?s original work coupled with Zweig?s meticulous and enjoyable update, make this a remarkable book about investments and investor behavior that every new and experienced investor should read. Of the 500 investing books that I?ve read, this one certainly is one of the greats of all time.

Shakespeare for the Investing Crowd
This book is light reading compared to Ben Graham's seminal tome, Security Analysis. It's easier to read, and shorter. It's also more up to date. Highly recommended for investors of any stripe, value or growth. The appendix, from Warren Buffett's speech at Columbia University is particularly entertaining, as he debunks academia's love affair with efficient market theory. Jason Zweig, an obvious Graham disciple, does a fantastic job bringing the book's principles to life through modern examples. The only grating thing is his constant derision of brokers or anyone that actually gets paid to manage money. (full disclosure: I'm an analyst now and was a broker for 10 years).

Ben Graham clearly invested in the stock market during a period of hustlers, crooks, crashes, and frauds. Brokers, investment bankers and analysts back then were not much more than fast-talking salesmen. Wait a minute, that sounds just like the way things are today on Wall Street! Things may not have changed as much as we would like to think. Due to his travails as an investor in difficult markets, Ben Graham's investment style evolved into a systematic, logical approach which became the basis for value investing. In "The Intelligent Investor", Graham lays out the foundation of value investing by three introducing key principles: the idea of "Mr. Market", a value-oriented disciplined approach to investing, and the "margin of safety" concept.

"Mr. Market."
The stock market on a daily basis resembles a casino, only without the comfort of free cocktails. Watching the stock ticker is like having a business partner that is totally schizophrenic; Graham calls him "Mr. Market." One day he loves the business and wants to pay a ridiculous price to buy out your half. The next day, all hope is lost, and he wants to sell you his portion for pennies on the dollar. Graham argues that this daily liquidity is an advantage that most investors turn against themselves: (p. 203) "But note this important fact: The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all; for he would then be spared the mental anguish caused him by other persons' mistakes of judgment." This is profound. It's not a question of whether our stocks will drop; they will: the trick is how we respond to that eventuality.

Ben Graham's Stock selection for the defensive investor.
Graham lays out some important characteristics of "value" stocks. (p. 348). Some of the metrics are dated, but the principles are still valid. Even deep value investing today would seem like GARP investing to Ben Graham. Investors are now more focused on future earnings than they were in his day, and valuations reflect that. Graham recommends:
a. Adequate size of the enterprise (>$100M revenue, old figure)
b. Sufficiently strong financial condition (2:1 current ratio)
c. Earnings stability (some earnings every year last 10 years)
d. Dividend record (uninterrupted payments for at least 20 years)
e. Earnings growth (1/3 increase in per share EPS past 10 years)
f. Moderate price/earnings ratio (P/E < 15x average last 3 years EPS)
g. Moderate ratio of price to assets (price/book < 1 1/2 times)
h. Overall stock portfolio, when acquired, should have an overall earnings /price ratio- the reverse of the P/E ratio - at least as high as the current high-grade bond rate. A P/E no higher than 13.3 against an AA bond yield of 7.5%

Margin of Safety as the central concept of value investing.
This is an investment rule that was written by a man who had been deeply bruised by bear markets. I believe he came up with this by learning from his losses. When the market turns into a storm of feces, like it inevitably will, if the stock has no earnings to rely on, you have nothing to grab onto. You can't make yourself stay in the stock when the price is down. Graham says: (p. 515) "The margin of safety is the difference between the percentage rate of the earnings on the stock at the price you pay for it and the rate of interest on bonds, and that is to absorb unsatisfactory developments". Furthermore he writes: (p. 518) "The buyer of bargain issues places particular emphasis on the ability of the investment to withstand adverse developments. " You can and will still lose money in the market with value-oriented investing, but according to Graham: (p. 518) "The margin guarantees only that he has a better chance of profit than for loss-not that loss is impossible."

Conclusion
So that's it, those are the three basic points of the book, but you should still buy it and read it, it's a very enjoyable experience, Shakespeare for the investing crowd. Despite being a realist, Ben Graham wasn't a total pessimist. Late in the book Graham makes a point that is one of my favorites: (p. 524) "A fourth business rule is more positive: "Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it- even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. Similarly, in the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand. "

A worthwhile read, with relevant commentary
Graham's writing is clear, concise and level-headed. He warns against unreasonable financial expectations and proceeds to explain his theories in sufficient detail to be worthwhile, without being over the comprehension of the layman interested in investing.

The book is lengthy and "solid", as opposed to other finance books that hope to explain investment in 100-200 pages. Topics include stocks vs. bonds, inflation, security analysis, and margin of safety (Graham's analysis of the assets of a company in relation to its debt). Zweig's commentary is useful, with footnotes to clarify historical references and, occasionally, demonstrate instances where Graham's predictions proved untrue. At the end of each chapter, Zweig uses recent (up to early 2003) examples of Graham's concepts to make things clearer to modern readers. (Graham's text itself is his 1973 revision to the original 1949 edition.) Also helpful are numerous references to online articles at various sites (I cannot yet vouch for these links' present state.)

Based on my understanding, I highly recommend this edition to anyone interested in this book. I feel that I gleaned more from this annotated edition than I would have from the original, without having to conduct additional research.

Look in the Mirror First!
Since I am retired and trying to manage my own portfolio, I figured this would be the book to read. I know how to pick 4 or 5 star funds and diversify well enough, but I don't have enough theory or any formal financial background at all. I was looking for a classic book on the subject, one that a financial novice could understand, and decided to read this one.

Benjamin Graham is known as the Father of Value Investing and was the mentor of Warren Buffett, the most successful investor of all time. Warren Buffett called the Intelligent Investor `the best book about investing ever written.' He believed in defensive, value investing, and famously summarized his philosphy as follows: "An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."

I found that `value investing' means that you buy only something that is being sold below its actual value, like buying dollar bills for 40 cents each, he said. One should take the quantitative (statistical) instead of the qualitative (predictive) approach, since no one can forecast the future anyway. Look at what a security is really worth in a business-like way, just like you would do for any purchase, ignoring what others might think. Do your homework is what he is saying!

According to Graham, almost everybody, me included, does investing wrong. You are supposed to buy low and sell high, but most folks buy when the price is going up and sell when it is coming down. `Mr. Market' is very emotional and encourages stampedes toward whatever looks good at the moment, and away from investments that seem spent. This very act of buying and selling creates updrafts and downdrafts in the market which causes disparity between what the price is and what the price should be for a given investment. Eventually the true value of an investment comes to fore when things settle down. The maxim he uses for this is: the market is a voting machine in the short run and a weighing machine in the long run. The investors `vote' for an investment which drives the price up; later, the investors find out what the investment is really worth, and the price settles into it's real value. He cited convincing examples in the tech-bubble era of the late 90's where stock prices ascended to ridiculously high levels and then came crashing down to almost nothing, and their stock shares became like Confederate money, worth only slightly more than the paper they were printed on.

In general, his theory runs counter to the speculative, get-richer-quick investing that seems standard for most of us. Stay away from gimmicks like market-timing and formula investing (chasing after perceived patterns in the market). Be boring, he says, and go for something steady and sure. Don't try to beat the market; just try to keep up with it. If you don't want to do the necessary homework, buy index funds. He touts ignored `secondary' or `unsexy' companies, the ones that don't have big names, or ones that produce boring products. It was interesting that when Graham was asked why he was unafraid of losing his edge by proclaiming value investing, he joked that his books are' the most over-read and under-used books on finances ever written'. If, indeed, everyone did value investing, there would be no bargains left out there. We are talking about something that works, but that no one wants to use!

A cornerstone of the defensive investing philosophy involves building in a good margin of safety by buying investments at as far below actual worth as possible. He also talks a lot about managing risk by patience and self-control; he says: `Don't just do something, stand there!' In some sense, this book is more about the person making the investments than the investments themselves. In essence, if you want to know what risk is, look in the mirror! In other words, it's not about how much risk you can tolerate; it is about how much investigation you are willing to do. He mentioned Pascal's Wager as a graphic example of how to think of the consequences when taking on risk - - - if one wagers as to whether God exists or not, he is better off betting He does; otherwise, though the rewards could be a little better, the consequences could be eternally worse! (This was, to me, a fairly heavy-handed but instructive parallel.)

Watch out for the shenanigans of the accountants when you read the financial reports. Words and phrases like pro-forma, nonrecurring charges, special charges, and good will could be euphemisms for a smoke screen. I also learned the phrase `kitchen sink accounting', which puts all possible losses into one year, which distorts the picture but gives good tax results for the company. The lesson is to not ignore the footnotes and to read the statements to the end.

Consistent with his philosophy, Graham does not believe in the prevalent Efficient Market Theory (or EMH), which says that investments have the correct prices because there is so much, widespread information readily available on every investment. He basically believes, and gives many good examples, that the public is not interested in digging into the nuts-and-bolts financial information, but is only interested in what is popular. In a word, an investor needs to make sure he understands what he is investing in, and make business decisions instead of emotional decisions about it. He says that the finances are really not very complicated, and it's more about character than brain.

The first edition of this book, written in 1950 and was revised several times before Graham died in 1976. Since it was a little dated as far as market history is concerned, Jason Zweig wrote commentaries on each chapter to bring it into the 21st century. Graham, as a product of his day, talked mostly about stocks and bonds, and less about funds, and he over-emphasized, in my opinion, the importance of dividends. Zweig says that diversity has replaced value today. Also, dividends are no big deal today for most investors since the total return (NAV + dividends) is what really matters. Another thing is that Graham lived through the Depression and saw that it took 25 years (to 1954) for the market to reach the levels of pre-Crash 1929; this might have made him defensive.

I'm glad I read the book. It gave me perspective on how the market works, though I'll still stick with diversity over value, especially since I invest almost entirely in funds. He did not have to scare me off on individual stocks, but he did convince me to do more homework and to try to be more business-like in my financial decisions, and - - - to look in the mirror first.

An Interesting Read
Graham is without doubt an intelligent man whose insights into investing are worth reading. This book, while dated in its examples, is not dated where it counts - intelligent investing philosiphies. The essay written by Mr. Buffet at the end of the book is also very informative and also enjoyable to read.

However, as always with such books there comes a caveat. Mr. Zweig's commentary through the book is not of the continuously high standard with which Graham writes. It disrupts the flow of the book and detracts from the overall experience of reading Graham's fine work. My suggestion is to ignore Zweig's commentary and footnotes until you find there is something that you don't understand or want further thoughts on. Zweig provides a few cutting insights, but only a few.

Dispite this the books value is not diminished - it's well worth your time and your money.

A must read for Fundamental Investors
First, I just want to say that many of you might find this book boring to read. If that turn out to be the case, you can read the commentary (which uses more relevant and recent examples) for each chapter by Jason Zweig, which is worth the price of the book alone. I got tempted to read the commentary only but I forced myself to read the entire book and I'm glad I did it. Warren Buffett is right, this is the best book on investing ever written, by far. This is one of the reasons in my opinion why Warren himself never write an investment book (plus the fact that it is not easy to explain Warren's intelligent on a paper. Instead just learn from what he does).

Now about the content of this book, it tells you everything you need to know about the investing field (not only stocks, but business in general, bonds, macro economy to some extent, psychological factor of the market, strategy for defensive and speculative investors etc).

Secondly, Warren Buffett highly recommend this book and his favorites are chapter 20 (Margin of safety) and chapter 8 (Investor and market fulctuation). Margin of safety should be the central concept of your investment, and understanding how the market works (and the mood and inconsistencies of Mr Market) should be the second thing that you need to know before jumping into the market.

I also find the chapter 11 (security analysis for lay investor) very educating as it teaches us to value the future of a business (breaking down into 3 area:
1. Long term prospect
2. Quality and conduct of management
3. Financial strength and capital structure

Additionally the comparison of eight companies (chapter 18) very practical and eye opening. I won't spill the content right here but when I read them, it feels like common sense to me, but back (during the tech bubble) then I was involved in several similar stocks that I shouldn't have touched with a ten feet pole.

The bonus chapter "The Superinvestors of Graham-and-Doddsville" by Warren Buffett is a classic reading. This article shows how inefficient the market can be, and argue that most of the time the market is not efficient. I have become a believer that the market is not efficient (after many years believing that the market is very efficient as the business school has taught me)

This book also cover several useful metrics that we can use to value a company in addition to just looking at EPS or PE ratio, such as the ROIC (Return on Invested Capital) etc.

In general, Ben Graham focuses a bit more on capital preservation (shown by focusing on margin of safety, dividend policy, and stocks priced below its tangible book value strategy.) which I think are really important, but one need to understand that there's more to investment than just those things (such as long term groth/the business itself and management) which are also covered in book.

This book would not serve as your investing philosophy, but it should help you create your own investing philosophies. It will help you find what your strength (defensive or enterprising) is and find/form your circle of competence. And as a minimum, this book will increase your confident when dealing with the stock market.

Last but not least, also read "Common Stocks and Uncommon Profits" by Philip A. Fisher and "One up on Wall Street" by Peter Lynch to complement this book.

Happy Investing!

Sidarta Tanu ... Read more

Editorial Review

The time was the 1980s. The place was Wall Street. The game was called Liar’s Poker.Michael Lewis was fresh out of Princeton and the London School of Economics when he landed a job at Salomon Brothers, one of Wall Street’s premier investment firms. During the next three years, Lewis rose from callow trainee to bond salesman, raking in millions for the firm and cashing in on a modern-day gold rush. Liar’s Poker is the culmination of those heady, frenzied years—a behind-the-scenes look at a unique and turbulent time in American business. From the frat-boy camaraderie of the forty-first-floor trading room to the killer instinct that made ambitious young men gamble everything on a high-stakes game of bluffing and deception, here is Michael Lewis’s knowing and hilarious insider’s account of an unprecedented era of greed, gluttony, and outrageous fortune. ... Read more

Reviews

One hand, one million dollars, no tears.
In the 1980's, Michael Lewis was a neophyte bond salesman for Salomon Brothers in New York and London for four years. Liar's Poker is a high-stakes game the traders, salesmen, and executives play each afternoon, but it is also a metaphor for the Salomon culture of extreme risk-taking with immediate payoffs and clear winners and losers.

This is the story of how Lewis survived the training program, inept but mean-spirited management, an aborted take-over even featuring a white knight, layoffs and the 1987 market crash before quitting to find his real calling as a business journalist. While Lewis's career did not take off quickly, he eventually became a highly paid producer, although not in the league of the true top dogs.

Lewis tells the real story of Wall Street in both go-go and crash days with self-deprecating humor enlivened with his ecletic wit. Colorful and well-known Wall Street characters appear such as Michael Milken, Lazlo Birini, Warren Buffett, Bill Simon, Sr. and John Guetfruend. All business students need to read this as even those with advanced degrees in finance such as myself, will learn how things really work. The story of how the junk bond and collateralized mortgage backed security markets emerge is told to fill in a chapter in financial history. Perhaps most interesting is some of the political machinations, rampant at Salomon, which lead for example for Salomon to ignore the junk bond market, allowing others to flourish and eventually attempt to take-over Salomon using junk bonds.

Lewis also describes for all investors the conflicts of interest and lack of governance on Wall Street long before Eliot Spitzer and Arthur Levitt became the champions of the little guy. My next step is to read Lewis's later books.

A Great Read
What a great read. A friend of mine recommended this to me and I can say that it certainly was a refreshing read.

This book tells you about some of the influential people who shaped Salomon Brothers and Wall St in the eighties. I never realised the history that went with Salomon Brothers.

The style is great and I can really identify with the author's early years going through the stages of obtaining and starting a job. Some of the characters in the book are hilarious, you can only just believe they are real.

Only one complaint: sometimes the author goes on for quite a long time with his history e.g. the history of junk bonds and the history of various people in SB. I only wish that there was more about the author's story.

Only one gripe though, and it can't prevent this from being a 5 star book.

Buy it now! Thanks to the book, I am now constantly searching for books like this but this is the only one I have found recounting the story of a salesman as opposed to a trader.

It made me laugh, it made me cry......
**** I read this book in my last undergraduate year of college. At that time, Lewis provided me with an eye-opening, first-hand glance of life in the high-flying world of finance (1980's) and the personalities that drove that period forward. It was relevant reading material since I was intending to pursue a career in the financial services industry, and here was a book written by a former bond salesman in the New York and London offices of Salomon Brothers. **** Nevertheless, this book is not limited to only those interested or involved in the world of business. This book is for anybody who is curious how the S&L crisis emerged; how the Reagan administration's deregulations affected the salaries of a select few in the US financial industry; how much the tax burden of the average American citizen grew as a result. This book is perfect for those who dislike the dry writing found in historical textbooks. **** Lewis's anecdotes will leave you in stitches! I am now working in the financial services industry. Most of the people I run into seem to have read this book at an earlier age and most enjoyed it as much as I did. **NOTE** Other "financial history" books that could be compared to "Liar's Poker", but written with very different writing styles: "Merchants of Debt" by George Anders; "Barbarians at the Gate".

Captures the essence of the culture
In Liar's Poker, Michael Lewis writes about his journey in becoming a bond salesman and his two years of work experiences at Salomon Brothers. While the book does offer some information about the finacial innovations driving the bond business in the 1980s, I think the principle thrust of the book is an examination of the culture and the personalities of Wall Street trading desks. The first chapter story, which is the basis for the title of the book, involving John Gutfreund and John Meriwether encapsulates the nature of this world.

This book is an important read for anyone who thinks they might want to become a trader/salesperson on Wall Street. If not, it is still a very interesting peek into a world that most people do not understand.

My last comment is a minor criticism of Michael Lewis. Lewis writes in the first person and is obviously a very self-involved individual with an extremely high opinion of himself. This is more evident in his later writings and columns for various periodicals (e.g. his NY Times article on Long-Term Capital was sickening). Despite this criticism the book is still very enjoyable.

Outstanding Synthesis of Economic Theory and Practice
Somehow Michael Lewis went from Art History major at Princeton to investment banker with Salomon Brothers. In this book he shows that he understood what these markets are all about, in a way that eludes the grasp of people who may spend years majoring in finance, going to law school or business school and slaving away in these same markets without a clue as to how the whole thing hangs together.

Using bond trading theory to trade whole companies and industries, as Lewis explains Michael Milken, is especially helpful, and it suggests that Warren Buffett is doing the same thing--buying companies by acting as a "preferred" lender.

The "us v. them" relationship between an investment bank and its customers was interesting, and in our current market times, I see a lot of this in how financial planners do the same kind of petty ripoffs that Lewis describes using bigger dollars and bigger customers. It's possible that today's minor aspiring financial planner types could read this book and aspire to be an even bigger malefactor of great wealth. It's refreshing that Lewis bailed out of the business, and this book stands the test of time as a continuing accurate diagnosis of the problems with sinners running markets. The trouble is , there will never be anyone else to run them.

At the end of the book, he seems to have a weakness for praising John Meriwether. Isn't that the guy who lost a huge sum of money in the recent "Long Term Capital" hedging disaster? Even that proves the point of this book, which is that none of these guys care at all about anything but the dollars to be made in front of their nose at the moment. Exactly as Adam Smith said.

Funny and informative
Liars' Poker is the quintessential business novel. Everyone businessman I know has either read it or heard of it. So, I decided that I should check it out.

This book is an account of Michael Lewis' time at Salomon Smith Barney in the mid 80s, at the height of the junk bond craze. He perfectly describes the atmosphere of competitiveness and the vast rewards everyone was reaping as a result of the boom.

What came as a surprise to me is that Lewis describes the mortgage bond market, an obtuse and vague instrument, very clearly and in a way most non-business people could also understand. This explanation also serves to show why these junk bonds ultimately collapsed.

Then, of course, are his hilarious descriptions of his orientation, his bosses and coworkers. To read about these outlandish characters is worth the price of the book alone.

So, to close, this book is a classic for a reason. It is informative and well written, but manages to be hilarious at the same time, a feat few authors can achieve. Read this book at all costs.

The gold standard
I have read a lot of 'insider' accounts of high finance and I am amazed by how much they all seem to owe Michael Lewis for writing "Liar's Poker." From "Monkey Business" to works of fiction like "All I Could Get" to even movies such as "Boiler Room," all of them seem to have borrowed heavily from Lairs Poker.

In this book Lewis tells the story of Solomon Brothers from its ascendancy from a small bond trading house, to the world's most profitable corporation to it's decline and eventual reorganization.

Lewis narrates his story from the perspective he had as a Solomon bond salesman in the mid 1980's. This book shows off two of Michael Lewis best talents:

1.) The ability to covey the feeling of how it was while he was there.
2) The ability to write about events/activities in the past (or halfway around the world) AS IF HE WERE THERE.

In this book, Lewis is a witness, a critic and a historian all at the same time and in comes together well. Reading this book, I kept think that Michael Lewis is too observant, insightful, and people-oriented to stay on Wall St. Maybe deciding to write this book, getting himself out of Solomon while getting back at his superiors, was just another smart trade.

Maybe someday I'll read another `insider' account book that will blow me way, but for now "Liar's Poker" is the gold standard for the genre.

This really is a home run - a great read and FUNNY
This is a great book. A home run. While I am not an industry insider, I did read it while I was getting an MBA from the Michigan Business School and enjoyed it a great deal. It provided a great deal of background to what I was learning in various finance classes. Mr. Lewis helped me see the people who make these markets work and move and that it isn't faceless formulas free of emotion finding perfect prices; rather it is ambitious men (and women) ferociously and sometimes crazily pursuing their own financial interests.

The book is amazingly funny without being slapstick. There are some amazing images - not only the Meriwether games of Liar's Poker, but the food being delivered to the physically rotund mortgage bond traders, the bond trader who felt like the price would rise and then kept buying billions of dollars in bonds to prove himself right. I loved reading about the training he received and what he was taught about selling bonds and how those folks really do view their customers. Some of the institutional stuff is a bit dated (but still valuable as history), but the human stuff still rings fresh and true because people and still, well, whatever it was they were back then.

If you just want an entertaining read - read this book. If you want to read about the early go-go years in the bond trading and the pre-boom boom years on Wall Street - read this book. If you want to learn about some of the big names in finance and what they did - read this book. You get the idea. I am saying you should read this book and you will be glad you did. Really. ... Read more

Editorial Review

Personal finance author and lecturer Robert T. Kiyosaki developed his unique economic perspective from two very different influences - his two fathers. This text lays out Kiyosaki's philosophy and his relationship with money. ... Read more

Reviews

Financial Literacy 101
Where do you learn about money? School? No! Too busy memerizing war dates. Parents? Possibly, but not likely.If you dislike this book you have probably bought into the Great American Lie of go to school, get a job and after 40 years you get a gold watch. And you are in rat race my friend.I have a gold watch already. It says to Barry Kaufman the greatest guy in the world from Barry Kaufman the greatest guy in the world. I didn't have to wait 40 years for mine or sell my soul to corporate America for a little cup of soup (called wages)I also suggest reading Who Stole the American Dream, Wave 4 and Turner, Turner, Turner: The King of Network Marketing.

Not for Harvard graduates
This book is definitely not for Harvard graduates. Typical Harvard graduates are too busy updating their resumes and pounding the pavement trying to find a j-o-b just like the one they just got downsized from to benefit from a book like this.On the other hand, for people who are willing to be changed; are sick and tired of the rat race; tired of paying for somebodyelse's dreams; tired of having their boss determine how many sick days they deserve or how many vacation days they can take will enjoy and benefit from this book. I also recommend Loopholes of the Rich and The Business School for People who like helping people.Slams at network marketing people by 1 star reviewers are predictable and stale. Question 1 stars: How is your lifestyle? What kind of car do you drive? Where do you go to vacation? How much did you pay in taxes last year?The investment advice is also right on. Just talk to all of the people who are losing money following conventionable advice.A house is an asset? Yes, if you are the bank. If you want to turn a house into an asset, it's very simple, do what banks do and become a real estate investor.As for that website that keeps getting mentioned here, if it really was that good there would be no need to repeatedly mention it here would there?RDPD is a OUTSTANDING book. I highly recommend it.My motto is: I'll do today what others won't so I can do tommorrow what others can't.The recipe is simple; just follow Kiyosaki's advice.

Excellent book - ignore paid bashers
Rich Dad Poor Dad is a life changing book that is why this incredible book has been a best seller now for over 8 years and is still in the top 20 of all books being sold right now.

Kiyosaki will tell you some things you don't want to hear. He is controversial. So is Donald Trump. Rich people are always controversial, but who are the people that make Kiyosaki and others controversial? Certaintly it's not the wealthy. The wealthy agree with Kiysosaki becuase that is how they became rich.

Kiyosaki tells us that a house is not an asset. I have to admit that I had a problem with that one myself. I a lways felt that real estate was the one safe have out there and like most, was taught by parents and other early mentors that a house is an asset. Then I got a house and found out that Kiyosaki is absolutely right and so were my mentors. A house is not an asset for the buyers, people like you and me but it certaintly is an asset for the banks, real estate agents, insurance people, the local government who wack you with high city taxes and so on.

The biggest problem is that many people think that a big house is a symbol of wealth. It is a symbol of wealth to the bank. Most people tyupically take out 30 year mortgages. How much do you think banks make on that while you are paying for the equalivent of three house payments over time?

Conventional wisdom tells us to get a great education and you'll get a great job. Well it started in the Clinton era and has been escalating ever since---downsizing. People who spent tons of $$$ on a college education, invested years in their jobs being servants to their employers and for what, to be downsized?

And then there is the typical way that people invest. Conventional wisdom tries to tell us that we can't do it on oour own. We need brokers (so named because they make us broker with their advice) or other financial advice. Those who do try it on their own usually get bad advice and go to deep, deep discount brokers looking for the lowest commissions or on the other end pay fees for loaded mutual funds which are supposed to be better managed (HINT: They are not!)

Kiyosaki offers a newer, better, more effective way. Unfortunately like some others who have come before him, Kiyosaki has stepped on some toes, the very people who are using your ignorance for their bliss.

Rich Dad Poor Dad is a life changing book. It is highly recommend for anyone who really wants to survive the new millenium.

I highly recommend Rich Dad Poor Dad, Rich Dad's Guide to Investing and Rich Dad's Success Stories (prooves that Kiyosaki's naysayers are wrong as usual)

Good luck!

Still a best seller for a reason---it works!
I first heard of this book when J.P. Morgan on the cover of the Wall Street Journal referred to Rich Dad Poor Dad as a "must read for millionaires."

Most people know by now that this is the true story of Kiyosaki's two fathers, one, his real dad had a high income but was poor. The other, his friends dad, but Kiyosaki's mentor and Rich Dad.

Kiyosaki learned that income alone does not create wealth as he learned from his "Poor Dad." Seeking financial freedom, Kiyosaki learned from his "Rich Dad" the keys to wealth.

Kiyosaki went on to amass a fortune and lost it. But remembering the lesson taught from his "Rich Dad", started over and amassed yet another fortune and retired at age 47.

The book will tell you some things you don't want to hear like a house is not an asset, 401 (k)s and so called "safe" investments are not quite so safe. That there is no such thing as job security and the world is full of "bullies" who will tell you how much money you can make, when and how many vacations you can take, lunch breaks etc.

Kiyosaki's "Poor Dad" was fired at age 50 and learning from this, Kiyosaki tells us that the only real security and freedom is in being your own boss.

Kiyosaki goes on to say that both of his dads were "honest, good, honorable men" but his poor dad, although a hard worker was weak and consequently ended up broke.

Interesting is that Kiyosaki pledges his first book, "If you want to Be Rich and Happy, Don't Go To School?" to his poor dad.Goes to show that Kiyosaki has class and truely loved his Poor but real dad.

Rich Dad Poor Dad is an excellent book. The main message is to take responsibility for your life. You are either a master of money or a slave to it.

In addition to Rich Dad Poor Dad, I also recommend "Cash Flow Quadrant", "Rich Dad's Success Stories", "The Millionaire Next Door" and "More Wealth Without Risk."

The best personal finance program available
Rich Dad Poor Dad is undoubtably the best financial book ever written. However, it is only for those who are willing to change.

I contend that it only takes three things to make this program work:

1) You must have a white hot burning desire.
2) You must be willing to do a few daily disciplines.
3) You must be teachable and willing to let go of old idealogy.

Many people have a feeble wish, not a white hot desire. They are not willing to pullthemselves away from the tv set, the internet or whatever (how much money is that making you or more importantly, how many people are you helping with those disciplines?) And many people are NOT teachable, they want to hold on to old dogma taught to them traditionally by parents and other early mentors so when something like Rich Dad comes along, they dismiss it because it doesn't coincide with what their early teachers told them. Of course it never occurs to these people that those early teachers were never rich.

Rich Dad has a great program. Follow these three keys. Read the book or listen to the tape or both and get to work.

You'll be glad you did!

HAPPY VALENTINES DAY RICH DAD!

RD/PD the power of MLM????
I have read more than a half dozen reviews (probably same person) attributing the success to Rich Dad, Poor Dad to network marketing (MLM).I don't know if there is any truth to that or not, but I sure hope so.You see, I just signed up into a MLM company (not Amway) and if MLM can turn a book into a mega best aeller like some people have indicated, then that certaintly prooves the power of network marketing.And obviously Network Marketing (MLM) is far more powerful than that cheesy, supposedly well researched (it's not) website that gets getting mentioned here or the constant barrage of 1 star bashers (really just one person with a attitude problem) and obviously more successful than the self publishing industry.Thanks to RD/PD, I have reorganized my investments, started a successful business and am sharing this info with family and friends.1 star reviewer (s), get a life already!

Great books RTK
I just purchased Rich Dad, Poor Dad, Retire Young, Retire Rich and Rich Dad's guide to investing. I also have the tapes from RD, PD, CFQ, and RDGTI. These excellent programs by RTK have already made a profound change in my personal and financial life. They are a must for anyone who wants success.Two others are Millionaire Next Door and The Millionaire Mind.

Why listen to Kiyosaki and add to his wealth?
Best way to answer that is with another question. What is your net worth and how does that compare to what Mr. Kiyosaki is worth? Here is another question. How does your net worth compare to the many successful Kiyosaki students?

Less than 2% of people in America are doing well. Less than 2% in the richest country in the world!

It pays to listen to someone like Robert Kiyosaki.

Definitely NOT for Teenagers
If some adults can't understand this great work by Kiyosaki, how can we expect our teenagers to understand it?

No, instead, I would recommend Rich Dad's Rich Kid Smart Kid and then move them up to Rich Dad Poor Dad and Rich Dad's Success Stories after that.

Great to see the the Rich Dad books are still best sellers and that intelligent people are NOT taking that single one star basher too seriously. Poor guy must have a very boring life! ... Read more

Editorial Review

In his new book, Cramer offers the most detailed guidance he has ever given on how to invest in a changed market. Savvy investors will not just survive; they will thrive. Cramer begins with six rules for protecting the money you have and making sure that you have the money you need. (Rule Number 3: Skip the first four stages of portfolio grief: denial, anger, bargaining, and depression.) Your portfolio won't fix itself; you have to do that. It's easy to close your eyes and pretend that it all never happened, but you'll never get back to even that way, much less profit from the opportunities that this new market offers to investors who know where to put their money. One key to making investment decisions is to watch what the mutual-fund managers are doing and -- better yet -- to anticipate their moves. Cramer tells you how to do this. Their decisions will move markets, and you want to profit from these moves.

Cramer explains why dividends may be another key to picking winners in the post-crash stock market, and he introduces a category he calls the accidental high yielders -- stocks whose prices have taken a beating, boosting their yields. Some of these stocks could make a major move upward; Cramer tells you how to spot the ones that could take off.

For the first time in any of his books, Cramer offers a portfolio of twelve stocks that he says are poised to profit from the economic recovery. And he gives investors a list of five regional banks that could make big moves and return a handsome reward to shareholders. As always, Cramer explains why investors can't just take his word but have to "buy and homework" on these stocks to make sure that their stories don't change.

If you're near or in retirement, your opportunities to recover and profit are more limited than those of younger investors. Cramer tells you why stocks should still be an important part of your investment portfolio. And for younger investors, Cramer explains why you must take advantage of what could be a rare opportunity to buy stocks at fabulous prices and set up a terrific portfolio.

Cramer offers advanced tips for investors who have the time and are willing to invest it to profit from the post-crash stock market. Call options may seem like exotic and dangerous investment tools, but Cramer shows why they can be a conservative investing strategy that can bring quick returns in a recovering market. He explains how to use IPOs and secondary offerings wisely to juice your investment portfolio.

And as if all that weren't enough, Cramer has come up with twenty-five new rules for the post-crash market. (Rule Number 4: It pays to follow the dumb money.)

Getting Back to Even is indispensable for any investor still reeling in shock from the 2008-2009 market collapse and wondering where to go from here. From investment strategies to specific stock recommendations, it's the foundation for the portfolios that will soar when the economic recovery takes hold. ... Read more

Reviews

Financial First-Aid - Cramer Style
First a caveat, Jim Cramer seriously annoys me. I rarely ever watch his show (especially after the notorious "melt-down") and less frequently read his books. However, as a college instructor and business writer, I read a lot of business books and make a point of keeping up with what is in the popular press since it tends to come up in daily questions etc...admittedly, I was also curious how well a book claiming to help people "Get back to Even" was going to do in the ratings...it's certainly a modest proposal at best and a constant reminder of financial pain at worst. Much to my surprise, Cramer actually mentions this early in the text so score one for Cramer!

The book is easy to read with a purely conversational tone; those that enjoy Cramer will feel right at home while those such as myself will still manage to get through it without constant irritation like listening to him on television. There is an abundant use of examples to explain any all all technical terms no matter how simple or complex but they do not (usually) insult the readers intelligence but rather enhance the reading nicely. The author assumes the reader has minimal prior exposure and takes little for granted so even novice investors or those that have always had their portfolio managed by someone other than themselves will not need to read with references in hand.

Now, as to the core of the concepts covered in the book itself. Cramer begins by presenting 8 new rules which are more or less "common sense" but well worth repeating given the typical lack of financial savvy of most "investors". I suspect most people will enjoy the statistics and rationale more than the actual "rules" themselves but it effective presents a foundation from which the rest of the book is written while acting as the typical disclaimer for all financial related books (ie, get your basics covered first).

Like any investment related book, there are likely areas to agree and disagree with...but if one manages to pick up a few nuggets it is well worth the time and effort to read. This book is no exception. Cramer is Pro diversification, gold/precious metals, dividends, performing your own research and weekly updates for stocks that you select. He goes into more detail than usual in how to research these stocks, his rationale for selection criteria and examples from both sucessful and non-successful examples in his own past.

For those that are well versed in reading/understanding financial statements, most of this will be rudimentary but as a person that routinely deals with people in various stages of financial literacy - there is a strong need for user-friendly information that can be applied directly to one's own portfolio. Cramer earns an "A"...he keeps the information direct, relevant and easy to understand while covering the flaws and limitations of everything from valuation to growth rates and the impact of "big money".

After a fairly robust section on dividends (like a dividends 101 abbreviated course), Cramer goes on to name 12 stocks to watcch for the recovery including a few well placed plus for his show and newsletter. As a general rule, I despise books that are thinly veiled marketing materials but in this case, didn't dock a point from the review because he showed quite a bit of self restraint and kept it to a minimum. Each recommendation is supported by a full rational including areas serviced, history, future potential etc as would be expected. Whether you agree or not, each is well worth the time for consideration and/or to use as a foundation for your own selections.

Bottom line - worth the time and effort to read. Novice investors will appreciate the examples and conversational style, more experienced investors will appreciate the actual stock selections with rational behind each even if you disagree. I suspect one of the largest complaints will be on what is NOT included in this book as well as the typical (and expected) diagreement surrounding Cramer's general investment advice...of course, readers should not expect a radical departure and will get what is expected in terms of Cramer's general investment orientation, style etc...

Great book for beginners
I admit I love his show but the real reason I give this book 5 stars is for the Options chapter. Every option site I have viewed made it seem so complicated, which it can be, but buying call options is as easy as it gets and for me so far very profitable.

Cramer shows investors how to get their portfolio back to even
I would buy this book regardless of what your personal opinion is of Jim Cramer. My investing and stock trading style is very different from his but I agree with him on most points in this book. In this book Cramer focuses on many risk adjusted strategies that over time will bring your portfolios back to even, if you are down the 30-50% like most investors are in the past two years. (I am a trend follower and did my homework on the fundamentals so I went to cash on January 4th, 2008). I completely agree with Cramer's advice to never buy and hold, but buy and homework. I know this is true from personal experience. Cramer also points out that if your investments drop by 50% you must have a 100% return to get back to even. If $100,000 drops by 50% to $50,000 it has to go back up 100% to get back to $100,000. This is sobering, however I would also like to point out that a compounded 12% return six times is a 100% return, this is certainly possible and this book will show you many ways to accomplish this.

1). Jim suggests buying great stocks at good prices, he advises not to chase stocks but wait for pullbacks to buy what you want at the right price. never chase a stock when it goes beyond a reasonable price. (This also explains why he loves certain stocks then a week later does not, the stock became to expensive).

2). He gives great strategies on how to use the right dividend stocks to get steady low tax returns. Dividend stocks hold value better than other stocks in huge sell offs. He shows how to choose the ones with strong steady earnings to get the ones that are accidentally high yielders and avoid the ones about to cut their dividends due to declining earnings.

3). He gives you twelve specific stocks that he believes will benefit greatly when the full economic recovery takes place. They are all very strong companies in different sectors: construction, financial, industrial, housing, and oil, etc.

4). He suggests investing in companies that will benefit from the growing world of wireless internet. He believes that the growth in this industry will be a growth story of epic proportions.

5). He gives names of regional banks with strong balance sheets, and good loan practices, that are poised for growth through takeovers and better management. Cramer has seen this before in the savings and loan disaster and recovery of the early 90's.

6). For the first time in one of his books Jim Cramer explains how to use deep in the money call options intelligently for low risk returns.

7). He urges us not to become perma-bears and miss the recovery. Things will recover and we must be invested to take advantage of it when it arrives.

The book ends with twenty-five new rules for post-apocalyptic trading. Which gives some great advice including how to use secondary stock offerings to make money by buying in at the right time. Also, how to choose the right IPO to buy based on who is taking it public. At the end of the book he rails against the dangers of double and triple leverages ETFs, showing how they have daily returns that in the long term do not mirror the index it is reflecting. You can be short a double leverged financial ETF and still not make money after the financial sector crashes for two months due to volatility and daily rebalancing. They are strictly for day traders.(I agree, and I have done very well day trading them, but they are also sometimes great for trend following for days and sometimes weeks).

I really enjoyed this book more than I thought I would and learned several things to help me in my investing and trading. I highly recommend it for anyone starting on the road to get you portfolio back to even or just get great returns from being a more informed investor.

Good book
I really like the book. Thanks Jim Cramer for the investment insight again.

1. One thing what Jim talks about is how the mutual fund play in the stock market.
2. This is important you need to buy stocks when the market is in a uptrend and a stock which is hitting the 52 weeks high is going to go higher.
3. Also investment is about gaining knowledge.
4. One other important lesson in investment is how and when to sell your stocks.
5. The most important rule as I learned from William O Neil or IBD ( Investors Business Daily) is sell a stock when it goes below 8% of your purchase price.
6. If one had followed this rule people would have conserved their hard earned capital in 2001 and 2008.
7. Jim covers in details about Visa and Apple, two powerful stocks for the next 5 years atleast.
8. Its true what he has stated stocks have produced the best return if we go back to last 8 decades.
9. But in investment one needs discipline, understanding, patience, when to buy, when to sell.

Lastly I would encourage retail investors to do their own research and homework. For that along with Jim Cramer one should be a a serious reader of
Investors Business Daily. In fact even Jim reads it. If you look at his recent shows he talks about arcsight, Salesforce, Apple, Visa , Flir systems they
are all covered in detail in IBD. One place where Jim lost out this year in 2009 was in Chinese stocks. He kept talking about Chinese ETFs whereas the
reality was when the uptrend started in March 2009, it was led by Chinese stocks like SNDA, NTES, PWRD, BIDU, ASIA, RINO. They were extensively covered in IBD.
To be a successful retail one needs to be diversified in their research as well. So combine IBD with Jim's books and also the book of Jesse Livermore,
Gerald O Loeb, Nicholas Darvis and one will be a winner in the long run.

Investment is a long term process of learning. Good luck and best wishes.

Informative and encouraging approach for those looking for help
This book is a practical resource for getting an understanding of working with equities and includes principles that will outlive the specific picks suggested in the book. Great foundation for Jim Cramer's show MadMoney, which I also find very useful. ... Read more

Editorial Review

YOU CAN GO AFTER THE JOB YOU WANT...AND GET IT! YOU CAN TAKE THE JOB YOU HAVE...AND IMPROVE IT! YOU CAN TAKE ANY SITUATION YOU'RE IN...AND MAKE IT WORK FOR YOU!

For more than sixty years the rock-solid, time-tested advice in this book has carried thousands of now famous people up the ladder of success in their business and personal lives.

Now this previously revised and updated bestseller is available as eBook for the first time to help you achieve your maximum potential throughout the next century! Learn:

* THREE FUNDAMENTAL TECHNIQUES IN HANDLING PEOPLE

* THE SIX WAYS TO MAKE PEOPLE LIKE YOU

* THE TWELVE WAYS TO WIN PEOPLE TO YOUR WAY OF THINKING

* THE NINE WAYS TO CHANGE PEOPLE WITHOUT AROUSING RESENTMENT ... Read more

Reviews

Wonder if he knew people would be reading this 75 years later, November 30, 2010
I doubt it, but when you tap into fundamental aspects of human nature in a way that helps people that's what happens. You've probably heard about this book, as it's one of those titles that have become part of the cultural lexicon (like CATCH-22). Written in 1936, it is based on courses in public speaking that had been taught in adult education courses by Dale Carnegie since 1912 (and to put to rest a popular assumption, he was no relation to the magnate Andrew Carnegie). It is an unusual little book, written in a highly personalized, colloquial style that is reminiscent of a great lecture. This book was designed with professionals in mind, and designed to help professional people do better in business by helping them make social contacts and improve their speaking skills. It was also written with a certain...earnestness in mind. Carnegie was a big believer in sincerity when it came to dealing with other people.

The book has six major sections. The core principles of each section are outlined below:

Fundamental Techniques in Handling People: Don't criticize, condemn, or complain. Give honest and sincere appreciation. Arouse in the other person an eager want.

Six Ways to Make People Like You: Become genuinely interested in other people. Smile. Be a good listener, etc. etc.

Twelve Ways to Win People to Your Way of Thinking: Avoid arguments. Show respect for the other person's opinions. If you're wrong, admit it quickly and emphatically. etc. etc.

Be a Leader / How to Change People Without Giving Offense or Arousing Resentment: Begin with praise and honest appreciation. Talk about your own mistakes first. etc. etc.

Emotional Intelligence 2.0 is another book you'll likely want to read. It's the only modern book I've come across that addresses dealing with people this effectively.

The In's and Out's of Human Nature, January 8, 2008
A classic (originally published in the 30's) and a must-have, this timeless piece of work can help just about anybody get along better with others and win them over to their way of thinking. Don't have a lot of time to spare? Don't worry. The book is divided into short sections, each one devoted to a particular principle that is well illustrated with many practical examples. In this way, you can read a chapter quickly, stop and do other things you have to do if necessary, and get back to the book when you have time- all without losing continuity.

Thoroughly entertaining by using fun and interesting examples, I don't think many readers will regret checking this one out and I like to think of this book as a kind of Human Relations 101 of sorts. Also recommend The Sixty-Second Motivator for further reading on motivational principles.

Timeless People Skills, March 22, 2003
This book is indeed potentially life changing, as so many of the reviews have stated. It continues to speak volumes into my daily interactions with people even though I listened to it nearly four years ago.

I have found that following its advice does not make me phony or narcissistic - rather just the opposite (I suppose you can choose to try to pretend to care about people, but people are wiser than that). The book promotes understanding others' behavior and could have the very positive effect of reducing day-to-day conflict. Your blood pressure could lower and relationships flourish. It certainly has had this effect in my life.

And the(at times)dated language? Classic!

I recommend it highly!

Common sense advice, but beware the unwritten chapter, November 7, 2005
I won't waste your time with a rundown of what "How to Win Friends and Influence People" is about. With over 400 reviews on Amazon, with over 15 million copies sold, and with a very self-explanatory title, I think you all get it. For the rare person who may not know what this book is about, here's a succinct description: in 1930s vernacular prose, Dale Carnegie explains that by appealing to the other person's highest ideals, remembering the other person's name, letting the other person do most of the talking, speaking in terms of the other person's interests, allowing the other to save face, by "throwing down a challenge," etc., you can make a friend out of just about anyone.

The advice is largely sound, but I think the reader should keep in mind the context within which this book was written. "How to Win Friends and Influence People" was written in the 1930's and intended primarily as a companion book to Dale Carnegie's classes on how to be a good salesman. In other words, these techniques work very well in the context of sales and public relations, i.e., in relationships that are not expected to be deep and/or long-lasting. I wouldn't recommend using these techniques on close personal friends. Doing so may make a person come across as a bit "plastic."

Also, there is one major point that I think needs to be remembered, but unfortunately is nowhere to be found in "How to Win Friends and Influence People." During my research of Dale Carnegie's techniques, I came across what I believe may be the only biography available about him: Dale Carnegie: The Man Who Influenced Millions by Giles Kemp and Edward Claflin. This book reveals many interesting things, such as the fact that Dale Carnegie grew up poor; he lost part of his left index finger when he was a child; he often broke many of the tenets set forth in this book, often forgetting others' names, often arguing with others, etc. But what I found most interesting was that the last chapter of "How to Win Friends" was to describe those individuals with whom none of Dale Carnegie's techniques work. In this unpublished chapter, Carnegie wrote that there were some people with whom it was impossible to get along. You either needed to divorce such people, "knock them down," or sue them in court.

Why is that chapter absent from this book, you ask? Well, Dale Carnegie was in the middle of writing this chapter when he was offered a trip to Europe, and rather than complete this last chapter he decided to take the trip. The uncompleted book was sent off to publishers, and Carnegie shipped off to Europe.

Giles Kemp and Edward Claflin say that given the optimistic tone of the rest of "How to Win Friends," the European trip was perhaps the better choice. Reconciling the the unwritten chapter with the rest of this optimistic book would've been nearly impossible, they say.

Anyway, I think that this unpublished chapter is important to keep in mind. I had to learn the hard way that the unpublished chapter is very true. There are some people with whom it is impossible to get along. When you meet up with such people, and believe me you will, don't think that you've failed the Carnegie techniques. Instead, remind yourself that you are experiencing exactly what Carnegie describes in that pragmatic, unpublished chapter. And then quickly move on to the nicer people!

Andrew Olivo

Good advice for the outgoing., March 1, 2007
This book mainly offers examples of a practical form of diplomacy. Don't criticize people directly so as to shame them; always articulate your sincere compliments when appropriate; make an effort to remember and use a person's name, etc. There's some good advice here on finessing your speech to get your honest point across without causing anyone to begrudge you for it, and some ways to train yourself not to take people for granted.

However, this book was written a long time ago, for people with average or better communications skills. If you're shy and introverted, or have autism or Asperger's, this is not the book to coax you out of yourself. This isn't to say it's of no use to an introverted person, but using the techniques advocated will be more of a challenge.

This book is endlessly simple and deceptively complex, February 21, 1999
It was facinating to read the other reviews of this book. I can't help but be struck by how simple minded many of the negative comments about the book are. What they don't understand is that the vast majority of people are motivated by the desire to be appreciated. Because we are all so consumed with our own desire to be appreciated we often miss that elementry fact. The principles of this book are simple, but their implications are complex. Therefore, its occasional simplicity could never deminish its greatness. It seems to me that those who hold negative comments about this book felt as though they were being tricked. Remember, Dale teaches that we should communicate "honest, sincere" appreciation and admiration of others. Phoney is phoney whether it is in 1937 or 1997. Dale would never advocate the use of untruths in winning friends. People are not stupid, simply naturally motivated a few common factors. Some readers became defensive believing that they are to smart to fall for these techniques. But, you see, they are caught up in their own sense of selfworth, their own sense of importance. What a shame that the brilliance of the book was lost on them. Other readers had the ability to recognize that they were also motivated by a desire to be appreciated. Those are the readers who have changed the way they see human interaction. Man is a complex animal filled with instinct and the ability to reason. There are certain situations that cause the vast majority of people to react in the same manner- this is instinct. A perfect example is a smile from another. Your first impression of that person is that he is friendly. This thought is involuntary. That fact that we all respond positively to a smile does not mean that we are being tricked. We are simply receiving the nourishment that we crave. Still don't believe me. Imagine this situation honestly. You have always believed that Tom from work is an ass. But yesterday you had a conversation with you best friend from work when the subject of Tom came up. Your friend says to you, "Well, I don't know what you've done to Tom to make him think you are so great, but earlier today he told me that you are the most valuable employee in the company and that your integrity as a human being is unmatched". What do you think about Tom now? You can't help but to like him can you? I would like him. Why? My new openion of him is involuntary. I think I am important and deserving of recognition just like every other human being on the planet, and he gave me what I craved just like every other human being, honest sincere appreciation. If you liked the book, read it again. If you didn't like it, read it again. Otherwise, you will be doomed to wallow in your own ignorance of human relations forever.

Aaron J. Ruckman

A Classic For Success, February 1, 2003
Dale Carnegie had made motivation into an art. Moreover, he had made his form of motivation into an American institution. Find out how an average person can achieve much through the right forms of inspiration, perspiration, and influence. In How to Win Friends and Influence People, you learn about the human factor of success and how principles applied almost 70 years ago, still speak true today.

Worth reading, but be your own judge, March 15, 2003
Anyone who reads this classic self help book will find it beneficial. It wouldn't have lasted as long as it has if it weren't helpful.

However, the first time I attempted to systematically put this book into practice, I was working with a domineering, loud, opinionated and outspoken person who subsequently stamped all over me and my "Carnegie" principles. True, many people (maybe a majority) will respond positively when you practice Dale Carnegie's plan, but there is a sizeable minority who will walk all over you regardless.

And a person who has self-image problems? I hate to say it, but Dale Carnegie's book can set them up to be mowed over.

I have balanced Dale Carnegie with Manuel J. Smith's book WHEN I SAY NO I FEEL GUILTY. I found it more effective when I built a good, healthy respect for myself first. Then guess what! I found myself winning more friends and influencing more people!

NOT the book Dale Carnegie wrote, July 8, 2003
Dale Carnegie's great book, How To Win Friends and Influence People, is practically unrecognizable in this revised version. Carnegie's quaint language and examples have been "updated", much to my dismay and the book's detriment. If ever there were a time to leave well enough alone, it was this book.

A Masterpiece on the Subject of People Skills, February 12, 2000
Man is a social being - unless one chooses the way of the recluse or hermit, he will inevitably have to interact with people. Strangely, for most people who never encounter this book, they miss out on one of the most important keys to achieving happines and prosperity in Life.

It's been proven that success in any field is related MORE to "people skills" than to mere "technical know-how". And, NO-ONE has put together the principles by which these skills can be acquired better than Dale Carnegie. ... Read more

Editorial Review

A revealing look at Wall Street, the financial media, and financial regulators by David Einhorn, the President of Greenlight Capital

Could 2008's credit crisis have been minimized or even avoided? In 2002, David Einhorn-one of the country's top investors-was asked at a charity investment conference to share his best investment advice. Short sell Allied Capital. At the time, Allied was a leader in the private financing industry. Einhorn claimed Allied was using questionable accounting practices to prop itself up. Sound familiar? At the time of the original version of Fooling Some of the People All of the Time: A Long Short Story the outcome of his advice was unknown. Now, the story is complete and we know Einhorn was right. In 2008, Einhorn advised the same conference to short sell Lehman Brothers. And had the market been more open to his warnings, yes, the market meltdown might have been avoided, or at least minimized.

• Details the gripping battle between Allied Capital and Einhorn's Greenlight Capital
• Illuminates how questionable company practices are maintained and, at times, even protected by Wall Street
• Describes the failings of investment banks, analysts, journalists, and government regulators
• Describes how many parts of the Allied Capital story were replayed in the debate over Lehman Brothers

Fooling Some of the People All of the Time is an important call for effective government regulation, free speech, and fair play. ... Read more

Reviews

An important work
It would suffice that this book is well-written, engaging and informative, but it is more than that. It is an important book, for two reasons. First, it shows how much of an investment edge it can be to employ deep research and critical thought. The fact that many other investors continued to be fooled by the company even after Einhorn published his analysis may seem frustrating to the reader, but as an investor I view that reaction as confirmatory that there will always be lots of ways for independent, meticulous thinkers to make money. Second, the book demonstrates how difficult and lonely it can be to engage in activist investing, especially from the short side. Consistent with the story in this book, I have almost invariably found that the more correct the activist's views are, the more likely s/he will be subjected to ad hominem attacks; and that, when presented with cogent evidence of a serious problem, government officials either do nothing or protect the malefactor. Indeed, the business news of the last nine months is replete with examples of this. I am unaware of another book on investing that captures this second element. It is all the more commendable that Einhorn can tell this incredibly frustrating tale calmly, resisting the temptation to engage in histrionics or self-righteousness.

Inside the Mind of an Exceptional Investor
Many well-respected money managers -- some of them with track records that spanned decades -- saw their reputations utterly destroyed in 2008. One manager who came through the carnage with reputation intact, and even enhanced, was David Einhorn (the author of this book). In addition to anticipating the fall of Lehman Brothers, Einhorn's fund, Greenlight Capital, significantly outperformed the S&P (though still ended up down on the year).

I am not an investor in Greenlight (Einhorn's fund), but I always enjoy reading their quarterly letters. They are consistently detailed, forthright and insightful, the way all investor communication should be.

I also give Einhorn respect (and admiration) for his 18th place finish in the 2006 World Series of Poker -- the $659,730 winings of which he donated to charity. The guy can clearly handle himself at a poker table.

The book itself was an interesting read on multiple levels. A friend of mine, who crunches spreadsheets in his sleep, made a friendly wager I wouldn't be able to get through the whole thing, as there is a great degree of detail (some would say mind-numbing detail) covering Allied Capital's various accounting irregularities.

I won the wager by devouring the book -- moreso out of hunger to absorb a highly trained investor's deeply analytical thought processes, than from a need to understand the particulars of Allied Capital or BDCs (business development companies).

The book sheds light on a number of excellent concepts above and beyond the Allied saga. The opening chapters, which describe the origins and philosophies and thought processes behind Greenlight Capital, are extremely informative.

The book as a whole, including all the Allied Capital detail, further offers a picture of what an exceptional investing mind looks like. If one were to try and reverse engineer the source of Einhorn's success (leaving out the irreducible good fortune component), four qualities would stand out:

- Exceptional analytical capability

- Exceptional creative ability

- Deep concentration ability

- Deep intestinal fortitude

To surpass "good" and make it to "great" as a trader or an investor, I would argue one needs all four traits. The presence of some but not all of these traits, I believe, accounts for the overwhelming tide of mediocre performance we see from Wall Street.

The typical investment banking path, for example, focuses heavily on the analytical side... while stomping the creative side into the dirt. The first few years of being an i-banker (if not one's entire career) are hallmarked by soul-crushingly repetitious activities that by and large replace spreadsheet gruntwork with any semblance of creative unconventional thought.

Worse still, the general institutional investment mindset runs directly counter to the "deep intestinal fortitude" idea -- in fact the whole of institutional investment culture seems expressly designed to browbeat the average manager into the mold of a gutless, benchmark-hugging coward, desperately afraid to deviate too far from the safety-approved track of his peers.

As if this were not enough, the mediocre types that hold the keys to most of the locks in the institutional investment world reinforce their plodding natures (and thus bolster their plodding dominance) with a "tried and true, proof in triplicate" way of thinking that drives the mavericks and creative thinkers mad (and out the door). At the end of the day, finding all four traits within a single individual becomes a rare thing indeed.

"Fooling" does have a touch of personal vendetta feel to it at times. The deep accounting detail can also be a bog in places, especially if one does not view keeping up with the myriad intricacies as an amusing challenge.

But the opening chapters alone are worth the price of admission... and if you want a gritty, true-to-life, wide-ranging gestalt feel for the combination of smarts and guts and tenacity it takes to successfully run a multi-billion-dollar hedge fund, "Fooling Some of the People All of the Time" delivers.

A great book and a must read for anyone interested in investing
I was lucky enough to get a hold of an advance copy of the book from Amazon. Couldn't put it down. Finished it and went out and bought one for everyone at our company. Then went and bought more over the weekend to hand out to folks. It is an absolutely terrific book, and thank you, David Einhorn, for writing it. I loved the first few chapters on Greenlight and was absolutely mesmerized by the rest. One of my colleagues has gotten about half way through and said he did not realize that folks could "not get it" when faced with compelling evidence. I told him to read on, and that his disbelief will get much worse. I think that it is a stunning example of the concept of cognitive dissonance (at best, and probably being very kind with that). Writing this book took a great deal of courage and I know I am a better investor for having read it.

A Scary Read. A Warning to America. An Excellent Book.
Ever wonder how the Internet bubble REALLY formed? How Enron got away with fraud for so long? Do you think that the truth always comes out eventually? And that the good guys win in the end?

Read this book and see how even the free American economy can't handle bad news about its companies. How companies are able to hide the truth from investors and how some on Wall Street and even the government end up helping them out.

This true story is Kafkaesque. The writing is easy to understand. And the ending is a wakeup call.

Riveting and Important
I received this book around lunchtime and read it cover to cover by the end of the afternoon. It was a riveting read - I found myself shocked at the lengths a company management would go to discredit detailed research that pointed to both corporate deception and a tolerance of a culture of fraud, but more than anything disgusted by the laziness of the investigators who could have put a stop to this behavior. I am hopeful this important book makes a difference in both corporate governance and government oversight.

One of the best investment books I've ever read, if not the best
Perhaps the only honest modern book on investments I have read. Also gives a limited insight into Einhorn's mind and way of thinking as an investor.

Einhorn masterfully tells the true tale of his battle against stock manipulation, corrupt and lax government, unscrupulous management, fee-hungry and conflict-laden investment banks, and careless and lazy long investors.

In the foreword, Greenblatt says something to the effect that he doesn't want his kids to read this book, because that will cause them to lose their innocence too soon. People should read this book for precisely that reason: to gain an appreciation for the sort of underhanded tactics that big business and the financial industry uses all of the time to part the little guys with their hard-earned money. And how the government often turns a blind eye (case in point Madoff, Stanford, Allied Capital, etc.)

Among the best investment books I've ever read
David Einhorn's new book about his long-running battle with Allied Capital is an amazing book. More than just an investing book, it's an investing novel, with good guys and bad guys and clueless, gullible and conflicted investors, regulators, Wall St. "analysts" and media. I stayed up all night to read it.

The review by George Anders in the Wall St. Journal recently missed the point. Anders focused on Einhorn, highlighting his tremendous track record and saying he's gutty, tenacious, patient and disciplined, but that's not the story! The real story is what Allied Capital has done and the utter failure of regulators, investors and the media to do anything about it. I don't see how it's possible to read this book and not come to the conclusion that this company has done -- and continues to do -- all sorts of terrible things, but rather than expressing an opinion on this, Anders makes it seem like a he-said-she-said tempest in a teapot and, reading between the lines, seems to be saying that because the stock hasn't plunged, that Einhorn's investment thesis has been proven wrong. It hasn't -- but it can sometimes take many years.

(Full disclosure: Funds I manage are short the stock of Allied Capital and I'm mentioned briefly in the book.) ... Read more

Editorial Review

The first authoritative history of hedge funds-from their rebel beginnings to their role in defining the future of finance.

Based on author Sebastian Mallaby's unprecedented access to the industry, including three hundred hours of interviews, More Money Than God tells the inside story of hedge funds, from their origins in the 1960s and 1970s to their role in the financial crisis of 2007- 2009.

Wealthy, powerful, and potentially dangerous, hedge fund moguls have become the It Boys of twenty-first�century capitalism. Ken Griffin of Citadel started out trading convertible bonds from his dorm room at Harvard. Julian Robertson staffed his hedge fund with college athletes half his age, then he flew them to various retreats in the Rockies and raced them up the mountains. Paul Tudor Jones posed for a magazine photograph next to a killer shark and happily declared that a 1929- style crash would be "total rock-and-roll" for him. Michael Steinhardt was capable of reducing underlings to sobs. "All I want to do is kill myself," one said. "Can I watch?" Steinhardt responded.

Finance professors have long argued that beating the market is impossible, and yet drawing on insights from physics, economics, and psychology, these titans have cracked the market's mysteries and gone on to earn fortunes. Their innovation has transformed the world, spawning new markets in exotic financial instruments and rewriting the rules of capitalism.

More than just a history, More Money Than God is a window on tomorrow's financial system. Hedge funds have been left for dead after past financial panics: After the stock market rout of the early 1970s, after the bond market bloodbath of 1994, after the collapse of Long Term Capital Management in 1998, and yet again after the dot-com crash in 2000. Each time, hedge funds have proved to be survivors, and it would be wrong to bet against them now. Banks such as CitiGroup, brokers such as Bear Stearns and Lehman Brothers, home lenders such as Fannie Mae and Freddie Mac, insurers such as AIG, and money market funds run by giants such as Fidelity-all have failed or been bailed out. But the hedge fund industry has survived the test of 2008 far better than its rivals. The future of finance lies in the history of hedge funds. ... Read more

Reviews

Best of the 10 finance books for the layman I've read in the last two years
If you have read "Too big to fail", "House of Cards", "Big Short", "Lords of Finance", "Fool's Gold", etc. you will like this book better. More wisdom based on incredible research and interviews. I was initially resistant to Mallaby's recommendations about financial reform, but he sold me based on reasoning well supported by evidence. The clearest, most readable and reasoned discussions of the efficient-market theory and Soros' reflexivity. If you don't know those terms, read this book anyway. He will at the end and you'll be glad whether you interest is investing or just voting. This is scholarship dressed up as popular non-fiction. On a par with Tom Wolfe and Malcolm Gladwell for brining non-fiction to a wide audience.

Deserve a place in any traders' library
When I read through page#97, my first thought is this book will rank as high as the Remini of a stock operator and two market wizards book. Now I am in page#179 and I still think so. This is one of the best trading books I read in the recent five years.


I was a history and war buff, the one thing I notice is that a thick detail history or biography books often are not as good as books that are writen from a high level but with a lot of details to illutrate the pointd made. This is one of those books. For example, the details regarding 1992 pound sterling is the best one I read so far. It fully make the points regarding Soro's character. Better than any Soros's biography or the books writen by himself.

The traders the author chose cannot be better.

From a trader's prespective, this book will go down in history as top five trading books all time.

I believe this is the 2nd Amazon review I wrote ever. and it deserve the time I spent.

A developer from <[...]>The Options Lab

Revealing study of hedge funds
Sebastian Mallaby, the Paul Volcker Senior Fellow in International Economics at the Council on Foreign Relations and a Washington Post columnist, has written a most illuminating book on hedge funds.

The top three hedge-fund managers in the USA get $1 billion each a year. The money comes from fees (often a fifth of the profits), short selling and leveraging bets with borrowed money. Then they apply the whole package to bonds, futures, swaps and options. Mallaby calls it a `carnival of creativity and greed'

Hedge funds claim that they make the market work. They believe the myths that the markets are always right, that they correct themselves, that the chaos after the credit crunch could only happen once every billion years. They base their models on assumptions of `rational expectations' and `efficient markets'.

But the efficient-market theory crashed with the 1987 crash, the bond market meltdown of 1994, the Long-Term Capital Management bust in 1998 and the crisis that started in 2008. Currency markets, like equity markets, do not tend towards an efficient equilibrium. As Keynes said of those gambling on bubbles, "the market can stay irrational longer than you can stay solvent."

In reality, hedge funds are not about making markets more efficient or prices more accurate. They are all about seizing profits from other people's wealth-creation. They are parasites.

Michael Steinhardt, for example, made his fortune by milking discounts offered by pension funds and mutual funds. His collusion with brokers harmed the funds, which would have got better prices for their stock if insiders hadn't fixed the market. So the losers were millions of ordinary Americans, the winners were the millionaires who invested with Steinhardt.

Britain's membership of the Exchange Rate Mechanism (1990-92) gave speculators an opening. The Major government spent $27 billion of reserves trying to save the overvalued pound. After we left the ERM, the pound fell 14 per cent, losing the taxpayers $3.8 billion. The great philanthropist George Soros got $1 billion, in a `vast transfer of wealth from taxpayers to traders'.

In 1997, the hedge funds caused Asia's financial crisis. Soros' fund sold the overvalued Thai baht short. His fund made $750 million from the forced devaluation; Thailand's output fell by 17 per cent, plunging millions into poverty. Then Soros told South Korea it must `restructure' by making it easier for employers to sack workers.

As Mallaby sums up, "During the crises of 1997, hedge funds had profited by betting against governments that set illogically high prices for their currencies. In the hangover from those crises, hedge funds would profit by betting against governments that set illogically low prices for the broken jewels of their economies."`

Morgan Stanley and Goldman Sachs boasted of their independence from governments, yet when in trouble in 2008 begged for government funds. The International Monetary Fund said the bailouts cost the taxpayer $10 trillion.

Future crises are bound to happen. As Mallaby writes, "When banks can pocket the upside while spreading the cost of their failures, failure is almost certain."

As he notes, "government insurance encourages financiers to take larger risks; and larger risks force governments to increase the insurance. It is a vicious cycle", which, he warns, "will go on until governments are bankrupt."

Surprisingly Enjoyable History of the Evolving Role of Hedge Funds.
The splashy title "More Money Than God" doesn't do Sebastian Mallaby's hedge fund chronicle justice. It sounds like a gossipy tour of New Gilded Age wealth. Hedge fund managers are among the nouveau mega-riche, but that's not what Mallaby's book is about. This is a history of the major developments in hedge funds from Alfred Winslow Jones' pioneering "hedged fund" in 1949 through John Paulson's 2007 coup in shorting sub-prime mortgage securities and beyond. Mallaby defends hedge funds against the rash of criticism that their successes and failures in the past few years has unleashed by chronicling the changing role and increasing power of hedge funds over the past 60 years. He presents both views of hedge funds, with examples: They make markets more efficient and stable and led the flow of capital to the developing world. Their aggression and high leverage can be a destabilizing force, and their history is not free of underhanded tactics.

Mallaby lets the larger-than-life personalities of hedge fund magnates lead us through his history. He chooses hedge fund managers whose innovations influenced the industry: Alfred Winslow Jones' hedged fund that made 5000% in 20 years of the post-war era, Michael Steinhardt's success in the 1960s and 1970s with contrarian ideas, monetary analysis, and block trading, the econometrics of Commodities Corporation, Bruce Kovner's "carry trade", George Soros and Stan Druckenmiller's currency speculation in the 1990s, the superior stock-picking of Julian Hart Robertson's Tiger Fund, Paul Tudor Jones II's market moving, Long-Term Capital Management's lesson in leveraged finance, James Simon's Medallion Fund and David Shaw's fund as different styles of quantitative trading, Ken Griffin's multi-strategy Citidel, Amaranth's 2006 blow-up, August 2007's "quant quake", and more.

Mallaby admires hedge funds, because they find more success than investment banks with less systemic risk and no taxpayer-funded bailouts, but he doesn't avoid legitimate qualms about their role. Mallaby concludes by making a case against regulating funds with fewer than $120 billion in assets. He points out the hedge funds blow up all the time (5,000 failed between 2000 and 2009) but still fare better than investment banks or the S&P, even after correcting for survivorship bias. Mallaby's approach to the good and bad of hedge funds is thoughtful and engaging. I was surprised how much I enjoyed this book. It's a gold mine of information for those who are not sure what a hedge fund is or what they do, and it can serve as a (patchy) introduction to global finance. For those who read the Financial Times every day, "More Money Than God" is a compelling history of the industry and a fun read, even if some of it will be old news.

Easy Read
It can become a guily pleasure reading about Hedge Fund managers success and extrodinary wealth. Mallaby's book does something bold in that is stands up for what is often a villified segment of the investment world. Mallaby humanizes characters like George Soros and Julian Robertson but also gives tremendous insight into their strategies, why those strategies worked, and how they occasionally failed. Whether you work in finance or are just a casual follower of the markets this book has a narrative flair that makes it an easy read but the depth to leave you with some important lessons and views.

Lack of Fear Itself


Inverting Franklin Roosevelt "...investors should fear the lack of fear itself". This is just one insight Sebastian Mallaby gives us in `More Money Than God'. In fact, he gives a nuts and bolts feel for Hedge Funds, their history and the people - the masters of the universe - who operate them. It is a history of leverage, short selling and size characterized by major success and catastrophic failure.

Strangely, it also gives the small investor an insight into the share market. Is the market efficient? Can the market be beaten? If the market is not `efficient', hedge funds (and the small investor) can be successful. But sadly for an ongoing hedge fund, success removes the imperfections that it was profitably exploiting. "Sooner or later, every great investor's edge is destined to unravel" and often "quant brainiacs follow their computers to a well-deserved doom" because "the rocket scientists had blown up their rockets".

Success means a flood of money into the hedge fund. But "an analyst might identify a promising small company and figure that its value could double over three years, but if there were only $20 million worth of shares available to buy, it was hardly worth bothering with." Not so for the small investor, but then again the hedge funds seem to be able to short sell flexibly at will - a facility that should democratically be available to the small investor.

Starting in the 1990's, hedge funds became large enough to move markets of all kinds. They could even overpower governments. This allowed the Tiger Fund in 1998 to approach "Russian friends...to buy the entire stock of nongold precious metals held by the central bank and finance ministry...take the palladium, the rhodium, and the silver. All of it." leaving the logistics problem of getting it into a Swiss bank with Tiger's name on it.

For the small investor there is sound advice:

- it is often dangerous to trade on statistical evidence unless it can be intuitively explained". "Visceral" is the word meaning deep inward feelings rather than just an intellectual focus.

- "The whole point of leverage, the very definition of the term, is that investors feel ripples of the economy in a magnified way."

- We all rationalize success. One position by the Chanos Fund only worked out because the April 1989 Tiananmen Square demonstration broke out. This earned the comment "The way Ah see it, is that it took a revolution of a bihl-lion people for your darn short to work out."

- "Event driven" investing at Farallon Fund specialized in predicting events that cause existing prices to be wrong e.g. takeover announcements, demergers, avoiding bankruptcy, meeting banking covenants, major economic events, hybrid security maturity dates etc.

- `Pattern investing' used by the Medallion fund looking for patterns in the market. This applies research on French/English translation where the computer finds the grammatical rules not the programmer (using the Canadian Hansard which is conveniently in both languages).

- A Tiger Fund manager "should manage the portfolio aggressively, removing good companies to make way for better ones; should avoid risking more than 5 percent of capital on more than one bet; and should keep swinging through bad times until luck returned".

- Remember that "...the market can stay irrational longer than you can stay solvent".

- "If one of these stocks fell ... it was probably being pushed by an institutional block trader that needed to raise cash...the price would soon revert, creating an opportunity to profit." In other words, why is the seller selling?

- "the biggest danger for buyers of illiquid assets is that in a crisis these assets will collapse the hardest."

- "...the larger an investment fund, the harder it was for a fund manager to generate returns" meaning the small investor has more opportunity.

- And remember, "LTCM calculated that this loss should have occurred less than once in the lifetime of the universe. But it happened anyway." The market does not follow a normal distribution; often it is not random; but then is it often predictable?

Mallaby grapples with the variety of thought behind the success of the hedge funds giving us a workmanlike insight. This attempt to describe how the hedge funds actually operate - as far as he is able (and he tells us when he cannot) - makes this a valuable book indeed.

Wonderful trading insight

If you have read books like "stock Market wizard" and still feel that you don't have good idea how those people made so much money, this book is for you. Initially, I thought this book was just another hedge fund book without much substance. However, the author beautifully explains the trading methodologies of these star traders(and also their misses)- I was blown away. The author's insight into trading, leverage/economic history is remarkable, and by the reference list it is clear that he has put enormous efforts into this book. Compare this book with other hedge funds books and you will soon see the difference. I think this book may soon become a classic. ... Read more

Editorial Review

Top economist Gary Shilling shows you how to prosper in the slow-growing and deflationary times that lie ahead.

While many investors fear a rapid rise in inflation, author Gary Shilling, an award-winning economic forecaster, argues that the global economy is going through a long period of de-leveraging and weak growth, which makes deflation far more likely and a far greater threat to investors than inflation. Shilling explains in clear language and compelling logic why the U.S. and world economy will struggle for several more years and what investors can do to protect and grow their wealth in the difficult times ahead. The investment strategies that worked for last 25 years will not work in the next 10 years. Shilling advises readers to avoid broad exposure to stocks, real estate, and commodities and to focus on high-quality bonds, high-dividend stocks, and consumer staple and food stocks. .

• Written by one of today's best forecasters of economic trends-twice voted by Institutional Investor as Wall Street's top economist
• Clearly explains what to invest in, what to avoid, and how to cope with a deflationary, slow-growth economy
• Demonstrates how Shilling has been consistently right about major economic trends since he began forecasting in the early 1980s

Filled with in-depth insights and practical advice, this timely guide lays out a convincing case for why investors need to be prepared for a long period of weak growth and deflation-not inflation-and what you can do to prosper in the difficult times ahead. ... Read more

Reviews

Did I Tell You I'm A Genius?
I've admired Gary Shilling's writing and insights for years and eagerly looked forward to this book. But, wow ... I have to be honest: I never realized what a vain blowhard this guy is. The first 158 pages of this booked should have been cut out by a good editor, or, better yet, sub-titled, "Let Me Count The Ways I'm Uniquely Right About Everything."

My recommendation is that you start reading the very lively part of this otherwise interesting book, which begins on page 159. This part of the book might be entitled, "I'm Smarter Than Everybody Else So I'm Going to be Right About Everything Again." As is so happens, I think I kind of agree with him but, sheesh, a little modesty, please. This guy makes Donald Trump sound self-deprecating.

Gary Schilling Gets It !
Gary Schilling and Bernake are the only ones telling us that DEFLATION is the problem. I believe they are right. Look around, everyone is saying how Bernake is wrong, and inflation is the problem. But Bernake and Schilling are correct. DEFLATION really is the problem.

Americans are the primary consumers for the world, and we are about to embark on a new prolonged era of extreme frugality.

The city and state governments are laying off workers like crazy. There are no new jobs to replace these jobs. Private sector employees are lucky just to have their jobs.

And globalism is causing the price of products to deflate as an open arena of competitiveness will tend to do.

And when we have QE2, it will do more to inflate the developing econimies than the American Economy, as the US banks are only feeling free to fund to fund the emerging markets. All bailout money fill filter overseas so DEFLATION will still hit hard in USA.

Stocks are bad, Real Estate is bad, Developing Economies are bad, Junk Bonds are bad. And if you think gold is good look at all your 'clever' friends that own gold, have they ever made money in the market before? Gold is a bubble too.

Only Long Term US treasuries and high dividend low p/e stocks have any potential to provide capital preservation. US treasuries are the best as even stable stocks will suffer from the deflation to come.

Gary Schilling Gets it! Most other people don't and they will lose much of their assets.

The Singular Gary Shilling at his best
Great book. Full of stats and history. Maybe he will be right again, and we are headed for deflation and a 3% or less yield on the 30 year treasuries. In any case, of all the investment advisories and financial sources that I follow, Gary Shilling is one of the few whose predictions I give my full attention.

Good ideas and strategies
Always very interesting to read Gary Shilling's insights and advice. I'll refer to this a few times over the next few years, I'm sure, as we continue to go through these economic times. ... Read more

Editorial Review

The essential stock market guide updated with timely strategies for investing after the crash

Now in its fourth edition, Jason Kelly's The Neatest Little Guide to Stock Market Investing has established itself as a clear, concise, and highly effective guide for investing in stocks. This comprehensively updated edition contains tried-and-true investment principles to teach investors how to create and refine a profitable investment program. New strategies and content include:

•Basic tips on when to invest and how to reduce the amount of risk in this turbulent market
•A new core portfolio technique that shows readers a way to achieve 3 percent quarterly performance with the IJR exchange-traded fund
•An exclusive interview with legendary Legg Mason investment counselor, Bill Miller, including his thoughts on the financial crash of 2008

Accessible and intelligent, The Neatest Little Guide to Stock Market Investing is what every investor needs to keep pace in the current market.

... Read more

Reviews

One of the best books for Trading and Investing
This book is a great book for anyone looking to invest money in the stock market. I have read many investment books and stock trading books and this is one of only 3 books that I would advise a new trader or investor to read.

The author, Jason Kelly, starts by explaining "Why Stocks are Good Investments". Jason points to strong and true facts that show that owning stocks is one of the best ways of increasing wealth over time. He explains how you make money in stocks and goes into the difference between "total return" and "capital appreciation". Jason then explains why companies even sell stocks and how that works. If you are new to stock investing or trading and you do not have a clear understanding of this then you should read this. There is a quick section also about how to choose a broker to help you buy and sell stocks.

Jason then goes into "How to Evaluate Stocks". He explains the difference between value and growth investing. Jason does a great job of defining and explaining all of the most common terms in evaluating the fundamentals of companies including: current ratio, EPS, ROE, Net Profit Margin, P/E, and P/S. Then he explains common terms for evaluating the technicals of the stock price including: SMA, MACD, RSI, relative price strength, and volume. Knowing and understanding these terms is a must for anyone who wants to invest or trade in individual stocks.

After reading the 1st 3 chapters you will know half the things they teach you in a 4 year Business Degree. Believe me, I have a degree in Business.

Then Jason tells you "How the Masters Tell Us to Invest". Here he summarizes how each of the best traders and investors of all time advise individuals to build wealth. He covers Benjamin Graham, Phillip Fisher, Warren Buffet, Peter Lynch, William O'Neil, and Bill Miller. You could read whole books about each one of these investors or you could just read these sections in Jason's book where he breaks down their main points. Jason then has a section where he finds the common points that all these investors share called "Where the Masters Agree". This section will be the backbone for the strategy of the author.

Jason then explains "How History Tells Us to Invest". Here Jason explains some backtesting on various investing methods and shows that combining Value and Growth Investing is one of the best ways to build wealth over time.

Then we get into the real meat of the book. Section 4 "Permanent Portfolios" introduces you to easy to follow strategies to beat the market over time. This is where both new and experienced investors who have not read this book before will be able to really benefit by reading this. If you are someone who wants to beat the market by only looking at and adjusting your portfolio for a few short minutes about 4 times a year then these strategies are for you.

Jason also has the most exhaustive list of resources for stock research I have ever come across. When you read "Research to Riches" section you will have a gateway to all the best data on stocks available through many many sources.

In "This Books Strategy" Jason explains how we will use the "Permanent Portfolio" to build our fortress of wealth and then create and maintain a watch-list of individual stocks that we will send out of our fortress of wealth when the time is right to bring back even higher returns. Jason thoroughly explains how and where to gather information and compare it to stocks you already have on your list so that you are not overwhelmed by all the data and stock gurus available. Jason explains when may be good times to buy and when may be good times to sell stocks. He also has a very interesting way of tracking your performance and reviewing your choices to learn from the past.

And of course he has an investment website and "Letter" to compliment what we have learned in this book. The website is a great way to read his recent observations which he updates with new articles on a regular basis and is available to anyone for free. And he has the "Letter" which is a very affordable service (about $5.35/month I think) where he emails members on updates of his portfolios and his view of the market direction. I recommend at the very least to check it out on his website where you can find a sample "Letter" and see how his portfolios have performed against the "market".

WHY this book is for you- regardless
I see a one-star review here that says this book is for neophyte investors. Yes, it is! It's also for experienced investors. I have 400% in total portfolio gains over the last two years. I'm not inexperienced- and I find substantial value in this new book, as I did in his earlier one that helped me learn my investment strategy.

Occasionally someone will ask how I managed to achieve such gains in a recession, and I tell them how I follow fundamentals- value, potential, risk assessment, and so on. I'm amazed at the number of people who think that's crude strategy... but yet to find such a person who has done as well.

One of the reasons some "experienced" investors don't do as well as they should is that they forget the fundamentals, or start believing fundamentals are negotiable or don't apply to them because of their accumulated wisdom. Experience can get in the way if you start thinking that doing something for several years automatically makes you good at it, even when your gains are say you're not. Hogwash can get in the way too, and the investment world has plenty of that. It hides the important stuff, and distracts investors from what really makes the differences.

Jason is one of the very few investment writers who is clear and concise, and never loses sight of the fundamentals of investing. No hogwash! He gets to the point clearly and concisely without adding copy designed to impress or confound you with his wizardry. His books are actually designed to help investors understand and profit... while most books are designed to sell, and make the author profit. Don't expect the fancy stuff, the confusing techno-babble. Expect the core information that allows you to understand and remember the fundamentals, to grow and become better and better. One of the best investment bucks you will ever spend.

Excellent book!
I picked this book up hoping to learn a little something about the stock market, instead I have come away with more knowledge than I ever thought I'd get out of a book. The book covers the basics and shows you how to evaluate stocks, build you own worksheet and also includes strategies. I finished it excited to start investing and use everything I had just learned. Jason Kelly breaks everything down so it is easy to understand and very entertaining to read. It's a great book and I'd recommend it to anyone interested in understanding the stockmarket.

Excellent reading
I find that the best sources of realistic, actionable financial insight and analysis come from those people located far, far away from "Wall Street" -- Jason Kelly is one such source.

Jason Kelly's 2010 update is a fantastic addition to any investor's library be they just starting out or experienced. As with his weekly Kelly Letter, the book's tone is common-sense, conversational, and friendly ... yet provides a hidden wealth of useful insight and/or friendly reminders on controlled individual investing.

In particular, I found his discussion of the seldom-mentioned Value Averaging as a viable long-term wealthbuilding methodology that I will begin incorporating into my own retirement account. That's one of the strategies he offers readers for their consideration -- however, contrary to the comments made by other reviewers, he does not focus exclusively on using leveraged ETFs and his discussion of them as trading tools both is fair and properly-explained to readers who may be enticed by their potential returns. In fact, his Value Averaging method is UNLEVERAGED, which is why I like the idea for a long-term investing style.

I have recommended his book to others and will do so here in my first Amazon review, too. :)


(Disclosure: I'm a Kelly Letter subscriber and been investing/trading for over 20 years in various capacities.)

Amazing Book for anyone and everyone.
To be completely honest I think this book should be read by the entire population! Haha. But seriously if you feel uncomfortable about investing this book really makes things much clearer and its an easy and fun read. I'm not a big book reader and oddly enough I couldn't put it down. My GF commented on how I would get completely lost in reading it. I think it too me three sessions to finish it. Some of which was just because I thought I should stop and digest the info. This book gets you excited about investing with a very grounded perspective and explains all the details at just the correct timing and in a logical manor. Some sort of investing is the key to long term financial security. As much as buying stocks can seem like something only people with lots of money can do that is completely false. This book puts it perfectly into perspective.

I would also suggest 'The Options Course' By Fontanills. Its not near as good of a read but it makes up for it in content and technical info.

People without a ton of money: There isn't a day on the stock market that goes by that you couldn't turn a hundred dollar stock purchase into $110 or more and just today I saw a stock option that was selling at $.45 and went up $.70. You could have turned $90 into $230 in about a half an hour. Read, watch read, read, think, read, watch then invest!

Great intro to an otherwise complex topic
Having come from a software development background, I began reading the book to spark my interest in financial investments. I didnt really know what to expect. After reading this book, I am now able to keep up with stock tickers and stock analysts on MSNBC, Bloomberg, and Fox Business. I can read WSJ and Google Finance charts without feeling like I am reading another language. I've decided to highlight my favorite parts of the book:

Speak the Language of Stocks:
This chapter alone was the best. For someone without any background in stock markets, this chapter alone is the holy grail of the book. It tells you what stocks are, where they come from, briefly how to evaluate them, and distinguishing growth/value. Like i said before, if you have no clue what stocks are, this chapter will be the most important in the book and the author does a great job explaining it.

How History Tells Us to Invest:
Being a very technical person, I found the analysis in this chapter very interesting. The author advocates the importance of P/S ratios over the popular P/E ratio. He also goes over the criteria for valuing growth stocks vs value stocks and how using both strategies can maximize returns.

The book's investment strategy is also very simple. The author supplies an abundance of research options for fundemental and technical specs you need to rank stocks. He also supplies worksheets, which can be printed from his website.

For the beginner, this book is a great intro to the market. Give it a try!

Great Book, You Won't put down!
This book is amazing for someone who is trying to get into the stock market business.
It covers a range of topics such as:

-How the stock market was formed.
-How to buy/sell stocks (different options you got, such as Market Order/Limit Order..Etc)
-This book explain terminology extremely well with great example. Such as Ratio, what they mean and what ratio's good companies should
have.
-Fundamental and Technical analysis.
-It gives you many sources of where to conduct your research and details what information each source will provide, where to find the
source.
-It tells you about a few strategies you can use to invest in the stock market.

There is a lot more to the book then what I mentioned but the MOST important thing about this book is this:
IT IS NOT BORING. I have tried reading many books about the stock market but most could not get past the second chapter Why
cause it was not written as well as this book is.

The writer writes in such a way that is easy to understand and easy to follow. He makes you excited about investing and potential return. If you interested in a good book to start your education about the stock market and trading in the stock market this book is
for you!

Greatest Book For A Beginner
I have been interested in the stock market for a while but had no idea of where to even start! I read a few books, including "Buffetology" which to me was more helpful with some theory than any actual strategy or starting point, ultimately it didn't pan out as I didn't feel comfortable with what I had taken away.

I decided to try this book after I saw it in a bookstore and read some reviews, I originally had the 2004 version and was most of the way through that when I noticed it was seriously lacking in a lot of internet tools and current trends, so I researched the 2010 edition and bought it immediately. IT IS AWESOME! I have literally never been so jacked about a book before because it is such a wealth of knowledge.

Another review mentions that it teaches you half of the stuff you learn in a four year business school, he is right, but this book actually teaches it better than any teacher I had.

The author, Jason Kelly, is also very cool. I had some questions regarding a few things in the book and he took the time to email me back and actually reply. How cool is that!

The book itself lays out a great startegy, while laying the groundwork for competent understanding of stocks and the market. It doesn't teach you everything (I can't imagine the size of a book that would try to do that) but it gives you the base skills to feel confident about investing and talking to others about the market.

I 100% endorse and recommend this book for anyone who is a beginner. ... Read more

Editorial Review

"It's hard to talk clearly about investing and make sense to ordinary readers at the same time. Katsenelson gives a lucid explanation of today's markets with sound advice about how to make money while avoiding the traps that the market sets for exuberant bulls and frightened bears alike." -- Thomas G. Donlan, Barron's

"A thoroughly enjoyable read. Provides a clear framework for equity investing in today’s ‘sideways’ and volatile markets useful to everyone. Clear thinking and clear writing are not often paired - well done!” -- Dick Weil, CEO, Janus Capital Group

"The bible for how to invest in the most tumultuous financial market environment since the Great Depression. A true guidebook for how to build wealth prudently.” -- David Rosenberg, Chief Economist & Strategist, Gluskin Sheff + Associates Inc.

"A wonderful, grounded read for new and seasoned investors alike, Katsenelson explains in plain English why volatility and sideways markets are a stock picker's best friend.” -- The Motley Fool, www.Fool.com

Praise for Active Value Investing

"This book reads like a conversation with Vitaliy: deep, insightful, inquisitive, and civilized." -- Nassim Nicholas Taleb, author of The Black Swan ... Read more

Reviews

Aleichem reincarnated as a value investor, December 6, 2010
Vitaliy N. Katsenelson's The Little Book of Sideways Markets: How to Make Money in Markets That Go Nowhere (Wiley, 2011) is thoroughly enjoyable, not so much for the message as for the thoughtful and often entertaining way in which it is delivered. It is part of the "Little Book Big Profits" series that began with Joel Greenblatt's The Little Book That Beats the Market in 2005 (recently updated) and now includes fifteen titles.

Katsenelson's hypothesis is that we will likely be in a sideways market, personified by the cowardly lion, "whose bursts of occasional bravery lead to stock appreciation but are ultimately overrun by fear that leads to a descent," until about 2020. (p. 3) His reasoning is that we are experiencing earnings growth but continuing P/E compression: the gains we get from earnings growth are wiped out by a decline in P/E ratios. Even though there can be a lot of cyclical volatility, over the long haul stock prices will stagnate. Until the 12-month trailing P/E falls "significantly below the historical average of 15" (by mid-2010 stocks were trading at more than 19 times 2010 earnings) the sideways market will continue. (p. 27)

If this hypothesis is borne out, buy and hold (never a great idea in any environment) absolutely must be replaced with buy and sell. "A disciplined sell process injects a healthy dose of Darwinism ... into the portfolio, weeding out the weakest stocks--the ones that have deteriorated fundamentals or diminished margin of safety--in favor of stronger ones." (p. 164) That is, once the reasons you bought the stock (valuation, quality, and growth) have disappeared, sell and move on.

Katsenelson takes his reader step by step into the mind of the value investor by relating, in a fictional addendum to Fiddler on the Roof, the story of Tevye's purchase of Golde, the cow. He also describes his own big-time gambling evening (he was willing to lose a maximum of $40) and that of a half-drunken, rowdy fellow blackjack player to stress the importance of process. He then moves on to the fundamental principles of active value investing

What differentiates this book from so many others on value investing is that it describes, sometimes through the use of case studies, the thinking of a value investor. Not just his models or his metrics but his assessments. Katsenelson is an empiricist who weighs facts, looks for contraindications, and makes decisions. He makes value investing come alive.

This may be a little book, but it's packed with insights for both novices and experienced investors. And it is a delight to read.

Want to remove clutter and think clearly about investing... this is a very good start, December 25, 2010
I loved the book even though it felt something is missing like a movie without proper ending. On the whole the book explained the author's theory on long market cycles and fundamental concepts on value investing very well. The author clearly has a crisp and clear way of presentation. The author has definitely stuffed a lot of value investment wisdom into this very little book. Whether one buys into the argument of active investing - a mini version active trading is a personal choice. Ben Graham's enterprising investor may like it while ardent fans of indexing may hate it. There is a chapter on Japan and China - very small - but good one.

The primary reason for me giving 5 star rating - very neat summary of value investing concepts and concepts like P/E compression, value of using relative measures than price, effect of rising tide etc. Could finish the book in few hours over two days - Nassim Taleb was right that the book reads like a conversation - never boring. I will definitely look forward to next book from this author.

Note: I was hesitant to buy the book as I did not have great opinion about this Little Book series. The book was rated by only one person. I did not like The Little Book of Common Sense Investing by John C. Bogle even though it is highly rates. Another one was written by Ben Stein about whom I do not have a great opinion after I heard him on TV multiple times (Pls note that I have not read his little book). I tried a sample chapter on Kindle and still was not convinced.

Finally bought the book by looking at Nassim Nicholas Taleb's comment and rating on Mr Vitaliy's previous book. More than money I was worried about time lost in reading an average book.

A Summary of Active Value Investing, December 26, 2010
Vitaliy Katsenelson's new book can, in my mind, be broken up into three parts. He begins with his argument that we are in a sideways market. He follows that up with a bit of a tutorial on value investing, and finishes with a few miscellaneous observations.

His sideways market thesis is that following a secular bull market, such as we had in the 90s, we are doomed to spend a number of years in a sideways market. It wiggles around, but ends up roughly where it started. He does some calculating, not to predict the precise length of the sideways market, but to give the reader an idea of the factors involved. (If his assumptions are correct, the current sideways market has another 11, or maybe14 years to go. I don't have a lot of faith in the precise numbers he uses, but neither does he, so that's no criticism.) The central reason for making the sideways market argument isn't to pinpoint the length of the market move, but to convince the reader that, in such a market, it's tough to make money just by being in the broad market, or by being a buy-and-hold investor. We can however, make money by opportunistically buying individual stocks when they are cheap, and selling them when they are fully valued. Don't time the market, but do time individual stocks.

The middle of the book (chapters 4-12) is a tutorial on value investing. I don't think it contains anything that well-read investors won't have come across elsewhere, but it is put together nicely, and pays attention to a few ideas that are often ignored or underplayed in the value investing literature. Specifically, there is a nice piece on the importance of focusing on process, rather than outcome (an idea popularized, though by no means discovered, by Nassim Taleb) and a chapter on ways that poor management can destroy free cash flow. Value investors sometimes treat free cash flow as the holy grail of investing and valuation, ignoring the ways management has historically handled the cash, either creating or destroying value.

The book concludes with a group of largely unrelated chapters ranging from a mildly behavioral-finance influenced pep-talk to a critique of the Chinese economic model. A few of these are interesting, a few are a waste of paper and ink (chapter 13, I'm looking at you).

My biggest criticism of the book is that I'm not quite sure what the target audience is. The first few chapters are a bit on the technical / numerical side for a rank beginner, and don't contain enough data or a strong enough argument to really convince a more experienced investor who doesn't already agree with the thesis. Yes, the pattern of bull market followed by a range-bound market has occurred a few times over the last 100 years, but the ranges and lengths have varied a lot, and I saw no compelling reason to think that a bull market couldn't start from a higher level than Katsenelson thinks it could, that we couldn't have another bear market (such as the one post-1929), or any of a number of other possible scenarios. Investors often make the mistake of thinking that this time is different, but they also make the mistake of thinking that the future will be just like the past. In the end though, I don't think that the sideways market thesis is important, beyond the idea that we can make money when the overall market isn't moving strongly up or down. I've been following a method similar to the one he advocates here since the late 90s, and have experienced success with it personally, so I didn't need much convincing.

The value investing tutorial portion of the book appears to be written for the true beginner, using very simple and non-technical examples, but I don't believe it goes quite far enough to be the sole resource of a new investor. Where should an investor go to get the sort of information on a company that Katsenelson recommends using? How do you read a cash flow statement, or a balance sheet? How do you read a 10-q, or a 10-k, or a proxy statement? Should you be reading these at all? I think it's a rare investor who knows these things, but still needs Katsenelson's farmer-buying-cows example to figure out why free cash flow is important.

My primary question before buying the book (which I could not, at the time, answer) was what this book would offer to someone like myself, who had already read Katsenelson's previous book, Active Value Investing. The answer is "very little." I loved Active Value Investing. I wasn't entirely convinced by his range-bound-markets hypothesis, which has been re-named "sideways markets" in the current book, but thought that the meat of the book, on value investing techniques, was great. Most of the current book is an abbreviated version of Active Value Investing, with liberal use of the cut and paste function. Large chunks of the books are identical. Many chapter headings are the same. The last few chapters are new, but not particularly useful, and most of their content will be familiar to anyone who reads Katsenelson's blog. If this Little Book were his first effort, I would certainly recommend it to the intermediate investor. Too much knowledge is presumed for this to be useful to the novice, and an experienced investor is unlikely to find anything both new and useful. It is not his first book though, and it is, in almost every way, inferior to his first book, Active Value Investing. Read that instead.
... Read more

Editorial Review

A practical guide for investors who are ready to take financial matters into their own hands

The Warren Buffetts Next Door�profiles previously unknown investors, with legendary performance records, who are proving every day that you don't need to work for a hedge fund or have an Ivy League diploma to consistently beat the best performing Wall Street professionals.

These amazing individuals come from all walks of life, from a globe drifting college dropout and a retired disc jockey to a computer room geek and a truck driver. Their methods vary from technical trading and global macro-economic analysis to deep value investing. The glue that holds them together is their passion for investing and their ability to efficiently harness the Internet for critical investment ideas, research, and trading skills.

• The author digs deep to find the best of the best, even finding those who are making money during these turbulent times
• Contains case studies that will explain to you how these great individual investors find and profit from stocks and options.
• Shows you how to rely on your own instincts and knowledge when making important investment decisions

In an era when the best professional advice has cracked many investor nest eggs and Madoff-style frauds have shattered investor trusts, the self-empowered investors found in�The Warren Buffetts Next Door�offer an inspiring and educational tale. ... Read more

Reviews

A Great Book!
As a private investor who suffered big losses during the tech. meltdown and who vowed never to invest in stocks again, only to get seduced back into the market to then watch another collapse when the economy sank worldwide (and who finally figured out how to make money in the stock market), I think that "The Warren Buffets Next Door" is a great book. After all, as investors wouldn't we all like to enjoy the success of Warren Buffet? As Mathew Schifrin points out, the best investors learn from their mistakes (as does any other successful person).
I see many elements of what I have learned about financial success explained in Schifrin's book, so right off the top I highly recommend this book because paying close attention to the very practical tips and strategies throughout this book can help make you a more profitable investor. "The Warren Buffets Next Door" is an entertaining, easy-to-read, interesting book with a lifetime of investment suggestions crammed into one book. What makes this book such a fascinating read is the Schifrin has selected ten ordinary people from very different walks of life who have all achieved remarkable investment success during a decade in which the market destroyed many people.
I really like Schifrin's approach to tell us a little of the personal life of each person. In addition, he provides each person's rules for investing and provides a case study in point for each person. Great information and great reading.
Throughout the book are links to relevant websites and Schifrin makes no bones about the fact that the internet has changed the rules of the game allowing you and me to have access to the research and information that was once the domain of only the professional advisors.
As an author of a book on financial success (The Millionaire Lifeguard), I appreciate and understand what many of the ten investors profiled in Schifrin's book have been through and I found inspiration in their stories (not to mention support for my own investment strategies as well as some new tips).
I highly recommend this book to all investors, but particularly those who have become disillusioned with investment advisors and would like to take control of their own investment portfolios.

"Follow What You Know"
If there is one take-away from Matt's book, I believe it is that investors who follow what they know, in an analytical manner, are bound for success. Matt profiles superstar "amateur" investors, creating rich portraits of their lives, backgrounds, successes and failures. These are not people with B-school backgrounds, or years of experience on the Street. They are your next door neighbors, friends and family - ordinary retail investors who have had extraordinary results.

Something in each of these investors' lives has informed their investing-style, whether it be years of frugality (leading them to a value approach), or a love for software and mathematics (leading to an options approach), etc. These investors use Main Street smarts to get returns that would make Wall Street experts jealous. With the help of online tools and communities such as Valueforum.com, Marketocracy, the "Warren Buffetts Next Door" research and decide which investments to pursue.

The book is an easy, fun read (I finished it in two days). It has you thinking "How can I do that?" and provides resources to help you become your own "Warren Buffett Next Door".

Adam Menzel
COO
ValueForum.com

Meaningful Stories, Relevant Success
Sifting through all the books about investing and money management can be as time consuming as actually being an investor. Luckily, when you see certain cues, such as "26 years at Forbes" or "Investing Editor and VP" you know that the quality of writing will eclipse the blogger/talking head crowd and provide you with real kernels of information and honesty. Each chapter in the book focuses on a narrative of one person's road and unfolds to show both technical lessons in investing and the kind of positive message that we need today. This message is simple but has never been more important: retirement is our responsibility and investing as an amateur is not just a dream but a reality for Americans in all walks of life.

The layout of chapters lets you know what to expect and glean vital information quickly, and Schifrin knows how to tell a great story, even ceding control to his successful investors at the end of each chapter with an "In their words" area. One particular investor tells a story of managing risk by talking about furniture makers and lost fingers--this kind of visceral tale will stick with you while you're cribbing notes about key metrics for your own portfolio.

This book is a must-own for people taking on their financial future and those who want to explore the world of financial freedom.

The next Warren Buffett could be living next door
In his 25 years at Forbes, Matt Schifrin has seen everything Wall Street has to offer and yet for his first book, Matt chose to write about "The Warren Buffetts Next Door." I am proud that Matt selected 7 Marketocracy Masters for his book.

I've spent the last 10+ years looking for great investors like Warren Buffett. People who can make money even when the market is flat or down. People who have the good sense to stop buying stocks when they are expensive and the courage to put money to work when everyone else is afraid.

Warren Buffett is proof that such people exist, and that they are extremely rare. However, even if Buffett is one in a million, in a country with 50 million investors there ought to be more than 1. Where are the other Warren Buffetts?

While reading Mr. Buffett's biography I learned that he got his start in 1956 when his friends and family invested a total of $105,000 - about $1 million in today's dollars -- in his first partnership. Not to take anything away from Mr. Buffett's achievements, but it may just be that the other Warren Buffetts simply didn't have friends and family who could give them the same start.

But then I realized that as long as the investment decisions are made in real-time, a track record of a model portfolio would help me to identify people of Buffett's caliber just as well as if it had been real money. Using model portfolios also enabled me to give tens of thousands of potential Warren Buffetts a chance to prove themselves thereby increasing the odds of finding the rare people I am looking for.

The people Matt chose for his book all have impressive track records - some as long as 10 years. In a market that has gone nowhere for the past decade, these people somehow found pockets of opportunity to make good money that almost everyone else missed. Matt's book gives me confidence that even if the market is flat over the next 10 years, there will still be opportunities to make good money and that it will be people using techniques like those profiled in the Warren Buffetts Next Door who will find them.

Ken Kam
CEO
Marketocracy, Inc. ... Read more

Editorial Review

A time-tested guide to stock trading

Published every year since 1968, the Stock Trader's Almanac is a practical investment tool with a wealth of information organized in calendar format. Everyone from well-known money managers to savvy traders and investors relies upon this annual resource for its in-depth analyses and insights. The Stock Trader's Almanac 2011 contains essential historical price information on the stock market, provides monthly and daily reminders, and highlights seasonal trading opportunities and dangers.

• Alerts you to little-known market patterns and tendencies to help forecast market trends with accuracy and confidence
• An indispensable annual resource, trusted for over 40 years by traders and investors
• The data in the Almanac is some of the cleanest in the business

For its wealth of information and the authority of its sources, the Stock Trader's Almanac stands alone as the guide to intelligent investing. ... Read more

Reviews

Great Seasonal Investment Ideas, November 3, 2010
Excellent desktop reference full of ideas on how to capitalize on seasonal trends in the market.
Provides good reference source for historical market data. ... Read more

Editorial Review

"Throughout the ages, many things have been used as currency: livestock, grains, spices, shells, beads, and now paper.But only two things have ever been money: gold and silver.When paper money becomes too abundant, and thus loses its value, man always turns back to precious metals.During these times there is always an enormous wealth transfer, and it is within your power to transfer that wealth away from you or toward you."--Michael Maloney, precious metals investment expert and historian; founder and principal, Gold & Silver, Inc.

The Advanced Guide to Investing Gold and Silver tells readers:

• The essential history of economic cycles that make gold and silver the ultimate monetary standard.
  
• How the U.S. government is driving inflation by diluting our money supply and weakening our purchasing power
  
• Why precious metals are one of the most profitable, easiest, and safest investments you can make
  
• Where, when, and how to invest your money and realize maximum returns, no matter what the economy's state
  
• Essential advice on avoiding the middleman and taking control of your financial destiny by making your investments directly.

Reviews

The time is NOW for gold and silver investing!!!!
Mike has made a compelling case that sooner, rather than later, the US Dollar is going to tank and everyone will be running to gold and silver to protect their wealth. The good news is that NOW is the time to get in on both silver and gold- before the HERD of people start rushing in. Mike states that this opportunity coming could be the best investment in history.
The book starts off with the history of other empires that have used a fiat currency and how they have failed 100% of the time. The United States has been on this path since Aug, 1971 when President Nixon took us off the gold standard. There are a lot of interesting facts in this book but not too many to bore the reader. He explains that gold and silver will revalue themselves periodically in relation to the amount of paper currency printed. For example, the M3 money supply (total printed money in circulation) was ~$1.7 billion in January, 1980 when gold hit $850 an ounce. Today, the M3 is estimated at $14 trillion, a 7.7 times increase in the amount of currency. With that said, gold, when it adjusts, should be $6,118.00 an ounce...
Mike goes into today's current economic climate, then predictions for "tomorrow". He concludes with the final section "How to Invest in Precious Metals".
I recommend this book if you are unsure about silver and gold relating to investing. There's so much documentation and research behind it.

I've never read an investment book with this much passion put into it!!!

This is the book I've been searching for.
I became interested in precious metals and economics about a year ago and have been reading and watching everything I could get my hands on. After a while you begin to see that there is a lot of common ground shared between most of the material out there and being new to the "Rich Dad" stuff I wasn't sure what to expect from Mike Maloney (though I did like the series of interviews he did with industry analysis professionals). I was very impressed with the amount of original research and information I found in this book - it covers all the bases from the historical trends and cycles, to the fundamentals of economics and everything in between. Of all the books I've read on the subject this year (about 10 so far) this is by far the best overall coverage and was the most fun to read.

MUST Read if You Want to Protect Your Wealth!
If you don't know why gold and silver are a good investment "Guide to Investing in Gold and Silver" will tell you why they are. Simple to read full of facts about money and currency and history of money and currency. It breaks down complicated economics into fun easy reading. This book gives you the do's and don'ts of investing in precious metals and a clear understanding of why now is the time to invest in gold and silver. If you want to protect your wealth from inflation or build your wealth through gold and silver this book is a must read. A great addition to the Rich Dad library of books!

Read this book NOW.
Wait a second. Don't read this book now. First buy all the gold coins or bullion that you can because there isn't any time to waste. Then, read the book and you'll understand why your purchase was so urgent and so wise.

As I write this, the spot price for gold is pushing $900 per ounce. I got into gold about $20 ago. Although I already understood a lot of the things this book explains, I had always put the purchase of gold on the back burner because I never really connected all the dots. However, when the current credit crisis happened and the government began talking about a Trillion dollar bailout (of course, it will cost at least 3 times that - it always does), I knew that the unavoidable result would be a devaluation of the dollar. Therefore, in order to preserve the value of my dollars, I transferred them into gold. I THEN read Michael Maloney's book.

If I had been able to see the big picture as I now understand it after reading his book, I would have bought gold years ago and been way ahead of the game at this point. However, I don't regret my delayed entry into gold because I now UNDERSTAND that when it comes to the devaluation of our currency and the resulting increase in the price of gold, "we ain't seen nothing yet". So, even if the price of gold is $1,500 or $2,000 per ounce by the time that you read this, buy it anyway because that price is still only the beginning. I am not saying that you are going to profit by owning gold (although you probably will), I am saying this because your dollars MUST continue to decrease in value. If this sounds confusing, don't worry. After you read the book you will completely understand what I am saying.

One last thing. This is NOT one of those doomsday books. It is an intelligent, logical presentation of facts which gives YOU the knowledge and tools to come to your own conclusions EVEN when the financial forces that drive the economy change and require a different investment strategy. Once you understand this, you will not need someone else to tell you what to do, you will be able to decide for yourself the best course of action because you will understand what CAUSES things to happen in the economy. It has never been so true that "knowledge is power".

Great primer for precious metals investing!
This is a really good basic book on buying gold and silver for your future. The author covers historical precedents, possible scenarios, how to prepare, and even a little bit about an exit strategy. I don't agree with the author about everything, notably, he doesn't like collector coins, while I believe, with proper research and judicial buying, they can be an excellent investment - as has been the case for me. Also, the author thinks you should limit your buying to US Gold and Silver eagles. I also like Krugerrands, Maple Leafs, and Philharmonics, and for silver, I also like 10 ounce and 100 ounce bars - they sell at a much smaller premium than Silver Eagles, and they make it very easy to figure out your total silver holdings. Also, the exit strategy could be expanded upon. All in all, one of the best investment guides for precious metals out there, and I have read 20-30 of them. Highly recommended reading if you are even remotely considering buying some gold and silver.

#1 book on gold and silver investing.
Michael Maloney gives a very insightful historical recount of gold and silver money. He explains how these metals have always prevailed over fiat or paper currencies.

Today, not a currency in the world is backed by gold or silver.
Understanding and acting on this fact will be one of the greatest financial discoveries you make in your lifetime.

This is best precious metals book out there. I have read numerous books on the coming collapse of our Dollar and fiat currencies world over. Mike explains the best ways to invest in the precious metals market. It is both fun to read (not doomey and gloomey) and educational (not difficult to understand).

Get it, Read it, and Act on it soon as the early bird will get the best silver and gold prices ;-)

This book spells it all out!
This book systematically spells out the history of fiat currency and precious metals/bullion and what governments throughout history have done to devalue money. It also spells out what the public has done as a result and paints a clear picture of what we should do now to protect and build our own wealth. ... Read more

Editorial Review

Q&A with Author John C. Bogle

In Don’t Count on It, you discuss how we deceive ourselves, particularly with numbers.Can you describe what you consider to be the absolute worst illusion investors fall prey to?
The most damaging illusion for investors is their belief that they capture the stock market's return. For example, if the stock market provides an annual return of 7%, we know that the average investor's return will fall short of that by the amount of fees they pay. Those fees amount to about 2.5% annually for the typical investor, so their net return is down to 4.5%. Taxes might knock another 1% off of that, reducing the investor's annual return to 3.5% -- just half of the market's return. If you compound those figures over 50 years, $1 grows by $4.60 at 3.5%, and by $28.50 at 7%. In other words, the investor's cumulative return is less than 20% of the market's return. That's an enormous gap; one that can easily mean the difference between achieving one's long-term financial goals and falling well short of them.

If you could change just one thing about the practice of capitalism today, what would it be, and why is it the most important?
The biggest problem with capitalism today is our tremendous focus on the short-term. Institutional investors--who own 70% of our corporations--are predominantly concerned with whether or not the quarterly earnings of the companies they own will meet the stock market's expectations. As a result, our corporate managers move heaven and earth to try to meet those targets, so as to keep their firm's stock price high and maximize their stock-based compensation. But building corporate value over the long-term is hard; there are no quick or easy shortcuts. And as the past decade has demonstrated, decisions made to boost earnings and stock prices in the short-term tend to end up destroying shareholder value over the long-term. The sooner we can realign our focus from the short-term to the long-term, the better for all concerned.

What do you think about ETFs?
I like some; I am appalled by others. Specifically, I favor low cost ETFs that are focused on broadly diversified portfolios of stocks and bonds that investors can hold for a lifetime. These ETFs should provide investors with their fair share of whatever the returns our financial markets will provide. That's a winner's game.

On the other hand, I'm not happy with ETFs--the vast majority--that exist to enable investors to speculate, to play their hunches on which country or market sector will outperform or underperform over the short term. The turnover rates are enormous, holding periods are measured in mere days, and costs are far higher than those levied by broad market ETFs. That kind of speculation is a loser's game.So I believe that ETFs have the potential to play a significant role in the portfolios of long-term investors. Unfortunately, to this point their use seems to be dominated by those engaged in far more destructive investment approaches.

You talk about inspiring the next generation of leaders and your mentors in Don’t Count on It.What did your mentors have in common that you think is the most important trait in inspiring young people today? In other words, how can each of us be better mentors?
I think at the most basic level, my mentors were good people; men of strong character who loved their work. They realized that the work they did made a difference in people's lives, and they did that work with a great deal of ability, pride, and professionalism. They woke up every day and tried their best to make the world a little bit better. That's what I took away from the relationships I had with my mentors, and the extent that I've been able to emulate them, I think, explains a great deal of what I've been able to accomplish in my own career.

My views on mentoring have a lot in common with the themes of Don't Count on It. That is, these relationships are largely built upon trust, and attempts to quantify them are doomed to failure. Mentoring, in my mind, is less about helping someone fill out a checklist of accomplishments, and much more about passing along the immeasurable qualities one needs to be successful in their field --character, professionalism, honesty, intellectual curiosity, even humor. If you possess sufficient amounts of those characteristics, you're likely to be successful in whatever field you work in.

"This collection of Jack Bogle's writings couldn't be more timely. The clarity of his thinking—and his insistence on the relevance of ethical standards—are totally relevant as we strive to rebuild a broken financial system. For too many years, his strong voice has been lost amid the cacophony of competing self-interests, misdirected complexity, and unbounded greed. Read, learn, and support Jack's mission to reform the industry that has been his life's work."
—PAUL VOLCKER, Chairman of the President's Economic Recovery Advisory Board and former Chairman of the Federal Reserve (1979–1987)

"Jack Bogle has given investors throughout the world more wisdom and plain financial 'horse sense' than any person in the history of markets. This compendium of his best writings, particularly his post-crisis guidance, is absolutely essential reading for investors and those who care about the future of our society."
—ARTHUR LEVITT, former Chairman, U.S. Securities and Exchange Commission

"Jack Bogle is one of the most lucid men in finance."
—NASSIM N.TALEB, PhD, author of The Black Swan

"Jack Bogle is one of the financial wise men whose experience spans the post–World War II years. This book, encompassing his insights on financial behavior, pitfalls, and remedies, with a special focus on mutual funds, is an essential read. We can only benefit from his observations."
—HENRY KAUFMAN, President, Henry Kaufman & Company, Inc.

"It was not an easy sell. The joke at first was that only finance professors invested in Vanguard's original index fund. But what a triumph it has been. And what a focused and passionate drive it took: it is a zero-sum game and only costs are certain. Thank you, Jack."
—JEREMY GRANTHAM, Cofounder and Chairman, GMO

"On finance, Jack Bogle thinks unconventionally. So, this sound rebel turns out to be right most of the time. Meanwhile, many of us sometimes engage in self-deception. So, this book will set us straight. And in the last few pages, Jack writes, and I agree, that Peter Bernstein was a giant. So is Jack Bogle."
—JEAN-MARIE EVEILLARD, Senior Adviser, First Eagle Investment Management

Insights into investing and leadership from the founder of The Vanguard Group

Throughout his legendary career, John Bogle-founder of the Vanguard mutual fund group and creator of the first index mutual fund-has helped investors build wealth the right way, while, at the same time, leading a tireless campaign to restore common sense to the investment world.

A collection of essays based on speeches delivered to professional groups and college students in recent years, in Don't Count on It is organized around eight themes

• Illusion versus reality in investing
• Indexing to market returns
• Failures of capitalism
• The flawed structure of the mutual fund industry
• The spirit of entrepreneurship
• What is enough in business, and in life
• Advice to America's future leaders
• The unforgettable characters who have shaped his career

Widely acclaimed for his role as the conscience of the mutual fund industry and a relentless advocate for individual investors, in Don't Count on It, Bogle continues to inspire, while pushing the mutual fund industry to measure up to their promise. ... Read more

Reviews

Commuting home from Boglestock 9 . . .
My recent journey to Bogleheads 9 was special for one and only one reason: the opportunity to see Jack Bogle enter the room to a standing ovation of Bogleheads and speak his mind, as he always does. His god-given sportscaster's voice is truly something special--and it is always worth the price of the trip to listen to him. (If Jack had ever decided to do play-by-play for the Phillies, there is no doubt that he would have ended up in a different sort of Hall of Fame).

The commute back from Philly to Chicago only made the latest Boglestock meeting even more memorable, since it gave me a few uninterrupted hours to read his new book, in the way he suggested, by moving directly to the chapter of interest, rather than reading the book as a continuum. I'll let you find your own personal gems, but let me share a few that I enjoyed.

No one speaks more eloquently to Americans--particularly young Americans--in my view than Bogle. I encourage everyone, whatever your age, to read Chapters 26-30, first to yourself and then to your children. His commencement speeches, packed with sage advice, are well crafted homilies for America's youth. I'm glad they are published in a book for all to read. Part VII, "Heroes and Mentors," is also deeply personal, an acknowledgement of 29 heroes and mentors who changed his own life for the better. The obit for Dr. Bernard Lown, who at one point served as Jack's doctor, also gave me a window into a part of Jack's personal journey that I did not know about. Dare I say that Bogle writes as well about all things non-investment as he does the investment world itself?

As poet Wallace Stevens once noted, "to get to the universal, you must go through the local." How else can I explain how poetic and moving it is to see a man of Bogle's success spend the time to thank Jim Harrington in the Princeton Athletic Association Ticket Office for giving him a break or two, or Taylor Larimore, a member of the Greatest Generation who served as a soldier in the Battle of the Bulge in World War II, for starting the Bogleheads? We all have heroes of this sort in our life, but how many of us take the time to give thanks? No man is an island, entire of itself, as John Donne wrote and Jack Bogle reminds us.

As a card-carrying member of Bogleheads, I was most intrigued by one central theme in the book, what Bogle calls "The Perils of Numeracy". I agree numbers and statistics can often lie. But I want more numbers as an investor from people I can trust, not less. I personally find some of the numbers and information on Vanguard's own website to be quite useful, for example, when I'm trying to get a handle on the risks I'm taking in my own 401(k) portfolio. I often go to other sources such as financialengines.com, which I find useful as do-it-myself investor. Some of these numbers are extremely helpful, even if, as Jack warns, there's an inherent risk to using them. I'd like to think the numbers coming from a reliable source, such as Vanguard or Financial Engines, are much more useful to me than numbers spoon fed by less trustworthy charlatans in the investment world.

* Full disclosure: For those who might question a review done by an editor at Wiley (publisher of this particular book), please note I did not personally work on this book. I simply share my thoughts as a Boglehead, who continues to enjoy virtually everything Jack writes or says -- speech, book or otherwise. Some day, my kids will inherent my personal library of Bogle books and be very happy they did.

A Passionate Advocate for Investors
This book covers a lot of ground, with 35 chapters addressing seven main themes over a total of 586 pages. If you are already very familiar with John Bogle (who has written many books and delivered countless speeches addressing investment topics over a very long career in investments), then there is precious little in this book that you don't already know. However, if you are an investor who isn't quite that familiar with Bogle, then you may find this anthology of his major essays and speeches over the last decade to be a very helpful introduction to important investment-related topics of today.

Without divulging too much detail about the book, here's a relatively short guide to Bogle's topics. The seven parts of the book address:

1. Investment illusions. For example, as Bogle makes clear mutual funds taken as a whole simply cannot earn the markets' returns--because mutual funds have their own expenses. Indeed, Bogle's simple formula--net returns to investors = gross returns on assets minus the costs of operating the financial system--is pretty obvious, but one that investors tend to forget. Another illusion cited by Bogle is that mutual fund investors actually earn the returns of their funds. That is, if the XYZ mutual fund earns an average annual return of 8% over a 10-year period, chances are that XYZ's shareholders didn't achieve that 8% annual return, due to the well-documented tendency of investors to add to their investments when they feel optimistic (and markets are high) and reduce their investments when they feel pessimistic (and markets are low). Simply put, buying high and selling low reduces one's return.

2. The failure of capitalism. Bogle is actually a champion of capitalism, not some anti-capitalist critic. However, Bogle maintains that self interest and free markets alone won't necessarily guide an economy effectively. Rather, he says, there is a need for a broad fiduciary standard applicable to market participants, so that corporate managers, brokers, etc. put the interests of their shareholders and clients before themselves. (Some would argue that sufficient fiduciary standards already exist, but Bogle doesn't buy that argument.)

3. What's wrong with "mutual" funds? For starters, Bogle observes that "mutual" typically refers to an entity that's owned by its participants. In that case, only the Vanguard Group of mutual funds, Bogle maintains, is truly "mutual." Surprise, surprise--Bogle helped found the Vanguard Group.

4. What's right with indexing? Traditional indexing has taken a lot of flack in recent years, so Bogle (who helped start the indexing movement) fights back. He says the intellectual theory of indexing is not dependent on the notion of "efficient" markets, but rather on the concepts of low cost, diversification and tax efficiency. I admire Bogle as an honest and passionate advocate for investors, but I should note that not everyone will agree about the importance of the efficiency argument to the concept of indexing.

5. Entrepreneurship and innovation. I am taking more of your time than I planned, so I'll become briefer. In this part of the book, expect yet more of Bogle's characteristic idealism concerning the determinants of innovation.

6. Idealism and the new generation. Here we go again. More of Bogle's passionate arguments.

7. Heroes and mentors. We all owe a lot to those who have inspired and guided us, and here Bogle describes four men who were influential to him: Walter Morgan, Paul Samuelson, Peter Bernstein and Bernard Lown.

In conclusion, if you are an investor who is concerned about the economic and investing environment in which you participant, and if you are not already familiar with John Bogle's thoughtful commentaries on a host of relevant topics, then this book would be well worth your careful consideration.

If Investors have a better FRIEND on WALL STREET - Tell me who he is? Five Stars!!!!


When I write reviews I do not usually read the other reviews, but in this case there were a limited number of reviews and they were EXCELLENT. I therefore will not cover the same ground but come at John Bogle's work from a different angle if you will permit me.


By way of disclosure I am a market professional, with 40 years of experience working with billions of dollars and performing an advising function which includes not just wealthy individuals but heads of state and finance ministers. Having said that, it is my belief that this book is extraordinary. It is a breath of fresh air in an industry of incompetence. You will learn more from reading, and re-reading this book than any course you could probably take at Harvard or Wharton in portfolio analysis, and valuation - been there, done that.


Keep in mind that Wall Street is by definition the worse managed industry in America, and whose basic function is to judge the managements of other companies in other industries. For 200 years they haven't gotten it right, and my fellow Wall Streeter's are so CONFLICTED between their need to make money, and their fiduciary responsibilities that they fail in both. John Bogle is the only author I know that lays it out for you. Warren Buffett is always polite politically to Washington. He does not want to make waves just like the jovial uncle he wants to portray himself as. Bogle on the other hand has a desperate need to get the truth out there, and he writes as he speaks. This book is his voice, no question about it.


Only John Bogle will hit you in the face with the truth on every topic that he writes. There are no punches pulled here. You can start to read this book anywhere you like. Throw darts at the pages and start there, just be prepared to be enlightened. Come at with an open mind, and you will receive a financial education like no other. I do recommend that you read the first 20 pages or so to set the tone, before moving around in the book.


Here are just a few fabulous revelations you will learn:


* Bogle often speaks about the high cost of financial intermediation. This simply means, what are the commissions and fees you are paying on top of the actual investment you are making. As an example in private real estate transactions I look at, the sales charge can be 15%. This means if you put up $100,000, only $85,000 is actually being invested in the product. It's a lot of ground to make up.


* The master talks about 2007 in particular because the numbers are available for that year. The actual commissions and take-outs for all investments in the United States that year was $528 billion, which is equivalent to 3.8% of Gross Domestic Product. Now the question you have to ask yourself is whether or not Wall Street added $528 billion of value added advice to the investment process. The answer is no way.


* Again in 2007, companies reported $1.67 trillion in operating earnings whereas reported earnings were 1.17 trillion. Where did $500 billion in earnings go? It simply disappeared in accounting gimmicks sanctified by independent public accounting firms, and condoned by government regulators. Now if there is that much leeway in the how you can report your numbers, the whole deck of cards is stacked against the investor.


* The author speaks of the absence of normal fiduciary standards, and he could not be more right. The answer seems to be to make billions, and wind up paying fines of a hundred million or so for conflicts. Then change the name of the game and make billions again. Only in America my friends can this happen, and Bogle lays it all out with the unvarnished truth of how the game is rigged against the average investor.



CONCLUSION:


Is there hope, of course there is. You need to educate yourself, not by reading the popular press that will simply earn you the same returns as the masses get. Actually, you will lose principal with that approach. You must study the works of the masters, and I cannot think of a better place to start than with this new book by legendary investment professional John Bogle. Good luck in all your investments and thank you for reading this review.


Richard C. Stoyeck


SUPPLEMENT:


I'm sitting in a private club in Manhattan recently and a brilliant young lady I mentor tells me she just got her Masters from NYU about two years ago. She got all A's and one B. I ask her what did she get the B in, and the answer is banking. I inquired as to the problem. She tells me that she wrote a thesis on how the banks were taking on too much risk at the time. This is early 2008. The professor tells her that the basis of her paper isn't plausible because the banks have professional risk management teams that are averse to taking on too much risk.


As you know the financial markets blew up shortly thereafter. Here's what you need to take away from this. Economists know a thousand ways to make love, but they have never been with a woman. You as an investor have to learn your own truth yourself about what you are investing in. It will take time and effort but the rewards are substantial. Good luck.

Great book!
Bogle maintains his reputation as the brightest investor in history. He breaks down investing into its simplist form with insights that it seems the entire industry either ignores or intentially obfuscates in order to take more money from investors. Why anyone would be invested in anything other than index funds after they really understand the facts is beyond me.

Don't Count On It!

Reading the works of John Bogle has changed my life. After spending a lifetime investing with various companies and working with at least three different financial advisors with only marginal success, I finally encountered my first Bogle book some dozen years ago. I began reading Bogle then and have continued through these past dozen years continuing with his latest title Don't Count On It. In each of his works he speaks to the layman in a clear, well documented style with occasional references to figures from history or literature. None of his writing is dry economics text. His major emphasis on "costs matter" are eye opening to investors trying the accumulate a nestegg for retirement. He shows in great detail the impact of various fees and transaction costs charged by actively managed mutual funds. Intermediation costs ultimately detract from whatever the market is able to deliver, and investors realize only the sum available after these various fees are imposed. Bogle discourages frequent trading because of the costs involved and counsels investors to diversify in low cost stock and bond funds and then "stand still" with an eye toward investing for the long term in order to accumulate the market's returns for retirement. Young and old alike with learn from the wisdom of John Bogle. He is the founder of index giant Vanguard, and yet he has no equity position in the company. Don't Count On It is a summation of this great man's philosophy and sage investment adivce.

A national treasure
In Japan, individuals who embody intangible national cultural values are called living human treasures. Jack Bogle is one of ours. ... Read more

Editorial Review

German bestseller about the best ways to protect oneself financially from the threats posed by government’s interference in the economy

After the bursting of the real estate bubble, the U.S. pushed a monetary and fiscal policy that is, at best, blatantly wrong and, at worst, carries enormous financial risk. And because Washington knows this, America’s greatest weapon–its propaganda machine–has been called into service, diverting attention away from the fact that it was and continues to be government interference in the market economy that’s lead us to where we are now, namely at the end of one financial calamity and the beginning of yet another. A plea for the market economy, The Inflation Trap: Rescue Your Assets! details the cause of our current economic crisis and argues that political mismanagement endangers finances, health and, in extreme cases, democracy itself.
•    Advocates the freedom of the individual and the capitalist economic system derived from it
•    Foreword by Martin Weiss, bestselling author of The Ultimate Depression Survival Guide, by Wiley
•    Other titles by Leuschel and Vogt: The Greenspan Dossier
Every crisis offers opportunities for those who have prepared. The Inflation Trap: Rescue Your Assets! shows how to prepare for the aftermath of years of government interference in the market economy.

Reviews

Breathe of Fresh Air, December 19, 2010
It is passed due for a German Economist's view on the current global crisis to hit America with a large scale publishing.
To anyone who wants a clear cut vision of what the future holds for the global fiat monetary system this book is a must read. The fact that this book comes from the words of men who's ancestors had to deal with extreme hardships of German Hyperinflation in the 1920's, makes it a credible source on outcomes of state controlled monetary indoctrination.(AKA 2010-The FED)
We are in the eye of the storm of America's great cloud that hangs for the future. I feel that this book does a great job of enlightening the reader on just how serious the problems (can) and (most-likely) will be.
Unbelievably well written book that is easy to understand for the new comer of economic reading, yet packed with alot of clear thought and probable visions that help the experienced come to a better understanding of how economist from around the world are perceiving the problems that we all face in retrospect to the mismanagement of America, and all fiat monetary systems around the world.

Also this is one of the most current economic preparation books out so plenty of info on QE's and all the latest of bubble building techniques the state is playing with to make Alice's hole to Wonderland that much bigger........
A must read. ... Read more

Editorial Review

Legendary money manager Ken Fisher outlines the most common—and costly—mistakes investors make.

• Small cap stocks are best for all time. Bunk!
• A trade deficit is bad for markets. Bunk!
• Stocks can't rise on high unemployment. Bunk!

Many investors think they are safest following widely accepted Wall Street wisdom—but much of Wall Street wisdom isn't so wise. In fact, it can be costly bunk.

In Debunkery: Learn It, Do It, and Profit From It—Seeing Through Wall Street's Money-Killing Myths, Ken Fisher—named one of the 30 most influential individuals of the last three decades by Investment Advisor magazine—details why so many investors fail to get the long-term results they desire. The short answer is many investors fail to question if what they believe is true—and are therefore blinded by tradition, biases, ideology, or any number of cognitive errors.

Your goal as an investor shouldn't be to be error-free—that's impossible. Rather, to be more successful, you should aim to lower your error rate. Debunkery gets you started by debunking 50 common myths—but that's just the beginning. It also gives you the tools you need to continue to do your own debunkery for the rest of your investing career. ... Read more

Reviews

50 Great Investing Lessons
Now I know what Debunkery means! This book was 50 short lessons on all the ways people mess it all up in investing. I recognized more than a few errors that I had certainly made, and some more I'll be sure not to in the future. The book is divided into five parts, but you can jump around and hit ones that interest you most. I just read it from start to finish in about two days. Well worth it. It's written in the lively style I've come to expect from this author. Fisher is good at describing complex topics in a way even a guy like me can understand. There are lots of lessons that stick with you, for example, I never knew that June, July, and August are together the three best months. No more "Sell in May" for this guy. Lots of charts, lots of graphs, lots of good takeaways. Put this on your wishlist.

What a fool I have been...

What a fool I have been. Nothing like brutal facts to destroy a beautiful theory! Ken Fisher does it with such panache too.
You know, I've always thought myself as a savvy investor. I did all the right things at all the right times. I invested in the stock market for the long term and never wavered all through the precipitous drop in 2001 to 2003. When I was laid off in 2004, I wisely decided to get out of the stock market and going to long-term CDs. That was a mistake.
Yes, I know, the great recession of 2008 to 2009 was a vindication of everything that I believed in as a "savvy investor". But the stock market just bounced right back. It wasn't supposed to do that! We have high unemployment, tons of foreclosed houses for sale, bankrupt car industries, and a major hit to the financial sector. It is a great depression, right? No, that is completely wrong. Everything is fine and this time, like all other times, it was just a recession, just like all the others.
Why the sudden switch in my thinking? It is from this book called Debunkery by Ken Fisher. In it, he demolishes all of my pet theories about investing, brutally destroying them with cold hard facts and evidence, one by one. How embarrassing is that?
Baby boomers? No effect. High unemployment? Not really. Government debt being too high? No, it is just about the same as it always has been. Government spending too high? That is actually good as it puts money into people's pockets. Huge trade deficits? Actually that is good for business and the country. The Dow Jones industrial? A worthless benchmark. Buying CDs? Bad mistake. Lower taxes, higher taxes? No effect on the stock market. Consumers spending less money? No, not really- this recession was mostly about businesses not investing. China owns a lot of our debt? That is laughable as three quarters of US debt is owned by the American people. What little China has is about the same as Japan. And my favorite one is that stock market prices are too high. Nope, they are just fine if you look at them using a logarithmic scale.
Boom, boom, boom. He knocks my ducks down one by one. I have just mentioned eight or nine of my pet theories that he demolished. In his book, he does this to 50, Count them 50, of people's beliefs that are not based on any sort of statistical science. All they are is confirmation bias, seeing patterns where they are not, or using fear or our instincts or a pet theory or a "financial adviser" or a pet book or the news to control our investing. Down they come, one by one. In each couple of pages, there is a nice graph or chart or Excel table that takes these pet theories and proves each one to be bunk. What a blow to me, the great thinker? Laugh out loud.
So, if everything is okay, which it is, and these are not the end of days, what is the proper way to invest? As it is has always been, invest in the stock market in a diversified portfolio going for the long-term. 50% of the investment should be in foreign markets, and 50% in US markets. The mutual funds should be in a broad spectrum of different companies, and not get fixated over any particular group of companies or stocks. The mutual fund should be based on an index and not try to "beat the market" or do a lot of buying and selling (Standard and Poor 500 for US and the MSCI for global is a good bet). This is especially true of any stocks that you may own in your own company, which should be no more than 5% of your total portfolio. Once you're in, you stay put and don't try to time the market. The only time you sell is when you need the money for living expenses when you retire. That's it. The way it is always has been.
So, when my CDs start to expire, I am going to get back into the stock market. Yes it is risky as we have seen many a time during our lives, but the author is shown, using cold hard facts, that it is still the best investment strategy that we can make for the long term.
I missed out on some great growth opportunities when I prematurely sold out. Yes, I have money, but it is just sitting around waiting for inflation to knock it down. As I don't expect to die tomorrow, I need to plan for long-term and start reinvesting in the stock market. It is the only prudent thing to do for the next 20 years. Geez, was I wrong! Thank you, Mr. Fisher.
PS, am buying a half a dozen books for XMas. I cannot think of a better gift for my kids and relatives.

No More Market Mythology!
In the spirit of MythBusters, this book is a fun ride. And, it hits on a wide array of markets, economics, politics, global issues, you name it. Its an easy to read style. I don't normally read a lot of investing books myself. I bought this as a gift for a family member but ended up reading it and enjoying it thoroughly. For anyone on your holiday gift list who likes investing book or maybe needs some investing help, this is a great option.

Another Masterpiece
You will acquire Ken's comprehensive knowledge and wisdom through this book. I always read his portfolio strategy in Forbes magazine. Debunkery is written from Ken's thorough knowledge of markets and experience with money management, written in fifty easy to read essays. You may call it revised version of his Wall street Waltz book with less graphics. One big thing I am really impressed with this book is, he is not afraid of sharing his accumulated knowledge and investment style. A must read for beginners and experienced investors. There is lot more to investing other than fundamental analysis; this book discusses the emotional and behavioral part of the investment process. Enjoyed every bit of it. ... Read more

Editorial Review

Harry Markopolos and his team of financial sleuths discuss first-hand how they cracked the Madoff Ponzi scheme

No One Would Listen is the thrilling story of how the Harry Markopolos, a little-known number cruncher from a Boston equity derivatives firm, and his investigative team uncovered Bernie Madoff's scam years before it made headlines, and how they desperately tried to warn the government, the industry, and the financial press.

Page by page, Markopolos details his pursuit of the greatest financial criminal in history, and reveals the massive fraud, governmental incompetence, and criminal collusion that has changed thousands of lives forever-as well as the world's financial system.

• The only book to tell the story of Madoff's scam and the SEC's failings by those who saw both first hand
• Describes how Madoff was enabled by investors and fiduciaries alike
• Discusses how the SEC missed the red flags raised by Markopolos

Despite repeated written and verbal warnings to the SEC by Harry Markopolos, Bernie Madoff was allowed to continue his operations. No One Would Listen paints a vivid portrait of Markopolos and his determined team of financial sleuths, and what impact Madoff's scam will have on financial markets and regulation for decades to come. ... Read more

Reviews

A true David and Goliath story, March 6, 2010
Although I was not an investor, I have been intrigued by the Madoff scandal since it exploded in December 2008. Ever since then, I have spent hours poring over articles written in the press and documents released by the government and watched (and rewatched) all the hearings on this massive fraud. I even attended one of Harry Markopolos' speaking events to make sure that my television screen did not conjure up such a noble public servant. Of course, it is only appropriate that I would have a copy of "No One Would Listen" in my hands on the first day of its release. Admittedly, I expected the book to be more or less a summary of everything I have learned thus far - I was very wrong. "No One Would Listen, " a true David and Goliath story, is one of the most riveting nonfiction I have ever read.

In the book, young innocent David is portrayed as a "wildly eccentric quant" from Boston named Harry Markopolos who tried to defend his country from the nine feet tall Philistine giant Goliath, portrayed as Bernie Madoff. King Saul of Israel and his army (the SEC) were terrified of Goliath. "No One Would Listen" is a 10-year firsthand account of how Harry and his three friends tried to warn the government, the industry, and the press that the founder of the most successful broker-dealers in the financial industry was actually the biggest crook in history. Unfortunately, "No One Would Listen" does not have the same happy ending as the biblical David v. Goliath battle.

For the past few days, I have been reading reviews on the book and found a lot of derogatory comments about Harry's character and his book. I have to wonder to myself if these reporters read the same book that I did and why they would want to tag their name with such unsubstantiated assertions. Before I continue on the book, I have to point out some false information printed by some media outlets. These book reviews only reconfirm the financial mediocrity in the press that Harry and his team had to deal with the past 10 years - that is why no one would listen.

First, we know that in its 73 years of existence, the SEC has a history of treating whistleblowers like dirt and has only paid 2 whistleblower bounties. One reward, as told in the book, was in the amount of $3,500. I'm sick and tired of people throwing that Harry only went to the SEC because he was looking for a bounty. He knew from the start that his chance of receiving a bounty was remote. Even if he did receive a bounty, is $3,500 worth hundreds of hours of investigative research while he was most likely making a comfortable 6-figure salary at his previous employment?

Second, some reporters claimed that the reason why no one would listen is because Harry is some sort of nut that rubbed the SEC the wrong way and that he was overly paranoid for fearing that Madoff may come after him. One only has to watch Harry's Feb. 4, 2009 testimony to Congress to confirm this man's articulate manner and brilliance. Do your research on his background, and you will see how aware people are of his talents and credibility. The reason why no one would listen is because the fraud was so unbelievable - Bernie Madoff was filthy rich, why would he need to steal? The second reason, as the world now knows, is due to the arrogance and investigative ineptitude of the SEC and the press. In addressing his fear for Madoff, why wouldn't he fear Madoff? People have killed for much less. There are pending investigations with the FBI undisclosed to the public. Why would the FBI announce to the bad guys that they're about to be investigated, unlike the SEC, who called Madoff to give him a heads up on the 2006 investigation.

Third, a major media outlet criticized how Harry had made a career of being "a professional whistleblower facilitator," turning corporate employees into spies when they should be reporting problems internally. After the collapse of Enron, the SEC was charged with reviewing incidents of financial statement fraud from 1997 to 2002. Of the 515 enforcement actions for financial reporting and disclosure fraud, charges were brought against 466 managers: 75 chairmen of the board, 111 CEOs, 111 presidents, 105 CFOs, 21 COOs, 16 CAOs, and 27 VPs of finance. You tell me how a lonely staff member at the bottom of the totem pole would come up against these big honchos.

Throughout the book, if I was not cracking up laughing at Harry's oddball sense of humor, I was pounding my fist from mortification at the horrors that Harry and his team had witnessed the past 10 years. "No One Would Listen" is a reflection of the culture of greed infected on Wall Street. One event that stuck to my mind was Neil Chelo's phone interview with the head of risk management at Fairfield Greenwich Sentry Fund in Chapter 7. I was completely appalled that he could not answer any of Neil's questions on how Madoff was getting his returns, why he was always holding T-bills at year end, and why the audits only show $160MM worth of T-bills on a $1.47BB portfolio. Where did the remaining $1.31BB go? This is the same egghead that manages the risk of a $7BB fund. It was absurd how he had the gall to follow up with Neil if he still wanted to invest with the fund even after Neil had called him out for an hour straight.

Another event that had me almost vomiting was regarding 20 market-timing scandals that Harry had worked on for 1.5 years and eventually presented to the SEC. The scandals cost investors $20BB, yet the SEC decided that they were done with market timing scandals so the crooks all walked away scotch-free. Keep in mind that this all happened after Peter Scannell already testified against the SEC on how the agency missed the market timing scandal at Putnam Investments even with his repeated warnings. Our tax dollars at work. And we wonder why our country is in the midst of economic meltdown today.

As Frank Casey pointed out, Mother Teresa did not work on Wall Street. Even so, the book details the sacrifices that Harry and his team went through to expose the evil man that is Bernie Madoff, even if it means losing money to a competitor or risk getting shot in the head. These four men are the rare gems in the financial industry. If more people like them exist, perhaps Wall Street would not be such a bad place.

Toward the end, Harry revealed the nature of some of the cases he has been working on the past few years and recommendations on how the SEC could improve. He is truly blessed - a self-taught fraud investigator accomplishing more for our country in five years than the entire SEC staff has done in decades. And for that, we owe him our gratitude.

Go get 'em, Harry.

The definitive story, March 3, 2010
When the SEC was asleep at the wheel, Markopolos was there. It blew my mind when I read just how many times Markopolos tried to contact the SEC and the media, and so many times, he was ignored. To think of the money and the lives that could have been saved! When I wasn't baffled and educated by the contents of the book, I was laughing. Markopolos has managed to write a TRUE thriller with charm and humor. It comforts me to know that this book is out there, for all to read, and I hope it brings a lot of change to our financial watchdogs. Harry Markopolos is a hero.

Well Written Account of Harry's Efforts, March 3, 2010
Excellent account of the efforts of Harry Markopolos and his team in uncovering Bernie Madoff's fraud and then trying to expose him and get the government to act. The book is well written and documents the the abysmal failures of an SEC relying too heavily on lawyers and accountants who lack the sophistication to understand how the investment industry works and the investment solutions the industry markets to investors.

Harry's account of when Noelle Frangipane, a member of the SEC's Inspector General's team investigating the SEC's failings, broke down and cried was indeed a particularly human moment and an account I'm glad Harry put in the book. There are people at the SEC who care. The agency clearly lacks investment professionals and people with investment industry operational experience. Lawyers and accountants have their role, but they are not trained as investment professionals.

Great read! Good job Harry!

I Listened, March 3, 2010
If you are attuned, you can hear the tree fall from the edge of the forest, and you know a tsunami is coming before you can see it. And so it is that master sleuth Markopolos saw what so many failed to see. I highly recommend that all but the master sleuths out there read this book. I would also recommend "What Greenspan Can't Tell You", which was published in Jan '08, and warned of "Madoff"-like schemes, and instructed readers on how they might spot them.

Pure Harry, March 4, 2010
I had the honor of "sitting across" from Harry on the Trading Desk. I feel extremely lucky to have learned the business from the best derivatives practitioner in Boston. There are very few derivatives-related books that approach required case study readings for rookies and veterans alike. Regardless of your industry, this book is one of those rare gems that will implore you to question conventional assumptions and challenge the supposed institutional wisdom that defines your professional circles. However, unlike most biz school case studies, you won't be bored. This book reads like its master in the shadows...

Good and educated read, March 3, 2010
In spite/despite the "flaming" by a fellow Kindle owner over the Kindle price, I found myself amused and horrified by Mr. Markopolos' well presented account of Madoff's scheme; as a member of the Bar, I live in disbelief at the non-action of the SEC. Mr. Markopolos was vainly trying to "herd chickens"!

A REAL LIVE HERO, March 7, 2010
Harry Markopolos doesn't consider himself a hero. That's about the only thing he's wrong about though. He is indeed a hero. This is the story of how a man and his small group of associates, at great personal risk, tried to prevent the greatest scam of our times. That they failed is tragic for Madoff's victims in particular and in general illustrates the failure of our institutions to protect us from even the most egregious and obvious fraud. The SEC(with 2 notable exceptions) were the biggest bunch of fools you could imagine. If you didn't know this book was absolutely true it would strain credulity to the utmost.

He relates in agonizing detail how for the better part of a decade his group handed the fraudster to the SEC on a golden platter. They presented proof after proof (red flags they called them) to the SEC proving unequivocally that Madoff was a total con, running a gigantic Ponzi scheme. And as the title indicates, "No One Would Listen". Though my math skills are fair to poor, his presentations to the SEC were crystal clear to me. You just couldn't miss it...yet they did.

I would compare what happened to a citizen finding a bloody arm from the Madoff residence and bringing it into the police station being told by the police that the arm didn't exist and 'to get our of here you're bothering me'.

He also points out how corrupt our financial system is in general, skewering the mutual fund and banking industries in particular. It seems we live in a nation of thieves. Well Harry and his group do give us cause for hope. Thank you Harry and friends for your efforts. For honest folks, you guys are heroes. This book deserves to be a best-seller now and for many weeks to come.

The Fox Hounds Salute Their Ghost Writer, March 7, 2010
Transparency, I am one of the Fox Hounds: David Fisher was the ghost writer for Harry Markopolos and the Fox Hounds Team. David produced an easily read financial thriller, balancing the complexities of financial derivatives required to understand why Bernie Madoff was able to dupe investors with the thrill-fear of the hunt for the tentacles of this criminal monster. I salute David Fisher for his talent and dedication to the cause of uncovering the ineptness of regulatory powers while informing the public as to the greed and willful blindness of Wall Street.

Bravo! Bravo! Bravo!, March 6, 2010
"It's Bernie in the parlor with $5 billion!" (ref Markopolos)

I really enjoyed this book. I read it in two sittings and will be re-reading it to absorb it again. I followed the Madoff story closely through the various media outlets, but the content of this book fills in all the gaps and does not obfuscate any of the details or emotions. I will not be re-selling this book to the discount bookstore.

A diamond in the rough, March 4, 2010
No One Would Listen should be a required reading for everyone working in the financial services industry. As well as I know the Madoff case by now, over a year after its collapse, the book still left me in tears at the end. Words cannot describe the anger I felt throughout the book toward all who saw this fraud but did nothing to stop it. In a world full of injustices and greed, Harry and his team give hope that good people still exist; although they did not always feel brave, Harry and his team were willing to do whatever it takes to expose the truth, even if it costs them their lives.

Kudos to Harry and his team.

... Read more

Editorial Review

Now in a striking new hardcover edition, Fooled by Randomness is the word-of-mouth sensation that will change the way you think about business and the world. Nassim Nicholas Taleb–veteran trader, renowned risk expert, polymathic scholar, erudite raconteur, and New York Times bestselling author of The Black Swan–has written a modern classic that turns on its head what we believe about luck and skill.

This book is about luck–or more precisely, about how we perceive and deal with luck in life and business. Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill–the world of trading–Fooled by Randomness provides captivating insight into one of the least understood factors in all our lives. Writing in an entertaining narrative style, the author tackles major intellectual issues related to the underestimation of the influence of happenstance on our lives.

The book is populated with an array of characters, some of whom have grasped, in their own way, the significance of chance: the baseball legend Yogi Berra; the philosopher of knowledge Karl Popper; the ancient world’s wisest man, Solon; the modern financier George Soros; and the Greek voyager Odysseus. We also meet the fictional Nero, who seems to understand the role of randomness in his professional life but falls victim to his own superstitious foolishness.

However, the most recognizable character of all remains unnamed–the lucky fool who happens to be in the right place at the right time–he embodies the “survival of the least fit.” Such individuals attract devoted followers who believe in their guru’s insights and methods. But no one can replicate what is obtained by chance.

Are we capable of distinguishing the fortunate charlatan from the genuine visionary? Must we always try to uncover nonexistent messages in random events? It may be impossible to guard ourselves against the vagaries of the goddess Fortuna, but after reading Fooled by Randomness we can be a little better prepared.

PRAISE FOR FOOLED BY RANDOMNESS:

Named by Fortune One of the Smartest Books of All Time

A Financial Times Best Business Book of the Year

“[Fooled by Randomness] is to conventional Wall Street wisdom approximately what Martin Luther’s ninety-five theses were to the Catholic Church.”
–Malcolm Gladwell, author of Blink

“The book that rolled down Wall Street like a hand grenade.”
–Maggie Mahar, author of Bull! A History of the Boom, 1982—1999

“Fascinating . . . Taleb will grab you.”
–Peter L. Bernstein, author of Capital Ideas Evolving

“Recalls the best of scientist/essayists like Richard Dawkins . . . and Stephen Jay Gould.”
–Michael Schrage, author of Serious Play: How the World’s Best Companies Simulate to Innovate

“We need a book like this. . . . Fun to read, refreshingly independent-minded.”
–Robert J. Shiller, author of Irrational Exuberance

“Powerful . . . loaded with crackling little insights [and] extreme brilliance.”
–National Review

“If asked to name the five best books written about markets, Fooled by Randomness would be on my list.”
–Jack D. Schwager, author of Market Wizards: Interviews with Top Traders

“Excellent and thought-provoking . . . an entertaining book.”
–Financial Times ... Read more

Reviews

Critical review from a trader, October 26, 2001
I picked up this book because I read Mr. Taleb's quantitative derivatives book, Dynamic Hedging. Dynamic Hedging was an extremely insightful and intuitive foray into vanilla and exotic options. It was enhanced by Mr. Taleb's occasional commentary on life in the markets. I imagined that an entire book containing Mr. Taleb's viewpoints on probability would be compelling.

It was indeed compelling. But I did not wholly agree with him. I suppose that is my right.

At risk of great oversimplification, Taleb argues quite articulately that extreme occurrences in a distribution happen a lot more frequently than humans are prone to believe. Ergo, in derivatives trading, it makes no sense for one to be "frontspread" (short gamma/vega). Ever.

My experience is in equity derivatives. Mr. Taleb's is presumably in fixed income and FX. Without knowing much about the world of FX options, I can assert that in the equity listed options markets, downdrafts in volatility can be almost as deadly as explosions in volatility. The vol crush of the summer of 2000 wiped out as many traders as the Russian debt default of 1998. Out of the money options are never cheap; lots of people buy them for the protection that Taleb seeks. Sometimes even they are too expensive to own.

Going further, I found Mr. Taleb's insights on the role of luck in human performance to be EXTREMELY unsettling. He talks at length about the rich idiot trader and the vastly more competent but underpaid trader (presumably himself). He goes on to ascribe most of those who are wildly successful in life to LUCK, and that individuals ascribe way too much of their own success to their own ability and hard work (which he scorns).

I find this to be frightening. I'm sure Mr. Taleb would find this reaction entirely predictable. The implications are most frightening, from a political standpoint: if most wealth is undeserved, then therefore it can be rightfully taxed (expropriated) and redistributed to those are not so lucky. Furthermore, most individuals who despise hard work do so not because they are brilliant, but because they are lazy. Evaluation of a particular person's work ethic is an imperfect but reasonably good indicator of performance.

Many of the MBAs he derides as being shallow thinkers and pluggers, while may not be (ahem) the intellectual giant that Taleb is, are no slouches themselves. They do not represent the legions of clueless option sellers that Mr. Taleb has somehow encountered throughout his career. Most young associates do have the luxury of telling their boss they did not read the Wall Street Journal in the morning because it represents nothing but random noise.

As you can tell from this review, I enjoyed the book. Otherwise I wouldn't be so critical of it. I couldn't put it down. You probably won't agree with all of it, but it will cause you to think about things in a very different way for a long time.

Intiguing but ultimately unsatisfying, April 30, 2002
I bought FOOLED BY RANDOMNESS after reading the Malcolm Gladwell profile on Nassim Nicholas Taleb in the April issue of the New Yorker. Like others who have reviewed this book, I found that Gladwell captured the most important details of Taleb's thoughts in a shorter, more entertaining way. However, I thought that this book can be a worthwhile read for those with a passion for this type of book.

FOOLED BY RANDOMNESS is an introduction to the difficulties human beings have at reasoning around probability. Taleb argues that human beings are genetically hardwired to misattribute the results of human endeavors to skill and knowledge that are, in fact, just coincidental, random events. Taleb discusses the results of this embedded flaw in human reasoning in three areas.

In part 1, Taleb discusses impacts of `rare events' on both financial markets and on human history. Taleb argues we should beware seemingly successful strategies if they are not proven by the test of history. In particular, we should examine human history in the long term for general trends and treat skeptically claims that humanity has reached `the end of history' or `a new economic model' where the old, proven rules do not apply.

In part 2, Taleb discusses the `survivor effect', or mistaking success based on luck for success based on skill. In particular, Taleb warns against judging a strategy by its actual results. Instead, we should judge strategies based upon a sum of all possible outcomes.

In part 3, Taleb briefly discusses `tricks' he has developed to try and derail his flawed, ingrained, statistical reasoning and live a rational and, to a great degree, classical life based upon a good understanding of the effect of randomness on our lives.

The book is peppered with classical references to ancient philosophers and literature, as well as humorous anecdotes to Taleb's own experience in the world of Wall Street. Unfortunately, interesting nuggets and provocative thoughts throughout the book are rarely fully explored. While I was entertained and intrigued, when I got to an end of a chapter or section, I often felt dissatisfied, as if I was trying to wrap my arms around some meaty ideas and came away with empty air.

Unlike other reviewers, however, I did not find Taleb particularly pretentious. In fact, I often felt that Taleb was more than open with his own particular foibles and failings. His only source of pride seemed to be in realizing that he had these failings. Ironically, Taleb attributes this understanding to the experiences suffered in his own personal, contingent history.

Overall, I found the book to be like a good Chinese dinner: entertaining at the time of reading, but left hungry an hour later.

Dav's Rating System:
5 stars - Loved it, and kept it on my bookshelf.
4 stars - Liked it, and gave it to a friend.
3 stars - OK, finished it and gave it to the library.
2 stars - Not good, finished it, but felt guilty and/or cheated by it.
1 star - I want my hour back! Didn't finish the book

Essential for understanding the workings of the world, March 11, 2002
Anyone who holds any doubts in regards to the validity of this book must read Edward Chancellor's 'Devil Take the Hindmost,' which provides a history of financial markets from the dawn of the Roman Empire up to now. After reading such a sweeping historical account, one sees the financial markets for exactly what they have always been: one vast bubble machine where people have even invested in, according to Chancellor, a company that refused to explain anything about what it did but simply assured the investors that it had a great idea for making money. Sounds rather similar to some of the dot coms in recent years. Through a compliation of both antecdotes and thoughts, Taleb provides an explanation as to why the markets work in this way, why so many fail to realize this, and how these issues are mirrored in our everyday lives. He addresses many issues that everyone should understand in order to view the world in a realistic manner. Evolution is not a one way road to nirvana but rather the process through which those adapted to the current situation fare better, and they may not be best adopted when things change. When judging the validity of any strategy in business or in life one must consider that the winners write the history books; you can only talk to survivors of war but that certainly doesn't mean that everyone survives it. When deducing anything from viewing a sample you must consider the forces that created that sample: should you consider yourself unintelligent because you're behind your classmates at a top law school? Are a good outcome and a good decision the same thing, and likewise for a bad outcome and a bad decision? And the list goes on.

While Taleb does not fully dive into this issue until later in the book, the primary conjecture of the piece is that human beings are psychologically prone to misinterpret random events. We need to explain things, whether it be in the social sciences, art and literature, or the natural sciences, so we find ways to explain them. Considering the infinite quantities of data at our disposal, no statistician denies that extremely powerful correlations will occur simply out of chance. Certain aspects of an author's life will be almost identical to passages in his or her novels, certains stocks will share perfect correlations, and we are creatures in need of explanation, and whole industries have been created to mine the data and tell us why things occur.

Prior to this book, Taleb had already written 'Dynamic Hedging,' considered by many, including myself, to be one of the best books ever written on exotic and vanilla options. That book is not for anyone who has not spent years studying (or preferably practicing) options, but in 'Fooled by Randomness' he illustrates his ideas in terms that anyone could understand. In 'Dynamic Hedging' he provides more insights into his trading strategies than he would have done had he been solely profit motivated, and likewise, as the boss of a fund that profits from other people's misconceptions of probability, he cannot have any reason to try to increase people's awareness of how the world really works other than a genuine desire to play the role of the teacher. Many have attacked the book as arrogant, but it must be remembered that anyone who goes against the common ways of thinking is essentially suggesting that he or she understands things better than do most people and therefore cannot help but come off as arrogant. Several times in the book Taleb specifically states that he falls victim to the tendencies that he condemns, and that the main difference that he sees between himself and others is that he is at least aware of it.

Considering the fact that Taleb blatantly argues that many who consider themselves the rulers of the universe were in fact a group of lucky fools, it is inevitable that many will come away from it with a sense of anger and a refusal to believe it. I am therefore almost surprised that the book has not drawn harsher reviews than it has, for Taleb was certainly not seeking to make friends through the publication of it. I suspect that those who rate the book as poor fall into two general categories: those who were troubled by the thought that a considerable portion of their success may have resulted from luck, and those who are attached to their current views on the workings of the markets and are hostile to any new views on them. These two categories naturally overlap quite often. An important thing to remember is that even if you work very hard, not only are the outcomes of your projects the result, to varying extents, of chance, but chance also played a role in getting you to the position where you can work hard and actaully see it pay off. Considering the complexity of the world we live in, and the infinite forces that push and pull on our lives, this book is critical to anyone who desires an objective veiw of how things come to be...

Solid assessment - poor presentation, September 18, 2002
This is an tough book to review. I give it 3 stars because the points he makes are valid and should be more widely understood. Unfortunately you must wade through much rambling to find them. He seems more interested in proving that he's as arrogant as people expect him to be than in discussing the key points at any length. With a fairly strong background in probablility assessment and risk evaluation I was able to follow his arguments reasonably well but I suspect anyone who does not already understand probabilities and Monte Carlo modeling will not understand the points he is trying to make. This is because the explanatory points are almost always one sentence buried in a rambling paragraph. Our society would be better off if every citizen understood his points but I don't think this book will enlighten many people. On a side note - I don't know what book several of the other reviewers read but it wasn't this one. Nowhere does this book discuss specific trading strategies or approaches or taxes. Several reviewers also clearly didn't follow the discussion. The point of survivorship bias is not that it proves LUCK is responsible for a given individuals success in any of the many areas where it holds. The point is that you don't KNOW the source (luck or skill) and you can't PREDICT future results.

Some interesting discussion, but plenty of Taleb's large ego, May 31, 2003
As a professional options trader and familiar with Taleb's "Dynamic Options Hedging", I expected a very professional book with interesting insights into the human and mathematical aspects of probability and randomness.

And while the book does provide some of that, the valuable information is embedded in writing that is overly self-centered if not egomaniacal.

I'd like to point out that I REALLY wanted to love this book. But I didn't.

Taleb writes about interesting ways in which people do not understand randomness but he does it in a way which is unnecessarily insulting and condescending.

Even worse, I find him hypocritical. He spends a lot of energy talking about the value of being able to change one's mind, as well as the value of large sample sizes in probability-based decision making. But then he describes how far out of his way he goes to avoid information (which might cause him to change his mind or which would increase his sample size.) Further he implies that anyone who takes in certain information, like almost any form of news broadcast, must be an idiot and lives in a world of self-delusion.

Taleb writes like a smart but anti-social and holier-than-thou trader. He writes some very useful stuff about randomness and its misapplication in modern thinking. But then he goes on psychological tangents which are nothing more than trying (and failing) to find a mathematical basis on which to defend his personality foibles (flaws?).

He over-generalizes about trading in a style which he does not employ, i.e. selling premium or making bets based on past occurrences. He writes as if his way is the only way that makes sense, and implies that in the long run it is only because of randomness that anyone who does not trade the same way he does could be successful. ("Ergoditic" is definitely the best word in the book....)

Taleb gets very close to interesting discussions of a non-mathematical nature as well, such as the level of emotion involved with success or failure, as well as some interesting historical information. But he lessens the effect of the good writing by then telling us how all this fits into how he lives his life, using as many obscure references as possible, in an ongoing attempt to justify (to the reader or to himself?) the lifestyle he has created for himself. For example, he uses the above discussion to explain why he does not like to look at his own trading profit or loss statements. And he writes it in a way that shows he expects us to think he's brilliant or heroic for having such discipline. Very silly stuff....

Taleb describes his hero worship (of a philosopher named Popper) and it becomes clear that at least a partial goal of this book is to get the reader to revere (or emulate) Taleb the way he reveres (and tries to emulate) Popper. Unfortunately, it doesn't work that way.

Overall I found the probability discussion interesting, but not worth the tedium of having to listen as if the reader is Taleb's (badly needed) therapist.

Luckily for Taleb, he says directly in the book that he will ignore all reviews. I think you should be able to find a less tedious source for the bits of valuable information "Fooled By Randomness" provides without having to suffer the insufferable smugness of the author.

Managing Unpredictable Variations in Order to Prosper!, September 19, 2001
Every person who is interested in investing should read this book!

In investing, few can tell the difference between being lucky and smart. Being successful in the short term can come from either source. If it is coming from unrecognized sources of luck, however, the behavior that the investor associates with success can sink the ship. The cautionary tale of Long Term Capital Management is cited in the book as an example of this point. If youre so rich, why arent you smart? is the wonderful reversal here on the old saw.

I see this effect all the time in my consulting practice with helping companies understand how their decisions affect their stock price. A large percentage of people feel that they know all the answers when their stock price is rising. They keep doing the same things when the stocks are falling. Few survive to still have top jobs when the cycle shifts again. Then a new group of self-confident people take over who often dont know any more than those who preceded them. Its just that their track records look better.

Fooled by Randomness will help make you more knowledgeably humble about what you can expect to accomplish with investments. Not only do fewer than one percent outperform the market averages over long time periods, the ones who do are probably often being aided by luck as well. Get thee to the index funds as soon as possible is the message that most should take away from this book. Better yet, buy them when multiples are low!

The books fundamental point is that there is tremendous volatility in any investment. Ignore that volatility to your peril.

At the same time, you should be cautious about how well you understand the volatility. Stocks at their lows can still go to zero. There are all kinds of events that can happen, that have not done so yet. When they do, throw out all the old rules of investing. The terrorist attacks on the United States last week are probably an example of this. So each investment must be made as though you could be totally wrong. This means that you have to manage your risk exposure to events you dont even know how to expect.

I loved his example of the joint probabilities of having a rare disease if you get a positive result on a test for that disease. Even most doctors apparently dont know how to evaluate that one. If even well educated people cannot quantify two known risks occurring simultaneously in their own field, how can investors be expected to make good decisions?

Dr. Taleb has some very good advice for how to handle the psychology of being able to do this. He upholds the Stoic ideal -- the attempt by man to get even with probability which encourages wisdom, upright dealing, and courage. This means not chasing the latest investment fad or fashion, not looking at your investments very often, and being open to both sides of any idea (it could go wrong as well as right --what are the consequences of both?). I especially liked his idea of watching CNBC with the sound off so that the experts seem humorous and you are less likely to hear and follow their advice. Even more poignant was his advice not to live on Park Avenue where living with all of the arrogant, temporarily lucky can make you feel small. Instead, live somewhere that the results of your cautious approach will cause you to be the envy of all.

Dr. Taleb impressed me with his willingness to tell stories on himself about how quickly he can become superstitious when things are going well, take on excess risks, and start looking too short term. After all, we are only human!

The importance of this book can only be appreciated if you go back and think about your biggest investing successes. How much was luck versus skill? A good way to test is to see if the same approach has continued to work for you whenever you use it. Another good test is to see how often it would have backfired in the past.

In my research on good decision making, I find that those who guard the downside first make the most money in the long run. They are able to find ways to get the best of both worlds!

Remember that the two-edged sword can cut in either direction!

Fun read + thoughtful ideas, March 11, 2002
I am a trader myself, and ran into this book as, ironically, a lucky coincidence: I happened to read the emerging markets chapter as a draft that was getting emailed around the office, and enjoyed it so much i purchased the rest of the book...

I found the book to be well written, opinionated and with some great ideas that frankly are hard to argue against. His book, at the core, is about the problem of induction. Statistics, for how useful they may be day to day, certainly do not solve this problem, and indeed, luck and skill are hard to differentiate in the markets.

He exposes a problem of a philosophical nature, and he is certainly not suggesting to drop all induced laws and redefine a day to day life full of uncertainty and incapable of establishing practical rules.

This book is not meant to be a textbook so i am not sure why Taleb's flair as a writer is getting attacked so repeatedly here. I think his writing style is elegant, amusing and smooth. This book is about opinion, so accusing him of having an opinion seems a misplaced objection. Also, i believe his writing is being somewhat misinterpreted. While there is an undertone of arrogance, it is self mocking. He does not claim to know better. His only, somewhat socratic claim is that he at least knows he does not know...I am surrounded by arrogance at work, and i can tell you, Taleb's ain't so!

Ironically, Opportunity Lost, December 31, 2002
I'm very much of two minds about this book. There's little need to offer further comment on:

1. The author's ego (in one paragraph on page 59, he uses the perpendicular pronoun 7 times; the possessive first person another 5); or his hyperbolistic writing style: this might be too easily dismissed as an ad hominem attack.

2. The many glaring contradictions in this book: they appear so often (sometimes in the next sentence), they can hardly be viewed as a random event: this would take too long, and any intelligent reader can spot them.

3. The superfluous material: with so much impertinent opinion found between the covers, this would take too much effort.

4. The missed opportunities: another author can capitalize on this.

5. The delicious irony between the thesis and the content: this is for the discerning reader to perceive and enjoy.

If people wanted to be as nasty as Taleb is in dismissing those he disagrees with, they could use a subject line like "Clearly, not a Swan Song," or "A Highly Masturbatory Essay" or "This book is as fat as the argument is thin".

While there is much to complain about in this nauseatingly self-centered book, so filled with noise and so little signal (seriously estimated at 85:15), such comments would miss the point: this is actually a highly original work and is certainly thought-provoking. Although I give it only 2 stars, it's still worth reading, if only to argue against. A three-paragraph summary of his 200 pages follows:

1. Thesis: Today's virtual world measures success without sufficiently discerning luck from skill. Intelligence alone is deemed the necessary condition for wealth.

2. Antithesis: Too much of what is widely held to be worldly success should actually be attributed to luck; i.e., results hidden inside the vicissitudes of random variation. This "common sense" approach is na�ve because it fails to establish the link between cause and effect and ignores the effect of variation, which, in one of its tails, can produce extraordinary results. Taleb explores the problem of induction and confronts the non-linearity of regret.

3. Synthesis: The trick is, of course, to determine post facto, what was random and what was skill, and more critically, to assess the nature of risk going into a decision. Mistakes in these areas can be extremely costly. Beware of the tails, especially if they are fat. If you want to be probabilistic, don't bet more than you can happily afford to lose. Question everything. Be humble. Accept adversity with good grace.

This is an interesting thesis; too bad Taleb doesn't focus on examining the evidence instead of talking about himself and offering unsupported opinions. He dabbles with epistemology, but equivocates on whether knowledge is arrived at by rational or empirical means. Despite frequent and inappropriate abuse of the word "clearly," he doesn't clarify the ontological considerations that lie at the heart of this book: sufficient cause and non-contradiction. Though he's personally fond of the Monte Carlo technique, many of us could be spared much of that bother by answering a few simple questions:

1. What is the worst-case scenario?
2. What is the best-case scenario?
3. What is the most likely scenario?
4. How confident am I in the assessments?
5. What can I afford to lose?

The author raises the work of Kahneman and Tversky, but hardly surveys it; the work of other key economic thinkers is ignored: Thaler and Arrow come to mind immediately; many others should appear but do not. No wonder Japanese librarians classify this work as literature: it's little more than an essay, largely devoid of footnotes or a meaningful bibliography.

Being unlettered in mathematical sciences, I ought to be cautious about questioning his math, as simple as it is, but must nonetheless question both Taleb's assumptions and his logic in the few examples he provides. He rails against "pseudo-science" but dabbles happily in many disciplines in which he lacks formal qualifications, jumping from lily-pad to lily-pad, seemingly unaware that his dilettantism is evident to even the fellow layperson. Despite his professed aversion for "borrowed wisdom," it abounds in this tome. Taleb's editor took a vacation, especially towards the end of the book, where there are many errors of punctuation.

Incidentally, in one of many delicious ironies of this book, Taleb uses the very Hegelian logic he rails against to make his point. It would be interesting to see John Horgan (he of The End of Science fame) interview Taleb. The ultimate irony is that Taleb has actually co-written a concise account of his thesis in 26 pages at his own web page.

Intriguingly, in some of the interviews also linked to his web page, he comes across as being lucid and pithy, and also a polished and gracious reviewer. Some of his other writings show a keen insight into human and abstract sensibilities. Sadly, the same cannot be said of this book, which appears to be more a transcript of a session with his psychoanalyst. This is an opportunity lost. A severe edit of this book could likely bring it up to the level (5 stars) for which it has the potential. But it's nowhere near there, yet.

Rare, useful advice, November 8, 2003
This is a book about probability and the way we misunderstand it. Author Taleb introduces the concept of the `lucky fool', and reflects on how we (wrongly) ascribe positive characteristics to the schmuck who succeeds purely as the result of luck.

Taleb's domain (and that of the book) is the world of finance. He is quite rightfully scornful of financial journalism, which attempts to fit rationales to the most insignificant movements in asset prices. According to Taleb, most of this price activity is purely random, pointless to predict and futile to explain. The flip side is the tendency of markets (and natural phenomena) to exhibit extreme, unusual behaviour that confounds conventional theory. The occurrence of this skewed behaviour (referred to as the `Black Swan' problem) has plenty of precedents in financial markets and has bankrupted numerous traders and former experts.

As a general rule, practical advice on financial speculation is almost always useless. If Taleb has a core belief, it is that `I may be a fool, but my edge is that I know I am'. This recognition is not an exercise in humility; it is a prerequisite for success in a world where we are continually fooled by uncertainty and causation.

Taleb's book is a convincing, entertaining lecture on probability and human nature. His written style is little difficult to digest, possibly because of his classical influences. His insights are fantastic, though. Anyone who trades or invests should read this book, and reread it until the message sinks in.

...like giving or getting Galileo's book on the solar system as a Christmas gift in 1632, September 27, 2006
My professional work involves evaluating money managers and trying to "understand" a manager's skill vs luck and where the manager might fit in an overall portfolio. So I have spent 30+ years slashing my way through the jungle made by academics who think they can put markets and reality into nice, predictable models; and worse, listening to the sales pitches of money managers and other financial salesmen who want you to believe they are predictably worth paying very high fees and subjecting your money to untold risks.

It is fabulously refreshing that Taleb has razed a small piece of that jungle and raised those important questions that few in the academic, financial, or political establishment dare. If he comes across as insufferably arrogant, so what! Some of the negative reviews herein are a bit feeble - if you want to learn something about this very rich topic, do you really want your freshman economics professor spoon-feeding you strained pablum to make you feel comfortable your first time away from home? Buck up!

This books gives the reader plenty of amunition to take on the many people who are maliciously or inadvertently fooling you - stock brokers making more commissions than your investment returns; politicians pounding the table that their Social Security plan will have in 30 years, $1.00 more than their opponent's; or whatever your position on the war in Iraq, you have to admit that there was no planning for random outcomes. The public is just too uncomfortable with the truth about how random the world can be.

And if you don't want to read this book like a textbook on randomness or to make your own polemical points in the world, read it for the philosophical, hysterical and entertaining romp through reality that it is. Taleb has obviously traveled and lived around the world; the fact that he has personally and professionally experienced a lot of complexity and randomness and is sharing it in this book, is quite fun.

Finally, I know some very smart and rather daring financial advisors who have given this book to their clients as mandatory reading - kind of like giving or getting Galileo's book on the solar system as a Christmas gift in 1632. ... Read more