Elementary School
One Up On Wall Street : How To Use What You Already Know To Make Money In The Market, by Peter Lynch
Investment opportunities abound for the layperson, Lynch says. By simply observing business developments and taking notice of your immediate world -- from the mall to the workplace -- you can discover potentially successful companies before professional analysts do. This jump on the experts is what produces "tenbaggers," the stocks that appreciate tenfold or more and turn an average stock portfolio into a star performer. The former star manager of Fidelity's multibillion-dollar Magellan Fund, Lynch reveals how he achieved his spectacular record. Writing with John Rothchild, Lynch offers easy-to-follow directions for sorting out the long shots from the no shots by reviewing a company's financial statements and by identifying which numbers really count. He explains how to stalk tenbaggers and lays out the guidelines for investing in cyclical, turnaround, and fast-growing companies. The Millionaire Next Door: Surprising Secrets of America's Wealthy, by Thomas Stanley
How can you join the ranks of America's wealthy (defined as people whose net worth is over $1 million)? It's easy, say doctors Stanley and Danko, who have spent the last 20 years interviewing members of this elite club: you just have to follow seven simple rules. The first rule is, always live well below your means. The last rule is, choose your occupation wisely. You'll have to buy the book to find out the other five. It's only fair. The authors' conclusions are commonsensical. But, as they point out, their prescription often flies in the face of what we think wealthy people should do. There are no pop stars or athletes in this book, but plenty of wallboard manufacturers--particularly ones who take cheap, infrequent vacations. Stanley and Danko mercilessly show how wealth takes sacrifice, discipline, and hard work, qualities that are positively discouraged by our high-consumption society.
Buffett: The Making of an American Capitalist, by Roger Lowenstein
By picking the right stocks and businesses to invest in, plainspoken Nebraskan Warren Buffett became the richest man in the U.S. In this excellent biography, Wall Street Journal reporter Lowenstein details the billionaire stock market wizard's strategy of betting on the long-term growth of a handful of successful companies such as American Express and Berkshire Hathaway. Providing personal glimpses of a very private man, Lowenstein unearths childhood traumas such as the tormenting rages of Buffett's mother and his forced relocation to Washington, D.C., in 1943, where, at 13, he ran away from home (he was found by the police the next day). Buffett's wife, Susan Thompson, a nightclub singer, walked out on him in 1977 and was quickly replaced by his mistress, Latvian-born Astrid Menks. Lowenstein profiles an emotionally guarded, "strangely stunted" Midas obsessed with work and secrecy, who seemingly derives little pleasure from his fabulous wealth.
Value Investing with the Masters, by Kirk Kazanjian
Value investing is buying stock in firms whose share price has fallen below the company's intrinsic value. To limn the concept, TV business commentator and business writer Kazanjian compiled interviews with 20 highly successful value fund managers. Each of the ten- to 20-page interviews concentrates on the "master's" investing philosophy and experience in short and well-focused responses. In the last two very brief chapters, Kazanjian details what the masters have in common and ten keys for successful investing. This is the same format that he used for mutual funds in Wizards of Wall Street. The well-edited volume reads easily and without too much jargon, though it is clearly aimed at the more serious investor.
The Davis Dynasty: Fifty Years of Successful Investing on Wall Street, by John Rothchild
Books on successful Wall Street investors have become common currency in publishing. Here, Rothchild (One Up On Wall Street) examines the legendary Shelby Davis, who founded Davis Selected Advisors in 1947. Rothchild chronicles how over the years Davis, his son, and his grandchildren have created a literal "family of funds" generating enormous returns for their investors. Davis and his progeny were somewhat conservative in their investment philosophies. They chose insurance companies, banks, and other financial institutions to invest in for the long-term, and the returns were nothing short of astonishing. Unfortunately, much of the historical eyewitness accounts provided here seem leaden. This, combined with an almost pedestrian writing style and the author's often fawning attitude toward the Davis family, makes for a rather lightweight work.
Valuegrowth Investing, by Glen Arnold
To be a successful investor you have to be a good evaluator of businesses. There are too many so-called investors who occupy their time analysing the stock market, identifying trends and forecasting. Valuegrowth investors understand the companies in which they buy stocks as living businesses. This book draws on the rigorous investment techniques developed by the great investors of the last 100 years, such as Peter Lynch, Benjamin Graham and Warren Buffett. These ideas are combined with modern finance frameworks and with recent developments in the field of business strategy analysis, to create a new way of valuing shares. All investors are searching for the Holy Grail of a set of sound and profitable investment principles to guide them in share selections. Valuegrowth Investing shows that the Grail has been found. Valuegrowth Investing: *draws on investment principles discovered by world-renowned investors such as Peter Lynch and Warren Buffett *combines these principles with insights provided by recent developments in the field of business strategy to provide a coherent investment philosophy for tomorrow's investment strategies *describes what the ordinary investor should focus on and then offers evaluation techniques to identify underpriced shares *provides tools for analysing key investment factors *shows that successful investing does not require great intellect, it requires great principles.
The Warren Buffett CEO: Secrets from the Berkshire Hathaway Managers, by Robert Miles
The success of Warren Buffett and Berkshire Hathaway, Inc., is legendary. Yet to understand this success, you must go below the surface to see how the hands-off management style of Berkshire Hathaway allows its acquisitions to grow exponentially. The Warren Buffett CEO provides a rare up-close and personal view of nearly twenty operating managers within Berkshire Hathaway-owned companies. Through interviews with key executives from these companies, Berkshire Hathaway expert Robert Miles offers a fascinating look at how the CEOs of Berkshire Hathaway subsidiaries are managed. Along with candid revelations about their relationships with "the best boss in the world"-these executives shed light on who Buffett might choose to succeed him and how the management structure of Berkshire Hathaway will change once he is gone.
Purple Cow, New Edition: Transform Your Business by Being Remarkable, by Seth Godin
In 2002, Seth Godin asked a simple question that turned the business world upside down: What do Starbucks and JetBlue and Apple and Dutch Boy and Hard Candy have that other companies don't? How did they confound critics and achieve spectacular growth, leaving behind formerly tried-and-true brands? Godin showed that the traditional Ps that marketers had used for decades to get their products noticed-pricing, promotion, publicity, packaging, etc.-weren't working anymore. Marketers were ignoring the most important P of all: the Purple Cow. Cows, after you've seen one or two or ten, are boring. A Purple Cow, though . . . now that would be something. Godin defines a Purple Cow as anything phenomenal, counterintuitive, exciting . . . remarkable. Every day, consumers ignore a lot of brown cows, but you can bet they won't ignore a Purple Cow. You can't paint your product or service purple after the fact. You have to be inherently purple or no one will talk about you. Godin urges you to emulate companies that are consistently remarkable in everything they do, which drives explosive word of mouth. Purple Cow launched a movement to create products and services that are worth marketing in the first place. Now this expanded edition includes dozens of new examples from readers who've taken the message to heart.
Almost everyone appreciates the importance of customer satisfaction in business, but this book takes that idea to two extremes. First, it claims that customer satisfaction is more important than any business criterion except profits. Second, it argues that customer satisfaction is best measured by one simple question, "Would you recommend this business to a friend?" Pressure for financial performance tempts executives to seek "bad profits," that is, profits obtained at the expense of frustrating or disappointing customers. Such profits inflate short-term financial results, Reichheld writes, but kill longer-term growth. Only relentless focus on customer satisfaction can generate "good profits." One unambiguous question, with answers delivered promptly, can force organizational change, he claims. Reichheld makes a strong rhetorical case for his ideas, but is weaker on supporting evidence. The negative examples he gives are either well-known failures or generic entities like "monopolies," "cell phone service providers" and "cable companies."
A slapdash mix of insight, jargon, common sense, inspiration and hooey, Godin’s follow up to last year’s Purple Cow argues that the way to make any product a bestseller is to couple it with "a feature that the consumer might be attracted to" whether or not she really needs it or wants it. "If it satisfies consumers and gets them to tell other people what you want them to tell other people, it’s not a gimmick," he argues. "It’s a soft innovation." An entrepreneur, lecturer and monthly columnist for Fast Company, Godin knows his business history, and his book bursts with interesting case studies that define "free prize" thinking: e.g. Apple’s iPod, Chef Boyardee’s prehistoric pasta, AOL’s free installation CDs. One of the problems with the book, however, is that its insistent use of needless jargon ("free prize," "purple cow," "edgecraft") clouds complicated issues and lumps dissimilar processes together. "Fix what’s broken," Godin advocates on one page. "Inflame the passionate," he declares on another. Both of these ideas could certainly lead to business improvements, but they hardly use the same methods.
With first-chapter allusions to martial arts, "flow," "mind like water," and other concepts borrowed from the East (and usually mangled), you'd almost think this self-helper from David Allen should have been called Zen and the Art of Schedule Maintenance. Not quite. Yes, Getting Things Done offers a complete system for downloading all those free-floating gotta-do's clogging your brain into a sophisticated framework of files and action lists--all purportedly to free your mind to focus on whatever you're working on. However, it still operates from the decidedly Western notion that if we could just get really, really organized, we could turn ourselves into 24/7 productivity machines. (To wit, Allen, whom the New Economy bible Fast Company has dubbed "the personal productivity guru," suggests that instead of meditating on crouching tigers and hidden dragons while you wait for a plane, you should unsheathe that high-tech saber known as the cell phone and attack that list of calls you need to return.) As whole-life-organizing systems go, Allen's is pretty good, even fun and therapeutic. It starts with the exhortation to take every unaccounted-for scrap of paper in your workstation that you can't junk, The next step is to write down every unaccounted-for gotta-do cramming your head onto its own scrap of paper. Finally, throw the whole stew into a giant "in-basket" That's where the processing and prioritizing begin; in Allen's system, it get a little convoluted at times, rife as it is with fancy terms, subterms, and sub-subterms for even the simplest concepts.
For most, the hardest part of writing is overcoming the mountain of self-denial that weighs upon the spirit, always threatening to extinguish those first small embers of ambition. Brenda Ueland, a writer and teacher, devotes most of her book--published back in 1938, before everyone and their goldfish got their MFA's in creative writing--to these matters of the writer's heart. Still, the real gift of the book is Ueland herself: She liked to write, she didn't care what anyone thought, and she had a great sense of humor. You're simply happy to hang out with her.
For Cloud, an author, clinical psychologist and corporate consultant, integrity is more than just a person's ethics and morals. The French and Latin meanings of the word hint at its origins, "that the whole thing is working well, undivided, integrated, intact and uncorrupted." Achieving this "wholeness" requires the development of six character traits (creates trust, unafraid of reality, results-oriented, solves "negative realities," causes growth and finds meaning in life) which Cloud examines in great detail, using business stories like Proctor and Gamble's success in China and the experiences of his CEO friends and clients. What each of his stories has in common is how success, often wild success across multiple fields, is fueled by openness, honesty to one's self and to others and "true trust," which is borne out of someone's goodness not being "dependent on anything." Cloud's conversational writing style makes for an easy read, and much of his advice is sound if not groundbreaking, but some aphorisms come off as hokey. ("Things never work. When they don't, that is the time to make them work. Then, if you do, they work," or "Character = the ability to meet the demands of reality," which is not to be confused with integrity, the courage to meet those same demands.) This book is not for the person seeking a quick-fix; Cloud's breed of integrity is a lifestyle choice.
Junior High
In 2005, Joel Greenblatt published a book that is already considered one of the classics of finance literature. In The Little Book that Beats the Market—a New York Times bestseller with 300,000 copies in print—Greenblatt explained how investors can outperform the popular market averages by simply and systematically applying a formula that seeks out good businesses when they are available at bargain prices. Now, with a new Introduction and Afterword for 2010, The Little Book that Still Beats the Market updates and expands upon the research findings from the original book. Included are data and analysis covering the recent financial crisis and model performance through the end of 2009. In a straightforward and accessible style, the book explores the basic principles of successful stock market investing and then reveals the author’s time-tested formula that makes buying above average companies at below average prices automatic. Though the formula has been extensively tested and is a breakthrough in the academic and professional world, Greenblatt explains it using 6th grade math, plain language and humor. He shows how to use his method to beat both the market and professional managers by a wide margin. You’ll also learn why success eludes almost all individual and professional investors, and why the formula will continue to work even after everyone “knows” it.
Accomplished value investors pay little attention to the ebb and flow of the stock market; instead, they concentrate on the intrinsic worth of a company. The Five Key Steps to Value Investing introduces you to the tenets of value investing. It then provides you with the hands-on tools and long-term confidence you need to construct a portfolio of solid, low-maintenance, and high-value stocks--each bought at a substantial discount to their true worth. It shows you how to become a value investor, investing only in companies with market-proven performance and track records of superior growth. This commonsense guidebook will help you:
- Understand--and apply--the Five Levers of Value to each investment decision
- Analyze the strengths and weaknesses of a company's management team
- Properly assess price, and locate gaps between market price and actual value
- Determine a stock's current safety levels through margin-of-safety analysis
- Know when the time is right to sell a company's stock and move on
Until retiring in 1990, Lynch ( One Up on Wall Street ) was manager of the spectacularly successful Fidelity Magellan Fund. Here he recalls with self-deprecating humor and disarming candor how he went about choosing winning stocks (and missing a few) for the $12 billion fund, which, during one five-year period in the 1980s, earned investors a 300% return. Lynch strongly favors stocks over other investment vehicles but insists that "investigative" research into a corporation's prospects, including credit checks and visits to the firm's installations, is essential. "Focus on companies, not the stocks," he stresses, adding that on this basis limited partnerships, banks and even S & Ls can be sound investments. Lynch's reputation and business writer Rothchild's deft touch should yield big sales for this inside story.
In a straightforward and accessible manner, The Dhandho Investor lays out the powerful framework of value investing. Written with the intelligent individual investor in mind, this comprehensive guide distills the Dhandho capital allocation framework of the business savvy Patels from India and presents how they can be applied successfully to the stock market. The Dhandho method expands on the groundbreaking principles of value investing expounded by Benjamin Graham, Warren Buffett, and Charlie Munger. Readers will be introduced to important value investing concepts such as "Heads, I win! Tails, I don't lose that much!," "Few Bets, Big Bets, Infrequent Bets," Abhimanyu's dilemma, and a detailed treatise on using the Kelly Formula to invest in undervalued stocks. Using a light, entertaining style, Pabrai lays out the Dhandho framework in an easy-to-use format. Any investor who adopts the framework is bound to improve on results and soundly beat the markets and most professionals.
The truth about 13 of today's most widely touted investment strategies.
- 10 powerful lessons for every investor
- Overcoming the enduring myths about markets
- High dividend stocks: better and safer than bonds--or not?
- Cheap stocks: cheap for a reason?
- Should you invest in quality? Momentum? The next big thing? Or what?
As an experienced Professional Stock Market (Value)Investor,aside from the useful short precis in each chapter, I feel the real strengths of this Book is the use of Fundamental data to establish a Stock's range of intrinsic value and quite simply to answer the question"Is the Stock under consideration overvalued,undervalued or fairly priced" on the basis of available evidence.Although involved, the mathematical manipulation is not complicated and should not be beyond the ordinary investor.
Widely respected and admired, Philip Fisher is among the most influential investors of all time. His investment philosophies, introduced almost forty years ago, are not only studied and applied by today's financiers and investors, but are also regarded by many as gospel. This book is invaluable reading and has been since it was first published in 1958. The updated paperback retains the investment wisdom of the original edition and includes the perspectives of the author's son Ken Fisher, an investment guru in his own right in an expanded preface and introduction, "I sought out Phil Fisher after reading his Common Stocks and Uncommon Profits...A thorough understanding of the business, obtained by using Phil's techniques...enables one to make intelligent investment commitments." Warren Buffet
The fourth edition of Basic Economics is both expanded and updated. A new chapter on the history of economics itself has been added, and the implications of that history examined. A new section on the special role of corporations in the economy has been added to the chapter on government and big business, among other additions throughout the book. Basic Economics, which has now been translated into six languages, has grown so much that a large amount of material in the back of the book in previous editions has now been put online instead, so the book itself and its price will not have to expand. The central idea of Basic Economics, however, remains the same: that the fundamental facts and principles of economics do not require jargon, graphs, or equations, and can be learned in a relaxed and even enjoyable way.
The international bestseller on the extent to which personal freedom has been eroded by government regulations and agencies while personal prosperity has been undermined by government spending and economic controls. New Foreword by the Authors; Index.
In Mavericks at Work, Fast Company cofounder William C. Taylor and Polly LaBarre, a longtime editor at the magazine, give you an inside look at the "most original minds in business" wherever they find them: from Procter & Gamble to Pixar, from gold mines to funky sandwich shops. Want to stop doing business as usual? Then take some lessons from the 32 maverick companies Taylor and LaBarre profile.
It's become clear by now the fall of the Berlin Wall and the collapse of communism in most places around the globe hasn't ushered in an unequivocal flowering of capitalism in the developing and postcommunist world. Western thinkers have blamed this on everything from these countries' lack of sellable assets to their inherently non-entrepreneurial "mindset." In this book, the renowned Peruvian economist and adviser to presidents and prime ministers Hernando de Soto proposes and argues another reason: it's not that poor, postcommunist countries don't have the assets to make capitalism flourish. As de Soto points out by way of example, in Egypt, the wealth the poor have accumulated is worth 55 times as much as the sum of all direct foreign investment ever recorded there, including that spent on building the Suez Canal and the Aswan Dam.
For the past eight years, the U.S. stock market has been on a bull run the likes of which few have ever seen, making and breaking records almost every quarter. And for the last four of those years, David and Tom Gardner's self-described market-crushing stock portfolios have made the market's own incredible performance pale by comparison. In their third book, The Motley Fool's Rule Breakers, Rule Makers, the brothers reveal the methodology behind their stock-picking success, which is impressive. The Rule Breaker Portfolio (formerly known as the Fool Portfolio on their Web site) has risen some 650 percent since its inception in 1994, thanks to stocks such as America Online, McAfee, and Wal-Mart, while the Rule Maker Portfolio (formerly known as the Cash King Portfolio) has risen 440 percent on the backs of investments in Microsoft, Cisco Systems, and Intel. Fans of the Motley Fool, who with luck have prospered from the Gardners' timely advice, will no doubt love Rule Breakers, Rule Makers. The book is written in their usual humorous and self-congratulatory style--not only educational, but often aimed at making the pros on Wall Street wince, as they should.
"Don't sell the steak. Sell the sizzle." In today's service business, author Beckwith suggests this old marketing adage is likely to guarantee failure. In this timely addition to the management genre, Beckwith summarizes key points about selling services learned from experience with his own advertising and marketing firm and when he worked with Fortune 500 companies. The focus here is on the core of service marketing: improving the service, which no amount of clever marketing can make up for if not accomplished. Other key concepts emphasize listening to the customer, selling the long-term relationship, identifying what a business is really selling, recognizing clues about a business that may be conveyed to customers, focusing on the single most important message about the business, and other practical strategies relevant to any service business.
On September 23, 1998, the boardroom of the New York Fed was a tense place. Around the table sat the heads of every major Wall Street bank, the chairman of the New York Stock Exchange, and representatives from numerous European banks, each of whom had been summoned to discuss a highly unusual prospect: rescuing what had, until then, been the envy of them all, the extraordinarily successful bond-trading firm of Long-Term Capital Management. Roger Lowenstein's When Genius Failed is the gripping story of the Fed's unprecedented move, the incredible heights reached by LTCM, and the firm's eventual dramatic demise.
High School
Arguably the best book ever on what is increasingly becoming the science of persuasion. Whether you're a mere consumer or someone weaving the web of persuasion to urge others to buy or vote for your product, this is an essential book for understanding the psychological foundations of marketing. Recommended.
For more than a decade, Stocks for the Long Run has been the authoritative guide to understanding market forces and building a successful portfolio. In this new fourth edition, Jeremy Siegel updates his argument for long-term stock market investment with: comparisons of ETFs, mutual funds, and index options and futures; evidence that the rapid growth of emerging markets will not only continue but may accelerate; insight into the benefits of fundamental indexation over market value indexation; an updated look at the surprising validity of Calendar Effects; and fresh analysis of the best-performing stocks since the formulation of the S&P 500 Index.
The late Sam Walton was one of the shrewdest and richest merchants in America. Centered on the building of his Wal-Mart empire, his book, like fellow magnate Sandra Kurtzig's CEO: Building a $400 Million Company from Ground Up ( LJ 5/1/91), is light on biography. However, readers will enjoy the folksy narrative of the small-town millionaire who revolutionized retail distribution. Walton also addresses accusations against him, such as running the competition out of town. Coauthor Huey does a fine job of incorporating candid testimonials from family members and associates, who thought Walton's ideas were sometimes silly. Shortly after Walton's death, the book was given an overly sentimental postscript (a minor detraction) and rushed into print. Highly recommended for public and academic business collections.
Going on the idea that experience is the best teacher, Phalon (a Forbes magazine contributing editor) has rounded up 10 mini-essays profiling the business ideals of some of Wall Street's most successful investors. Each chapter opens with a photo, along with a caption explaining the mogul's claim to fame. The author pays homage to eccentrics (like Hetty Green, a feared stock picker in the late 19th century) and simple geniuses (including George Doriot, whose formula "bet the jockey, not the horse" was his lasting contribution) alike, making this an interesting if not pragmatic guide to investing.
From 1964 to 1995, Neff managed the large Windsor mutual fund, which consistently beat the stock market's average returns. In this wise and engaging volume, Neff and finance writer Mintz (Five Eminent Contrarians) team up to explain how Windsor did it and how smaller-scale investors might duplicate Neff's success. The result is half financial advice, half autobiography. Early chapters describe Neff's difficult family life in Texas and Michigan, his navy years and his early job in a Cleveland bank. Thereafter, Neff's investment advice alternates with year-by-year analyses of the market and of Windsor's performance. Neff and Mintz together craft clear, forceful prose, studded with personal asides: at the bank in Cleveland, "I was not inclined to play by their rules. Instead of bankers' pinstripes, I wore sport coats." Neff's core precept is simple: buy stocks that look bad to less-careful investors and hang on until their real value is recognized. This means seeking solid companies whose price/earnings ratios look low. "I've never bought a stock," he declares, "unless, in my view, it was on sale." That's not new advice, but Neff's success proves that he knows how to apply it: patience and willpower, he informs us, matter as much as (though not more than) rapt attention to business news and company reports.
Among the library of investment books promising no-fail strategies for riches, Benjamin Graham's classic, The Intelligent Investor, offers no guarantees or gimmicks but overflows with the wisdom at the core of all good portfolio management. The hallmark of Graham's philosophy is not profit maximization but loss minimization. In this respect, The Intelligent Investor is a book for true investors, not speculators or day traders. He provides, "in a form suitable for the laymen, guidance in adoption and execution of an investment policy" (1). This policy is inherently for the longer term and requires a commitment of effort. Where the speculator follows market trends, the investor uses discipline, research, and his analytical ability to make unpopular but sound investments in bargains relative to current asset value. Graham coaches the investor to develop a rational plan for buying stocks and bonds, and he argues that this plan must be a bulwark against emotional behavior that will always be tempting during abrupt bull and bear markets.
Guy Kawasaki, former chief evangelist at Apple Computer and an iconoclastic corporate tactician who now works with high-tech startups in Silicon Valley, is back in print with his seventh book: Rules for Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services. Entertainingly written in collaboration with previous coauthor Michele Moreno, it lays out Kawasaki's decidedly audacious (but personally experienced) strategies for besting the competition and triumphing in today's hypercharged business environment. The book is divided into three sections, whose titles alone epitomize its thrust and tone. The first, "Create Like a God," discusses the way that radical new products and services must really be developed. The second, "Command Like a King," explains why take-charge leaders are truly necessary in order for such developments to succeed. And the third, "Work Like a Slave," focuses on the commitment that is actually required to beat the odds and change the world. A concluding section is filled with entertaining and inspirational quotes on topics like technology, transportation, politics, entertainment, and medicine that show how even some of our era's most successful ideas and people--the telephone, Louis Pasteur, and Yahoo! among them--have prevailed despite the scoffing of naysayers.
University
Charlie Munger is a magna cum laude graduate of the Harvard Law School and currently vice chairman of Berkshire Hathaway, Warren Buffet's $100+ billion empire. What can a highly successful businessman teach us about how we got into this mess and what lessons should we learn from it? To my surprise Munger as early as 2000 correctly predicted the current financial crisis and identified its causes. Speaking to the Philanthropy Roundtable in November of that year he said, "I suggest that when the financial scene starts reminding you of Sodom and Gomorrah you should fear practical consequences even if you like to participate in what is going on." (p. 352) One of the key causes is the functional equivalent of embezzlement or `febezzlement' as Munger calls it. Febezzling can take several forms but one of the most destructive happens when accounting rules are written so that fund managers and consultants can take huge fees based on `soaring' stock prices made possible by very low interest rates and loose lending practices.
In Fooled by Randomness, Nassim Nicholas Taleb, a professional trader and mathematics professor, examines what randomness means in business and in life and why human beings are so prone to mistake dumb luck for consummate skill. This eccentric and highly personal exploration of the nature of randomness meanders from the court of Croesus and trading rooms in New York and London to Russian roulette, Monte Carlo engines, and the philosophy of Karl Popper. Part of what makes this book so good is Taleb's ability to make seemingly arcane mathematical concepts (at least to this reviewer) entirely relevant in evaluating and understanding everything from the stock market to the success of those millionaires cited in the aforementioned bestsellers. Here's an articulate, wise, and humorous meditation on the nature of success and failure that anyone who wants a little more of the former would do well to consider.
Bernstein pulls back the curtain to reveal what really goes on in today’s financial industry as he outlines a simple program for building wealth while controlling risk. Straightforward in its presentation and generous in its real-life examples, The Four Pillars of Investing presents a no-nonsense discussion of:
- The art and science of mixing different asset classes into an effective blend
- The dangers of actively picking stocks, as opposed to investing in the whole market
- Behavioral finance and how state of mind can adversely affect decision making
- Reasons the mutual fund and brokerage industries, rather than your partners, are often your most direct competitors
- Strategies for managing all of your assets—savings, 401(k)s, home equity—as one portfolio
Fortune's Formula is a fascinating study of the connections between such seemingly unrelated topics as gambling, information theory, stock investing, and applied mathematics. The story involves the stunning brainpower of men such as MIT professor Claude Shannon, who single-handedly invented information theory, the science behind the Internet and all digital media; Ed Thorpe; and John Kelly of Bell Laboratories, who developed the "Kelly criterion," a now-legendary investment strategy for maximizing growth while controlling risk. Initially, Shannon and Thorpe took Kelly's theory to Las Vegas and applied it to roulette and blackjack. Later, they took it to Wall Street and cleaned up--Shannon made a personal fortune while Thorpe created the highly successful hedge firm Princeton-Newport Partners. They both discovered that Kelly's system was particularly effective when applied to arbitrage (minute price differences that result from market inefficiencies). As Poundstone ably demonstrates, the merits of Kelly's criterion are still hotly debated today.
O'glove is a former securities analyst who started the Quality of Earnings Report , used by many investment firms. With business historian Sobel, O'glove details a methodology to help the investor understand the role of the corporate annual report, cash flow and debt analysis, accounts receivable and inventories, the differences between shareholder reports and tax reports, and other documentation submitted to shareholders and potential investors. He advises investors to look carefully at all of the above, and he explains how to do research for more information. The book has a style suited to the investor with some experience and is technical. But it offers a great deal of substantive information that may be useful to those who use business libraries and collections.
Money Masters of Our Time is a reappraisal and revision of those money masters who have stood the test of time plus a look at new money masters. Train emphasises the parts of their various business careers that illuminate their investment techniques focusing on notable individuals whose decisions to buy and sell have actually made money grow. How do they reason? Where do they get their information? How much do they depend on fact and how much on psychology? What are their criteria in selecting a stock? What stocks are they buying now, and why? The ′Money Masters′ covered are: Warren Buffet, Paul Cabot, Philip Carret, Philip Fisher, Benjamin Graham, Mark Lightbrown, Peter Lynch, John Neff, T. Rowe Price, Richard Rainwater, Julian Robertson, Jim Rogers, George Soros, Michael Steinhardt, John Templeton, Ralph Wanger, Robert Wilson. Train centres on their investment techniques and methods and also gives brief biographical evaluations.
For very savvy investors, comfortable in the complex world of investing in stocks, Graja and Ungar present an excellent resource focusing on a niche in the investment worldAsmall-cap stocks. This term defines small companies having a total capitalization of less than $1 billion. Advice from top money managers in reputable investment firms on how to get the most value out of these stocks is succinctly summarized here, including tips on picking the winners, managing the volatility of smaller companies, finding "cheap" stocks ready for gain, and integrating these small caps into a larger portfolio of diverse investments. The brisk narration of this very technical but very useful material keeps the listener tuned in.
When the stock market booms--as it did through most of the 1990s--relatively inexperienced investors like to believe there's a new paradigm at work. That's why it's refreshing to take a look occasionally at how investors survived previous booms--and busts. What did the founders of Moody's, Value Line, and the Dow Jones Industrial Average think about the markets they were analyzing and attempting to quantify? Thus, when Charles Dow writes in an essay titled "Booms and Busts" that "There is a pronounced difference between bull markets that are made by manipulation and those that are made by the public," you perk up. Sure, he was writing all this in the Wall Street Journal in 1899, but he could just as easily be talking about day traders and 401(k) savers in 1999. Essays by more current investment gurus appear, too. Warren Buffett, Peter Lynch, and Abby Joseph Cohen pitch in, as does George Soros in a must-read section called "Crash and Learn". Not all investing involves the stock market, so even Donald Trump makes an appearance, with an essay called "Trump Cards: The Elements of the Deal."
The stock-market profits that investment pro Greenblatt is chasing are found in some areas not usually considered by the average investor: spin-offs, mergers, risk arbitrage, restructurings, rights offerings, bankruptcies, liquidations, and asset sales. Greenblatt acknowledges that pursuing them will require some time, effort, patience, and experience. But he argues that because these areas are not overstudied by the analysts, possible market inefficiencies can be exploited. He explains each area with case studies from his own experience. Librarians will love his answer to the question, "Where can you find these special investment opportunities?"?read, read, read?and he gives the best places to look, emphasizing that you can pirate good ideas but you still need to do your own homework. None of this should be beyond the experienced investor (Greenblatt himself says he doesn't "like to work too hard to understand an investment"), but it is probably beyond the neophyte.
"The constant pursuit of growth--through buying hot stocks, seeking out the next big thing, or investing in the fastest growing countries--dooms investors to poor returns." So states Siegel, an academic who, with optimism and extensive research, suggests that the future is bright for equity investors in old, reliable companies in slow-growth or even shrinking industries. He presents a framework for understanding world markets and offers strategies for protecting and enhancing long-term capital. Stocks will outperform bonds and other inflation hedges, and he recommends supplementing indexed portfolios using three directives--buy stocks that have sustainable cash flows and return these cash flows to the shareholders with dividends; recognize the economic power shifts from the West toward China, India, and the rest of the developing world; and accumulate shares in firms with reasonable valuations relative to their expected growth while avoiding trendy investments. Warren Buffet, the preeminent investor, suggests that those interested in investments should study Siegel's new facts and ideas.
What do the Honda Supercub, Intel's 8088 processor, and hydraulic excavators have in common? They are all examples of disruptive technologies that helped to redefine the competitive landscape of their respective markets. These products did not come about as the result of successful companies carrying out sound business practices in established markets. In The Innovator's Dilemma, author Clayton M. Christensen shows how these and other products cut into the low end of the marketplace and eventually evolved to displace high-end competitors and their reigning technologies.
Grad School
Knowledge and Decisions is a non-fiction book by American economist Thomas Sowell. Sowell explicates social and economic knowledge and how it is transmitted through the many facets of society, and how that transmission affects decisions made. Emphatically, Sowell repeatedly rejects the popular tendency to put economic and political decisions and their results in moral terms. Doing so, he argues, ignores the trade-offs and limitations inherent in every economic system and society. Consistent with his established Laissez-faire viewpoints, Sowell also indicts price controls such as rent control, minimum wage, price fixing, and subsidies as interfering in the implicit communication between consumers and producers necessary to optimize the choices of each.
The definitive work concerning Warren Buffett and intelligent investment philosophy, this is a collection of Buffett's letters to the shareholders of Berkshire Hathaway written over the past few decades that together furnish an enormously valuable informal education. The letters distill in plain words all the basic principles of sound business practices. They are arranged and introduced by a leading apostle of the 'value' school and noted scholar, Lawrence Cunningham.
Written by renowned teacher, author, and valuation authority Aswath Damodaran, and fully revised and updated from its top-selling first edition—which has become the essential reference for any professional needing accurate and reliable valuation information—this invaluable book now provides you with:
- In-depth coverage of different distinct valuation approaches and key models within each
- Techniques for accurately assessing the effect on value of employee stock options and other equity-based compensation
- Methodologies for using valuation models to value intangible assets—patents, copyrights, trademarks, licenses, brand names, and more
- Sound strategies for identifying and measuring the value of control in any business and why the expected value of control plays a role in many different valuation contexts
- Discussion of how liquidity—or, more accurately, illiquidity—affects value, along with ways to measure this impact on value
- Potential sources of the ever-elusive "synergy" when combining two entities, how best to value each type of synergy, and an examination of why firms so often overpay for synergy
- Techniques for measuring the costs of accounting opacity and business complexity, and accurately discounting the value of complex firms to promote transparency at every level
- A commonsense framework you can use to sift through numerous possible valuation models to determine the best model for your valuation task
Corporate break-up is dominating the business press and making executives worldwide fear for their careers. This text examines this phenomenon, and explores its far-reaching effects for shareholders, managers, employees, investors and customers.
It sometimes seems as if there were as many different investment styles in practice today as stocks in which to invest, with virtually every one of them--styles as well as stocks--offering varying levels of appeal to various people. Professional investment consultant Peter J. Tanous has come to understand this after three decades in the field, and in Investment Gurus, he presents a wide range of tactics and strategies that have been developed by acknowledged stock-picking experts. At the heart of this book are Tanous's interviews with 18 top money managers and academics, including Mario Gabelli, William F. Sharpe, Peter Lynch, Laura J. Sloate, and Merton Miller. The book concludes with "Your Roadmap to Wealth," which summarizes the success factors common to each of the money managers interviewed and suggests ways to develop an "intelligent personal investment plan.
Marty Whitman has practiced value investing successfully for many years, and his writings draw on his vast experience. However, unlike Buffett, he isn't the most clear author in the world. His writing is a little obtuse, and devoid of examples that would illustrate his points. Nevertheless, if you can make your way through the writing, you will find a lot of extremely useful and interesting information. I would recommend this book, but to understand it the reader should have a good working knowledge of financial terminology and an understanding of other value investing techniques and perspectives. If you read (and understand) some other books on value investing, plus maybe a few of Mr. Whitman's Third Avenue Value Fund shareholder letters, I think you will find this book invaluable.
Individual investors in the Internet Age are blessed with information. We also are cursed with too much of the stuff, from real-time quotes to streaming videos of fund managers. This info-clutter extends to books, and cutting through it can be difficult, even dispiriting, when you see how little thought goes into so many books. That's why I've spent part of the summer doing it for you. And the new title most deserving of your time is Value Investing: From Graham to Buffett and Beyond. Its authors, Columbia Business School faculty members Bruce C.N. Greenwald and Michael Van Biema and fund managers Paul D. Sonkin and Judd Kahn, aim to place their work next to Benjamin Graham's 1950 classic, The Intelligent Investor. My 1986 edition came with Warren Buffett's endorsement--"by far the best book on investing ever written."
An unimpeachable classic work in political philosophy, intellectual and cultural history, and economics, The Road to Serfdom has inspired and infuriated politicians, scholars, and general readers for half a century. Originally published in 1944—when Eleanor Roosevelt supported the efforts of Stalin, and Albert Einstein subscribed lock, stock, and barrel to the socialist program—The Road to Serfdom was seen as heretical for its passionate warning against the dangers of state control over the means of production. For F. A. Hayek, the collectivist idea of empowering government with increasing economic control would lead not to a utopia but to the horrors of Nazi Germany and Fascist Italy.
