Essentials To Investment

Review by Ikayakbr:

Without a doubt this book is far superior to anything else available on the subject of forex trading. “Forex Patterns and Probabilities” will become a trading classic not only for the tremendous amount of useful information it provides, but for the easy and fun way that the information is presented. The author, Ed Ponsi, presents very detailed strategies and then demonstrates them to the reader in a very concise manner. This is exactly what I needed and what most traders need – clear, unambiguous directions that explain in perfect detail exactly what the trader must do to make money trading.

The author caught my attention when he appeared on CNBC, and it became immediately clear that he was not the average guest. He has a relaxed manner and a seemingly encyclopedic knowledge of trading, yet he explains everything in a very down-to-earth manner. He has a real ability to explain trading in a way that is easy to comprehend for the average person. The book reflects that.

The one thing that is abundantly clear is that the book is written by an actual trader – you can tell by the tremendous detail and the clear thought process that the author has actually used these strategies, and he even shows examples where the trades didn’t work out. He shows trading as it really is, not the idealized version presented in most books.

When I read this book I felt as if the author were speaking directly to me in that pleasant, easy-going manner. The book is free of technical jargon and is even amusing at times. I especially enjoyed the stories about the author’s early days as a trader on Wall Street, and the way he relates trading to everyday life.

This book contains some real eye-openers, including a chapter that will forever change the way I think about trading. The author applies game theory to show why most short term traders lose money, and what you can do about it. This alone was worth the price of the book. Another section exposes the conflict of interest inherent in the introducing broker relationship. You certainly won’t see that in any of the books written by market maker employees. Another great section showed how to set goals. There was so much good, useful information in this book, and it was so easy to read and entertaining, that I couldn’t put it down. I recommend it highly to anyone who is serious about trading for a living.

Review by Zaphod:

This book presents a rare combination – excellent content presented in language that is easy to understand. This is exactly what I needed, a clear series of trading tactics and strategies with no mysterious technical jargon to confuse the reader. The author wastes little time and “gets to the good stuff”, a welcome relief from all of the filler-laden material on currency trading that permeates the industry.

I find it refreshing that Ed Ponsi does not try to hype anything in his book, he just gives good solid trading techniques and advice. This is in stark contrast to so-called ‘authors’ who are really just shills for currency market makers or signal providers, trying to hype their products. Why is there so much hype in the trading world?

The author is adamant that traders need to use different tactics for different situations. I have been using the FXED Trend strategy and Ed’s multiple time frame strategy and they’ve been great, especially on the trending currency pairs. When the market ceases to trend, I switch tactics as recommended by the author, and use the Elevator Trade or the FXED Fibonacci Trade.

The bottom line is, I really enjoyed this book. It clearly states what traders must do to succeed, so I recommend it highly. Five stars.

Review by Midnight Toker:

This is easily the most valuable book of the nearly dozen or so I’ve read. Have you ever wondered why the market moves against you when you follow text book technical set ups that every trading manual states you should? It’s because the brokers and dealers know you will and actively go after your position. It’s obvious to me now but before reading this book I didn’t know MY broker was out to aggressively take my money.

This book has given me a whole new view of forex trading and because of it I’ve stopped scratching my head and begun to make gains. I know the real game now and have adjusted my trading to take advantage of it.

Review by Sue:

Unlike most Forex books, this does not reiterate basic strategy and definitions. Rather, it assumes that the reader knows the basics, and concisely reveals how the Forex dealers can use those strategies against the reader. The author’s material corresponds well to common complaints from traders worldwide (check out Forex trader blogs at any website). The graphs are well-laid out, and helpful for elaborating on the counter-strategies described by the author. A quick read, but surely complex enough for re-reads. I cannot comment on whether the author’s strategies will indeed ensuring “beating the dealer” (have not tested them yet), but I think that revealing how the Forex establishment can take advantage of traders will make readers more cautious, and less trusting. Should be part of any advanced beginner’s library.

Review by SBJ400:

Let me say right away –

I judge harshly any material that promotes another product. This book promotes the author’s website constantly throughout. You must pay to be a member after a trial period LOL

0 for a measely 7 days!!! That is what the author calls TRIAL. LOL I thought you were trading because you needed money…not because you have tons of money to flush down the toilet?!

Here are the exact current details posted from the author’s website –

Trial Membership ( for the first 7 days. Then 9.95 for each month)

First 7 days . Then 9.95 each 30 days as a full Monthly Member.

Monthly Membership (9.95 for each month)

Semi-Annual Membership (99.95 for 6 months)

Annual Membership (00.00 for 12 months)

BEWARE NOVICES !!!!!!!! Tons of people write books and create websites just to get the eager novice to depart with money!

One simple question to ask yourself -

If the author is such a great, successful trader…why would he be busy chasing down subscribers? Would you? Wouldn’t you be busy scooping up pips and not bothering with some silly website and trying to drum up business for it?

For the money he is charging per month, you could buy DVD workshops and seminars from some of the top traders out there and you get to keep those DVDs and watch them over and over at no charge.

I do agree that the general VAGUE substance of this book is generally accurate. You could learn a few things…BUT what this book will teach you is freely available online at some great Forex websites for FREEEEEEEEEEEEE !!!! Just Google search “free forex training” or try “baby pips”. You will learn FAR MORE than any beginner book will ever teach you there for free.

Also, the candlestick advice in this book is so generic and vague you could lose plenty of money. Let me quote the book -

“Dojis become a most significant reversal signal when seen after an extended rally of long-bodied candles” (by the way, the plural of doji is doji…not dojis)

This holds a tiny kernel of truth to it in that doji signals are more powerful signals after a large move in the market. THE TRUTH ENDS THERE. According to THE guru of candlesticks…Steve Nison (the man that brought candlesticks to the West and the one you should learn them from and the man this book gives no credit to as a source for further education)…according to Nison’s teachings doji are not reversal signals by themselves. Doji represent transition or confusion in the market. You cannot just assume the market will reverse. You need more confirmation. Candlestick signals by themselves are not reason enough to trade!

For a novice, simplistic, generic advice like this could wipe your account out in days.

I am not saying the author is a bad person or has bad intentions. I am merely judging the book. I do feel there are many good little tips in it…BUT the same info is available for free. Since this book does not delve into meaty, strict detail about anything…you will only scrape the surface, get excited and will be more likely to subscribe to the website. I think that is the plan behind this book. For some people…that may be a good thing. As a novice, you should research, investigate and learn as much as possible before paying one single penny to anyone! How do you know what to pay for or subscribe to when you do not understand Forex, trading or any other relative issue????

Use the internet, GOOGLE as much as possible…chat in forums, take your time and LEARN then make purchase based on intelligence not knee jerk excitement. Forex is rife with scams, hustles, fast buck programs and systems.

Review by Glenn Woodford:

Wayne really hits the mark with this book. It’s a basic summary of the method he teaches at www.fxbootcamp.com. Not only does he cover the technical and fundamental aspects that a successful Forex trader needs to know, but he covers the other all important topics too, like risk analysis, trade plans & journals, trade reviews and having the right mindset to be a successful trader. All with no Fluff!

I found Wayne’s book really helped me trade according to MY rules, not the markets rules. This meant that when I trade, it’s become a lot of fun again. Now I am trading in one night, profit wise, what I used to trade in one month.

If you want to get a clear sense of what is in this book, have a look at his videos on FXStreet.com blogs called “2 Hour Video: Strategic & Tactical FOREX Trading”. blogs.fxstreet.com/fxbootcamp/2008/03/12/2-hour-video-strategic-tactical-forex-trading

I recommend this book to anyone who feels there is room to improve in their Forex trading, or is looking for a reliable, simple system to follow. The method outline in Wayne’s book won’t give you every pip in a market’s movements, but it will provide you with a large portion of them, in a conservative manner.

I also recommend this book to new FX Bootcampers, as it will help them come up to speed quickly, with the method Wayne teachers at FX Bootcamp.

In response to Jeff Marsick’s review (RE – Good But Poorly Edited), I agree that this book could have done with more editting. In regards to Wayne’s MACD settings of 21, 55, 8, this is in fact correct. One of the things with Wayne’s method is that he uses a slowed down MACD oscillator to guage MARKET speed (medium term price action) and a sped up Stochastics oscillator to measure PRICE momentum (short term price action). This is covered in the above mentioned webinar video at around 18 minutes into it.

Review by bspringholz:

I have spent 20 years researching and trading stocks and bonds, and was interested in currency trading. I purchased a number of books on foreign exchange. I read this book first, Essentials of Foreign Exchange Trading, and I found it an excellent choice. It has also been a good companion to my experimentation and trading on one of the major FX trading websites.

It starts off with a good introduction to the principles of currency trading and includes a discussion of a wide range of trading approaches to help understand which best fit your personality and style. The chapters that dive in on technical analysis (using candlesticks, moving averages, fibonacci/pivot point, elliott wave) are especially good; it is obviously the author’s specialty. That was good for me since my background is in fundamental analysis and the author’s treatment of technical analysis was comprehensive and helpful. The sections on fundamental analyses were good too, although I went through them quickly given my familiarity. My primary focus was to “expand the toolbox” with technical analyses and this book served that goal. Also, importantly, the book is written in an entertaining and fluid style. It was easy to read and absorb.

Overall, I found the book excellent and recommend it.

Review by Warren C. Hutchison:

I traded forex a couple of years ago and I’ve just gotten back into it recently. Got this book right when it came out because I’ve been following the author’s daily currencies analysis and attended a few of the webinars he gives. From the title of the book I was thinking that it might be a bit basic for me since I’ve traded forex pretty extensively before. But it’s turning out to be extremely helpful because it has a lot of really useful strategies and techniques. The book pretty much goes all the way from beginner to advanced and explains everything really thoroughly and clearly. I have two other books on forex trading that I bought in the past, but this one is by far the most complete and useful one. For me, chapter 5 on forex trading methods and strategies was one of the most comprehensive descriptions of trading strategies that I’ve seen. Also really liked the technical analysis chapter. Definitely recommend this book.

Review by Cali Kid:

I had read several books on the subject before seeing Jeff Glenellis’ book. And I had spent the better part of a year trying to trade Foreign Currency Exchange (Forex) unsuccessully. There are many successful traders using any number of trading methods, and many of them offer books about it. But none ever offered to TEACH me their methods (even some to whom I paid significant sums of money) the way Jeff G does in his book.

I bought this book in an earlier revision, about a year ago (before it was available thru Amazon). So I have already become proftable using what he teaches in it. Jeff G presents several very concise trading methods in easy-to-follow language. He is also the only one I ever saw present an actual profit progression from compounding, where he has actually worked the plan and compounded a small initial startup into a significant sum of money.

But more important than any method, he teaches a great deal on how to properly manage the money in your trading account, to protect your capital. If you start with 00 in your forex broker account, yet you wipe it all away in a few losses, you lose. But with a good method, the right money management of your trading capital, some consistent work and a little old-fashioned discipline, you can start with as little as 0, and compound it all the way to M in less than three years — while drawing out an ever-increasing income every week along the way.

Further, many people “bait” you with an intial book, but once you buy it, then they start to bombard you with more stuff they have to sell, that has the “deluxe” or “really great” information. And once you buy that, they then proceed to offer you the “super-secret” stuff, and so on. Or they “bait” you with the inexpensive book, and then want to sell you thousands of dollars worth of “mentoring” (that turns out to be from people who don’t even do what they’re teaching). Jeff G has done none of that. Since I bought his book originally he has NEVER offered to sell me ANYTHING else extra. All the goods are in the one book.

And as to “mentoring”, for those who are interested, there is a one-time membership fee (of less than 0) to join his on-going service. Anyone can talk to him personally in the members-only room on most trading days. He actually does what he is teaching, does it most every day, and any member who wishes may join him there.

And even then, he has never asked for even one penny for anything else extra.

For those who wish to learn to trade the Forex successfully, I’ve never seen anything better at any price.

Review by David Dube:

I bought the online version of this guy’s book last year, and joined his so-called “Trade Call List”. I paid for this and all it ended up doing for me was make me lose 0 trading currencies.

His strategies are absurd and his suggestions are amateurish at best. Not only will you NOT get rich following what’s written down in this book, but you will most likely lose every penny you spend trying to implement his advice.

The strategies range from being vague and complicated and highly-discretionary, to being outright wrong and having no chance of ever working. The impression I got after more research was that he borrows bits and pieces of tactics from different places, information that has been around for a long time and puts them together as “his” strategy, without ever giving the complete picture. He always leaves out some important information that makes long-term success elusive.

As an example, the strategy involving the GBP/JPY breakout. This doesn’t appear to work in the long term. If you trade it the way he suggests, trading every single breakout every single night, you might make some gains, but you will more likely end up giving back all or most of these gains, especially if you use a 1:1 reward-to-risk ratio.

I say this because this is what happened to me. This is how I lost 0 trading currencies. The only way this might work is if you use a 2:1 reward-risk ratio, using 100 pips as your profit target, and 50 pips as your stoploss, and move your stoploss to breakeven after you gained 50 pips. If the market was willing to give you that on a consistent basis, this strategy might work.

But, even then, you have to be prepared for some severe drawdown months, especially in the summer(low-volume) months from June to August. The months I tried it in were July and August of last year, and I just kept having loss after loss after loss. The few wins I had were not enough to make up for the losses, and I ended up blowing through my entire account.

Another way it might work is if you were somehow able to predict how far your winners would go, and then “let these winners run”, as the saying goes.

Jeff said nothing about the risky summer months in advance. He only mentioned it after the fact, to subscribers of his “trade call” list. He also said nothing about the risk of drawdowns.

I have since read that it is better not to trade breakouts alone, in and of themselves. You should only trade breakouts which have a bias to them, bias meaning a pre-existing trend, and this trend should be of a certain strength. Not all trends are created equal. Not only that, but the channel that you are trading the breakout from has to be a certain size and a certain shape- the smaller and more narrow it is the better.

He says nothing about this in his book. I had to discover it on my own, after losing 0 following his advice.

After being on his list for awhile, I have discovered that he tries out different strategies in a haphazard fashion, all of which are highly untested, and all of which seem to lose money in the long-term. I haven’t made a dime following any of his recommendations.

The only good thing I can say is that I have gotten a few good ideas here and there from his book and list, ideas which were only mildly interesting and only somewhat helpful.

As far as making a million dollars in four years following his advice, it hasn’t happened to me and I doubt it will happen to you. This is what’s known as “hype”. My advice would be to take his book with a huge grain of salt.

At the very least, practice the strategies on a demo account for at least 3 months, before committing real money to them. Be certain that you ended the 3 months in profit. And, even then, be sure not to over-leverage yourself. From my experience I would suggest that you prepare for the worst-case scenario, and make sure that worst-case scenario would only wipe out a quarter(one-fourth) of your account. Even less than a quarter would be preferable.

The worst-case scenario, in my opinion, is losing 4 times in a row, 4 consecutive losses. You should make sure that losing 4 times in a row will only wipe out a quarter(one-fourth) of your total account balance. If you then lose again on the fifth try, reduce your trading size to one-half of what it was. Then try 10 more times. If you lose 10 more times in a row, stop trading for the month. Either try a new strategy or wait until another month and try again.

I think the following items are worth looking at:

The London Rush System.

My advice with this is to trade the first one that breaks out, when more than one is giving a signal. Use a 100-pip profit target and a 50-pip stoploss. Move your stoploss to breakeven when you’ve gained 50 pips. Make sure to use the included MT4 indicators and template. Also, I would stay away from a currency whose spread is more than 15 pips. I’ve been making a consistent 400 pips a month with this so far. MIG is the best MT4 broker to use with this because they carry all of the GBP-crosses, and they let you use their MT4 demo for free.

Forex Deal Butler

This one is really expensive, but it seems to be really good for daytrading. However, I have not yet tested it myself.

Solomon FX

They have tons of strategies which are apparently well-tested.

You can find these items by looking them up on Google or Clickbank.

Review by Jackal:

The author presents four very useful tools for trading stocks, commodities, or currencies. These are: two time-frame momentum indicators, Elliott waves, Fibonacci with price, and Fibonacci with time. You can use these four tools as a discretionary trading system, but the Fibonacci discussion is especially valuable in and of itself. The author has been around 20 years providing trading advice – an indication of some quality.

I appreciate that the author isn’t trying to hard sell his software and newsletter. You can apply the ideas in the book without buying anything more from the author! That is an honest touch that is appreciated.

The style of the text can be somewhat annoying at times; it is a bit repetitive and has too many comments about not-so-good advisors out there somewhere. (No need for the author to point this out unless he wants to name the offenders.) It would have been good if the author told the reader how this book compares to his earlier book “Dynamic Trading”. My take is that the current book introduces the two time-frame momentum and streamlines the other information on Elliott and Fibonacci, but it would have been useful to get this information from the author. Is the previous book superceded in his mind or does it still have value?

All positive reviewers (13 of them at the time of writing) have only reviewed this book and nothing else. Clearly the author has a fan club. Irrespective, I can really recommend this book.

I have written several short reviews on trading books. The best way is to compare the score on the books I’ve read. Many reviews on amazon.com are just glorious 5 star reviews. I use all five categories; sorry but everything isn’t “great”. Books rated 5 are very good. Books rated 4 are good solid books well worth reading. Books rated 3 can be bought by some people who read a lot or have very specific needs. Books rated 1 or 2 I would not recommend buying or reading. Naturally all in my humble opinion.

Review by NYCTrader:

Miner is one of the few trading authors that seem to have some practical, successful trading experience. His book offers a complete trading plan from identifying the high probability trade setups for any market and any time frame right through the exit strategy. High Probability Trading Strategies is not the typical compendium of the old tried and true indicators and Fib retracements but a logical and practical approach to high probability trades with small capital exposure.

His Multiple Time Frame Momentum strategy is brilliant in its simplicity and execution. The Beyond Fib Retracements chapter shows a couple of unique strategies that help you to identify in advance which retracement level should be support or resistance. He also explains in a logical and practical way how to use simple pattern and timing strategies to identify the targets for trend reversal. Miner focuses on exit strategies as much as entry setups for a complete trading plan from entry to exit, just as the title describes.

Especially valuable is the video CD that is included with the book. I’ve had several trading books that included a CD but most of the CD material did not complement the book, let alone appear to be professionally produced. The 2 hour video CD with High Probability Trading Strategies is a valuable complement to the book material as Miner goes through several trade examples bar-by-bar. I think any trader will be very pleased with what they learn from High Probability Trading Strategies.

Review by Mark Twain:

Nothing new or great here. If your just getting started this book will help with the basics. The part about system development is very sparse (essentially just says use ms excel for backtesting). Overall I felt fleeced paying retail for this at B&N.

Review by Richard Reed Jr.:

This book is supposed to be for beginners in forex. But it is very poorly done. It mostly deals with fundamental analysis, but in a very unorganized and unstraight forward fashion. He shows bar charts and candlestick charts without bothering to explain how to read them. He even starts talking about pips without explaining what a pip is. Then he just gives the standard overview of technical analysis. Nothing truly in depth. He mentions using a practice account, but kind of pooh-poohs it. Then he challenges people to open ,000 and ,000 accounts and make 10-15 pip trades. This is not good in my opinion.

A person should open a practice account an stick with it until they can make money consistantly. Then they should open a small account (,000-,000) and trade partial lots till they get the hang of it. And unless they like scalping (10-15 pip trades), they should aim for 100 pip trades. The only way I could ever make only 10 pips is to risk 30.

Read Currency Trading for Dummies. It is a very well thought out, organized, and certainly more informative than the Forex Trading Course. The dummies book also has suggested reading at the end for further study. The Forex Trading course has a few books mentioned throughout, but considering how bad The Forex Trading Course is put together, I wouldn’t trust the books listed outright.

Review by Matthew Paolini:

As a novice investor, I wanted a book that covered all of the basics in detail. This book was exactly that! I wasn’t looking for a book that was loaded with ratios and technical data; This book covered everything from determing your risk factor by analyzing your current financial situation, approach, analyzing markets and companies. The basic fundamentals were discussed in detail and also included the important technical aspects of investing with very basic and straight forward examples that were very easy to understand.

I would and have recommended this book to anyone who is looking to invest in the stock market. I liked the book so much I’m going to read it over again.

I would also recommend that seasoned investors read this book just to reinforce the basics of investing that they might have forgotten over the years. Review of the basics is very important in any industry.

Review by DJ:

Solid, solid, solid. This book is very resourceful. I have never picked up one of these “Dummies” books before but got this one as a gift. It covers enough about investing in stocks and the securities industry in general so as to ease the befuddled neophyte. For the rudiments, start here. Then afterwards, you can move on to that other junk promising you the secrets of Wall Street.

Review by K. Roberts:

Having been a part-time real estate investor myself, I thoroughly enjoyed reading Steven Fisher’s book. Given the large volume of unhelpful books on real estate investing, I am pleased to see so much valuable information in a single book. If you have been, or plan to get, involved in real estate investing, this is the single best book to use.

Fisher covers all of the strategies that make for successful investing: starting with little money, “flipping,” mortgages, foreclosures, and REO’s. Unlike other books, Fisher also explains the secrets to finding the right properties. Given that property identification is the most common mistake that would-be real estate investors make, this chapter of the book is especially useful.

The book also includes some effective plans for tax advantages and exit strategies. If you want to own and make money from real estate, get this book!

Review by L. Salazar:

Whenever I have thought about investing in real estate, I always dismissed it as a “no, that’s not for me.” I had seen the various folks on TV saying `buy my papers so you can learn the tricks to purchasing homes for pennies on the dollar with no money down’ but I never felt like I could spend the money on their product. Then, after searching through this book by way of the Search Inside and reading a page here and there, I knew I had to purchase it. The information it contained was worth much more than the cost I paid to purchase it.

The book spends a lot of time on understanding the various financial nuances of purchasing real estate. It has various worksheets throughout it to help even the most mathematically challenged person (like me) understand some very complex concepts like interest, mortgage payments, returns on investment and even landlord/tenant agreements. Further, the book offers a basic business plan and guidelines for setting up your own operation.

The book is full of information and offers an accessible look at the world of real estate investment. It acknowledges that the complexity of real estate while keeping the text easy-to-understand and interesting. The step-by-step approach the book takes makes it an excellent resource for an investment beginner like me. I’m sure that a more seasoned investor would also find useful information in the book as well. I’m confident the small investment price I paid for the book will multiply exponentially as I put the information into action and start my own investment program.

Review by Waseem:

I was trying to decide whether to buy this book or the “cash flow” one, since my library had the cash flow book I purchased this one. However, the cash flow book turned out to be superior and much of this book simply rehashes it but with less detail. Basically, the cash flow book as a section on valuation then details on the 37 calculations he uses; this book has the 37 calculations again, but in less detail, then has a section on example valuations.

Overall, this book is okay, but stand-alone the cash flow book is superior.

Review by Jorge L. Rivera:

“You should recognize that investing is a program for the long-term building of wealth, and it has little or nothing to do with speculation.”

The above quote, directly from the book, instantly resonated with me. Frank Gallinelli wants to help you become the (unassuming) ‘millionaire next door.’ Not with get-rich-quick, info-mercial jargon, but by prodiving the reader with real, wealth-building knowledge. The book spills over with pearls of analytical wisdom specific to real estate investing. The current market is ripe with opportunity and this book does a great job of simply explaining complex calculations that should be part of every real estate investor’s evaluation process. All the best to you.

Review by john zack:

I bought the top 3 r.e. books (Investing in Real Estate, Real Estate Riches, Unofficial Guide). I could have bought just this one. It covers EVERYTHING the other books go over, AND it gives you FAR MORE DETAILS and far better explanations. I urge you to compare the contents–buying foreclosures, buying bargains, creative improvements, financing, paying less taxes, predicting appreciation, valuing properties. You will see what I mean. While Unofficial clearly beats Riches, it still gives you wrong or glossed over info much of the time. Unofficial is especially weak on financing, buying bargains, foreclosures, and valuation, though it’s pretty good on management. I can offer this critique because Investing In Real Estate set the standard from which I could make an intelligent comparison. All of those readers who rated UNOFFICIAL with five stars could not have known much about real estate. They surely believed that they learned more than they actually did. Over and over, I read similar topics in IRE and Unofficial, and each time I developed my understanding from IRE and quickly spotted the glibness of Unofficial. Don’t take my word for it. Go into a bookstore and compare for yourself. As to Real Estate Riches, DON”T BOTHER–unless you’re a rich dad groupie.

Review by Cassidy Uranne:

This is the 5th r.e. book on investing I’ve read. But it was the first one to recognize that we’re no longer living in the 1980s or even the early 90s. Sorry folks you can’t buy foreclosures at pennies on the dollar. You can’t find “motivated” sellers who will let you steal their properties for 60 cents on the dollar. Non-qual assumptions? Good luck trying to find one that’s workable. Cash back at closing–dream on! Yes the gurus will lead you to believe that anyone can use these and many other outdated and super risky “creative” techniques. I know from experience because I wasted much money, time and effort chasing after their promised rainbows. Luckily, this book offered welcome relief. Factual, up-to-date, and very specific about the real opportunities (and pitfalls) in foreclosures, high leverage, property improvements, and tenant management. Do yourself a favor. Before you run amok with illusive hopes, read this “state-of-the art” guide. Some years ago I read a great book (Million Dollar Habits) by Robert Ringer. The first chapter was called “The Reality Principle.” Well, Investing In Real Estate stands as one good dose of reality. This is the most real-world introduction I’ve found.

Review by David A. Taylor:

I recently decided to look into investing in residential real estate, but I didn’t know enough about the financial risks and rewards to determine whether this would make sense for me. So I decided to give myself a quick education by reading the best books I could find on the subject. I had to wade through a lot of get-rich-quick-without-any-money books to find the good ones, but I wound up with ten books that looked like they had good, solid information for would-be investors. After working my way through all ten books, I can tell you without reservation that Gallinelli’s book is head and shoulders above the rest. There was something to be learned from each them, of course, but the others tended to get a bit fuzzy about the financial details, often substituting simplistic rules of thumb for real analysis or doing a hand wave just about the time I needed hard information. Worse, there was a disturbing lack of consistency among the books where they did provide financial details, and there was no obvious way to sort out which book had the right take on a particular calculation or financial ratio. And it seems to me that, important as general principles may be, if the financials don’t work then nothing else matters very much.Fortunately, Gallinelli took me right down into the nitty gritty stuff and showed me, step by step, just how the whole business works. He was also the only author to even consider the possibility that I, as a modern-day investor, might have the ability to run these calculations in a spreadsheet, and he provides clear instructions for entering the required formulas in Excel. Not that you have to be an Excel user to benefit from this book; the financial analyses he describes are absolutely essential to knowing what you’re getting into, and you need to run them whether you do it on a calculator, use packaged financial analysis software, or build your own spreadshet. But for those who do know how to use Excel, it’s a tremendous benefit to have the step-by-step instructions right there.After reading this book, I now understand how to figure out the total return on a residential property from all it’s sources, including operating income, depreciation writeoffs, equity accrual, appreciation, and capital gains benefits, and I know how to calculate the effect of leverage on each of these sources. Better still, based on the formulas Gallinelli provides, I can quickly see how these sources play off against each other to predict my total return on investment in any particular scenario. More than any other book I read, this one prepared me to analyze a candidate property and evaluate its potential return, allowing me to determine whether it’s a good investment and, if so, under what price and financing conditions. Based on what I’ve learned, I’m now shopping for apartment buildings to make my first acquisition.Of the ten books I purchased, nine now sit on my shelf within easy reach. But this one sits right next to me and will always be close at hand. If you are thinking about investing in real estate, buy this book and read it before you do anything else. It’s that good.

Review by Rosalind Resnick:

Before you invest into income-producing real estate, be sure to pick up a copy of Frank Gallinelli’s excellent book, What Every Real Estate Investor Needs to Know About Cash Flow…And 36 Other Key Financial Measures: Guidelines, Formulas, and Rules of Thumb for Making Money in Real Estate. While the title may sound somewhat forbidding, the book is so well-written and accessible that even novice investors who wouldn’t know a cap rate from a rate of return can quickly and easily master key concepts such as present value, gross scheduled income and discounted cash flow. Better yet, Gallinelli offers free spreadsheets that you can download from his site that do the numbers-crunching for you. I like to think that I’m a pretty savvy investor, but, thanks to Frank and his amazing formulas, I narrowly avoided overpaying for a five-story office building in the Chelsea section of Manhattan. While there’s no guarantee that the seller will accept my lower offer, I feel confident that, if I do get the deal, I will be paying a fair price now that Frank has taught me how to do the math.

Review by W. Landers:

The book was in new condition. There were no creased pages, highlights or notes written in the book and the CD was attached and had new been opened. This was an example of very good condition.

Review by T. collins:

Book came in fantastic condition and came within a week. I needed the book for a class and paid .97, love it!!

Review by W Boudville:

For serious investors pondering whether to indulge in real estate, this book provides an indepth look at the factors you should be aware of. It explains the main types of real estate – residential, commercial, industrial. Each has its quirks, with its own pricing, investment history and tax considerations.

For example, there is consideration of foreclosed homes. Giving an analysis of the costs of buying this REO from a bank and then fixing it up for resale. The different types of acquisition fees you are likely to encounter are given. Along related lines, there is a study of a personal residence. Should you rent or own this? The conclusions can and will vary with market conditions and geography. Unlike what a realtor might tell you, the book has no automatic bias towards owning a home.

On a larger scale, the book tells how to evaluate many types of property for income streams. Along with possible financial leverages schemes, to bootstrap your portfolio.

Review by Sergei:

This book was required for my RE class at school, so I had to buy it. But unlike many college text books, which will sit on the shelf unused 90% of the time, this one actually proved to be very, very useful. It covers financial and some legal aspects of all major categories of real estate. It helps to be familiar with DCF, TVM and other basic accounting concepts before starting this book.

Review by J. E. Rexroth:

For clarity of style and reasonableness of approach to its subject, David Crook’s THE WALL STREET JOURNAL COMPLETE REAL-ESTATE INVESTING GUIDEBOOK may not have a peer in the realm of investing advice.

Crook shines an antiseptic light on the shadowy “get rich quick” hucksterism that has plagued the world of real estate investing as a byproduct of a long runup in prices, a phenomenon that has also accompanied strong bull markets in US stocks intermittently for two centuries. And he does much more: he introduces, in a genial and accessible style, the complex details of buying real property for profit, as opposed to simply watching your own home’s price rise and thinking of that as “investing.”

His discussion of taxes, a particularly convoluted and arcane – yet crucial – area, is logical and well organized.

The author makes no secret of the fact that real estate investing, like all other kinds, is not sorcery and requires careful research, hard work, thorough preparation, and, most important of all, close attention to detail. Given a realistic understanding of the challenge, one can partner with this book as an inexpensive but wise adviser. It won’t get you rich quick on no money down, but it will help you to make cautious and fact based decisions that are crucial to successful investing in any realm.

As a hedge fund manager, I am exposed to written financial advice of one sort or another virtually every minute of the day. I haven’t seen writing that is more scrupulously researched and thoughtful (yet also personable) than that in THE WALL STREET JOURNAL COMPLETE REAL-ESTATE INVESTING GUIDEBOOK. I heartily recommend it.

Review by Elle Michion:

There are no cutely named house-flipping schemes here. There are no touchy-feely chapters to help you find the “courage to be rich.” But for smart advice and an inspiring overview of the business of real-estate investing, this book is a must-read. Crook, editor of The Wall Street Journal Sunday, leads aspiring investors through locating, vetting and securing seed money for properties small and large. He also gives tips for managing your investment once you’ve made it. Surprisingly this potentially dry topic is anything but, thanks to lively writing, stories from real-life investors and witty one-liners. (On borrowing down-payment money from family members: “An ‘Uncle Al’ interest rate inevitably comes with Uncle Al’s interest in your business.”) If nothing else, read it to find out why your home does NOT count as an investment property.

Review by E. Lundberg:

This is a fantastic book about investing in mobile home parks. The authors have decades of experience buying, selling, operating, and turning around mobile home parks. They have owned over 50 mobile home parks. This book is based on real world experience that the authors used to make a lot of money from mobile home park real estate investing. The advice the authors give readers in this book will be extremely helpful to anyone interested in investing in mobile home parks, whether you are an expert or a novice investor.

Review by Deanna Stephens:

This is one of the Best books on Mobile Home Park Investments I have ever read. The 10/20 Investment System is a must read for anyone interested in the Mobile Home Park Industry. With the information provided in this one book, you can not lose.

Review by A. Freeman:

Investments is a well written text book that has been updated frequently. It is refreshing to see examples in the book from 2007 that touch upon what is behind the failing of the lending institutions. It is easy to read and makes learning some rather complicated investment subjects easier. I would like to see more thorough examples on how to work through the various problems (either by calculator or by hand) that are assigned to the student. There is however links to the book’s website that allows the student to use some excel spreadsheets to work through the books assigned problems. Overall it is an informative book that delivers on making the reader more intelligent on the finance subject.

Review by D. N. Ivanoff:

This book remains a classic from my years at BU. However, later on i learned that you need to put the theory of it with real books from traders and hedge fund managers like Toby Crabel and Linda Raschke. They both are phenomenal personalities and their books are always out of print. You may be able still to find something on Ebay or Amazon. Good luck, this is a good book.

Review by Chris J. Hudson:

This is a good book. Tobias’ main point is that you need to start saving 10% of your income, and he also gives advice on ways to cut costs and where you can put your money. I’ve read a lot of investing books and some of what he said was not new to me. However, I did learn some new things. Some parts of the book that I found helpful were Chapter 5 which explains Treasuries (bills, notes, and bonds). I also liked his advice in Chapter 10 about what to do if you fall into a large sum of money (Lottery or inheritance). There are also some useful resources in the appendices in the back of the book such as contact info for discount brokers, mutual funds, a compound interest chart, and finally a quick summary of his main point (save 10% of your income). I gave the book four stars instead of five because I don’t agree with ALL of his advice, for example I do not believe in purchasing rental properties (too big of a headache), and I think that home equity loans are a BAD idea. Other than that, a great book.

Review by Tim Beazley:

The book contains a wealth (hah!) of simple, sensible, wealth-building strategies. Perhaps even more important, it contains a wealth of simple, sensible, loss-avoidance strategies. And all of it is presented in an easy-to-read style, with humorous, self-deprecating stories that both enlighten and enliven. This is a seriously witty book!

Four points in particular that impressed me:

Tobias lists several kinds of investments that are so complex and have such a poor performance record that the only thing that most people need to know about them is that they should be avoided. That is very useful advice! Instead of wasting your time trying to become an expert in areas where even the experts lose money, you can spend your time more profitably in some other area.

Tobias examines the impact that taxes have on wealth-accumulation and proposes some simple strategies to avoid or minimize that impact, including IRA and 401(k) plans. That is very useful advice. Paying less taxes = accumulating more wealth.

Tobias discusses the effect that interest charges have and proposes some very simple strategies to avoid those too. That is also very useful advice. Paying less interest = accumulating more wealth.

Finally, regarding specific investments, Tobias provides some basic, common-sense strategies here, too. Tobias addresses some basic asset allocation issues, pointing out that some investments are very risky on a short-term basis, and it doesn’t make sense to put short-term money in a risky investment. Tobias lists a few places where your short-term money will be safe. As for your long-term money, Tobias makes the common sense observation that investment returns cannot be predicted from year to year, but investment costs can be predicted. That being the case, it makes sense to choose low-cost investments, and Tobias lists some recommendations. That is also very good advice. Paying lower investment fees = accumulating more wealth.

In short it is possible — and now, more than ever, it’s necessary! — for people to improve their financial position. This book helps show the average person how to accomplish that.

Review by James R. Brooman:

I use this book for my Investments course at Dartmouth, and I find it to be a very useful companion text. It is extremely comprehensive, with sections on pretty much everything you would want within this sphere. it is also relatively readable, with a logical layout and good explanations for most of the main points.

The downsides is that it is very expensive, although no ore so that other similar texts. Overall, it comes very recommended for those who wish to develop a strong understanding of capital markets and investing.

Review by Mark P. Shelson:

Overall, I am not impressed by this textbook. First, I would like to say that I am a college junior at a good Big Ten university with a high interest in Finance hoping to pursue a career in Investment Banking. I used this book in my 2nd Finance class, and I found it to be of minimal usefulness. The authors go very into depth even in relatively simple concepts, making the reading laborious and uninteresting. If you enjoy knowing how to derive simple formulas it may be useful for you, but for someone who isn’t interested in academia, it is simply not that informational. The examples are tedious and, frankly, not helpful. There was whole paragraphs and pages in which I stopped and said “wow, this didn’t teach me a thing.” Chapters are very long and reading a whole one in a sitting will be a true test of your patience. I have seen and read other finance books that managed to make the subject much more interesting and much simpler. When a reading from this book was assigned I truly dreaded it, because I knew that it wouldn’t facilitate my understanding of the concepts and was likely just to make me more confused.

Review by L. Masonson:

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.

Review by Scott Allen:

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 (>0M 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. ”

Review by Ken Winters:

Kelly has put together an excellent book here. In 7 chapters, he covers a breadth of knowledge that every serious or potential stock investor should be familiar with. I learned more in the week I spent reading this book, than in 6 months of listening to tips from co-workers, on-line discussions, and self-directed research.In chapter 1, he defines all the terminology you’ll encounter in stocks. In a very readable manner, he quickly covers EPS, P/E, PSR, ROE, Beta, and numerous other concepts that are useful.In chapter 2, he describes the methods of 6 all-time top investors (including: Buffett, Lynch, O’Neil, etc.) comparing and contrasting there methods.In chapter 3, he explores what some historic evaluations of stock growth show. This is great stuff, especially during a down market.In chapter 4, he explains in detail the Dow Dividend Strategy. Anyone can understand this and with only 30 minutes of work per year have a relatively successful investment plan.In chapter 5, he covers the process of choosing a broker and placing orders.In chapter 6, he covers some of the many methods you can use to research stocks. With a ton of web-sites, newsletters, and books, Kelly’s advice can save you countless hours wasting time looking for information from the wrong source.In chapter 7, he explains his own strategy. With easy to understand worksheets and using the knowledge gained earlier in the book, he guides you into an investment plan that will suit you.Not only is this book full of good information, but it’s written in a very readable manner. I highly recommend reading this book BEFORE making another investment decision. Even if you have a broker that you like, you owe it to yourself to educate yourself with this book.

Review by Nicholas E. Johansen:

I presume the majority of the glowing reviews on this site are from novice investors. Afterall, that’s what this book is aimed towards. While it contains many useful bits of information, some of the things mentioned by Mr. Kelly would most certainly be detrimental to a new investor. Allow me to explain.

First, the good. Kelly does an excellent job of defining various stock terms — everything from P/E ratio to beta — and doing it in simple language. As a side note, his writing style and prose is significantly better than that featured in most investing books, since he was an English major. Additionally, Kelly provides excellent research resources, including ones that I had not found in my extensive internet searches. More information and more sources is never a bad thing, and Kelly provides the latter in spades. Finally, his introduction to such investment greats as Warren Buffett and Peter Lynch — while rudimentary — are very helpful for the new investor. I find it particularly good that he utilizes Lynch extensively in his own strategy, because Lynch is (arguably) the best fund manager that has ever lived.

Unfortunately, Mr. Kelly adds a bit of his own intuition and thoughts into the strategies he presents in this book. First and foremost, his notion that investing in the UltraDow mutual fund is sound is beyond ludicrous. Not only is this an ineffective use of money, but its volatility and risk far outweighs its gains. Secondly, Kelly seems to be a bit full of himself, calling Wall Street professionals “gurus” who know as much about the stock market as YOU do. In the preface, he states that using this book “always works” — a pretty bold statement from someone who is A) not a business major and B) not really even a market professional. Only later, towards the very end of the book, does Kelly admit that he has “limited experience” in the area of stocks. Er…what was this about “this book always works”? Kelly’s strategy is, in essence, based upon filling out a worksheet and setting arbitrary numbers as “good” or “bad” — i.e. when X ratio outweighs Y number, this stock is a good buy. Get enough of these “good buy” signs together, and you have a stock to buy. Not only does this show his lack of knowledge on the subject, but worse, he makes these statements as if they are guaranteed to make you money. Interestingly enough, Kelly almost always talks about buying shares in the HUNDREDS. That’s right, as in 200 shares of Microsoft. Almost anyone who knows something about the market will tell you that investing ,000 or even ,000 will yield underwhelming results. The # of shares Kelly is dealing with proves to show that he is not only small time (re: has not made a lot of money off trading) but probably hasn’t been at investing for very long. Remember, the market has returned an average of about 9%. Even if you’re the worst stock picker ever, by probability, you will earn 9% on your picks over your lifetime. The question really isn’t whether you’ll make money, but how much will you make? If you follow Kelly’s advice, prepare to be underwhelmed.

By far the worst part of the book is Kelly’s complete and utter dismissal that short term trading works. Essentially, the strategies outlined in his book — which you shouldn’t use, if you value your cash very much — are all for very long term investing. While that’s a valid strategy, somepeople are exceptionally successful owning a stock for three months, six months or a year. You don’t have to be in a stock for three years to see wild gains, and you can perform sound technical analysis on a stock you plan to hold for three months. Kelly makes it seem as if short term investing is not only impossible, but not profitable. For some, though — even those who do it part time — it may prove more effective.

As a glossary of investing terms, list of investing resources and a quick overview of how the market works, “The Neatest Little Guide…” is a winner. Unfortunately, Kelly’s strategies are inherently flawed, and while they may appear to be solid to a new investor, they should not be trusted. Kelly’s view is a narrow-minded one and a rudimentary one at best. In some instances, this reads like a “Fisher Price” version of meatier, more substantial investment books. While it is worth the — for the definitions and list of investment companies, research sites, newspapers, magazines et al — you should take Mr. Kelly’s strategies with a grain of salt.

A better book for the novice investor — which isn’t bogged down too much with technical terms/complex numbers — is Jack D. Schwager’s “Stock Market Wizards” book of interviews with market professionals (fund managers, independent traders etc.). This should prove to give you an overview of many different strategies and things to look for. It was the first thing I read before I started buying stocks, and it was a tremendous resource.

Review by :

Wow…this book was (and still is) such a great help to me.I really do not like money-talk. But let’s face it: in our world, you’d better be somewhat savvy in money management if you want to be able to retire on your own terms.I do not find all the “Dummies” series books useful. However, this one by Tyson was indeed a gem. It took me a week to read through it, and in that time I was educated on all the different kinds of investments, debt reduction, and stock evaluation.If you have debts, you need this book. If you want to be financially secure on only a modest salary, Tyson is full of all sorts of common-sense strategy. Like I said, I do not particularily enjoy money talk, but this book presents the essentials in a surprisingly interesting-to-read format. Even now that I have read it, I know that I’ll still go back and refer to it for many years to come.If you are thinking of investing, invest in this book first. It’s a wealth of investing info. A tremendous bargain!(Also very helpful is Tyson’s book on Mutual Funds, also in the “Dummies” series)

Review by :

I bought this book after reading Mr Tysons first book on Personal Finance. This investing segment in the dummies serial takes the guesswork out of how to start investing. Like Personal Finance for dummies, this edition is also a easy read. I also strongly recommend “More Wealth without Risk” and “Financial Self Defense” for even more strategies on powerful investing. Read and grow rich!

Review by Giuseppe A. Paleologo:

This textbook introduces the basics of asset pricing theory and portfolio optimization at a level suitable to advanced undergraduates. The mathematics seems to be just right for practitioners: no martingales, no girsanov theorem, but a complete treatment of binomial lattices and a semi-quantitative introduction to diffusion processes and to stochastic calculus. Problems are very well chosen. The organization of the text is standard, except for the last two chapters, related to optimal growth portfolio and to real options. Final remark: the book is excellent for self-study. I learnt the subject from Prof. Luenberger himself, and he was repeating each single word from the book, saying (as a disclaimer) that “it’s not me copying the book… it’s the book that copies what I said. After all, I wrote it.” Needless to say, the class was excellent.

Review by jim:

This book serves very good introduction to mathematical finance. Particularly,

I enjoyed the discussion of bonds immunization, mean-variance theory, CAPM, APT.

It’s most suitable for senior undergraduates or any junior graduate students.

But it doesn’t deserve 5 star for the following reasons:

1) Most of the theories discussed so far in the book are TOO idealized and

over simplified. Financial data is dynamic and massive. In model quantitative/computational finance, the most important thing is to understand what the data says rather than what one thinks the data structure might be. With the book, one probably can only do some macroeconomic/very coarse analysis. Author should incorporate more data analysis evidence together with proposed theories.

2) The proof of ito’s lemma is wrong(i.e. “Deltaz^2 –> deterministic as Deltat –> 0″). It’s surprising since most books make the same mistake. It is the law of the large number contributes to the equality!(i.e. integration sense). The misunderstanding of the proof might lead to the misunderstanding of the hedging process.

3) In the commodity option pricing session, author demonstrated the use of futher market to price the option. This should be discussed further (i.e. black’s model).

4) The volatility pumping session should be further researched. The explanation is

not satisfactory.

Review by Joshua W. Packwood:

As an investment banking analyst and proprietary investor for Wall Street’s two most prestigious firms, I would like to attest to the firm economic underpinnings of this book. It is refreshing to see a chapter devoted to criticisms of the efficient market hypothesis, though a further discussion of behavioral finance would be greatly welcomed. This book is concise and provides a good balance of theory and practical knowledge.

Review by M. Speedling:

This review has 3 purposes:

1. This is a great book for learning about investments. I read somewhere that this book teaches you about investments “without the math”. There is math in this book. If you want a “math lite” reference, try one of the Dummies, Idiots or Totally Confused series.

2. This book is on the syllabus for a professional exam (CAS); however, the CAS syllabus specifies a 2008 printing. This book shows a 2006 printing, but when it arrived, it was the 2008 version of the 7th edition. I don’t know if there was a 2006 printing or if Amazon just has it wrong.

3. Finally, this review is to offset the two bozos who left reviews before me. THIS IS NOT HOW YOU CONTACT CUSTOMER SERVICE! This is a forum to let other interested parties know what you thought of the text. If you can’t figure that out, you probably won’t be able to understand what the text is talking about anyway. (See note 1.)

Review by L. Masonson:

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.

Review by Scott Allen:

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 (>0M 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. ”

Review by Ken Winters:

Kelly has put together an excellent book here. In 7 chapters, he covers a breadth of knowledge that every serious or potential stock investor should be familiar with. I learned more in the week I spent reading this book, than in 6 months of listening to tips from co-workers, on-line discussions, and self-directed research.In chapter 1, he defines all the terminology you’ll encounter in stocks. In a very readable manner, he quickly covers EPS, P/E, PSR, ROE, Beta, and numerous other concepts that are useful.In chapter 2, he describes the methods of 6 all-time top investors (including: Buffett, Lynch, O’Neil, etc.) comparing and contrasting there methods.In chapter 3, he explores what some historic evaluations of stock growth show. This is great stuff, especially during a down market.In chapter 4, he explains in detail the Dow Dividend Strategy. Anyone can understand this and with only 30 minutes of work per year have a relatively successful investment plan.In chapter 5, he covers the process of choosing a broker and placing orders.In chapter 6, he covers some of the many methods you can use to research stocks. With a ton of web-sites, newsletters, and books, Kelly’s advice can save you countless hours wasting time looking for information from the wrong source.In chapter 7, he explains his own strategy. With easy to understand worksheets and using the knowledge gained earlier in the book, he guides you into an investment plan that will suit you.Not only is this book full of good information, but it’s written in a very readable manner. I highly recommend reading this book BEFORE making another investment decision. Even if you have a broker that you like, you owe it to yourself to educate yourself with this book.

Review by Nicholas E. Johansen:

I presume the majority of the glowing reviews on this site are from novice investors. Afterall, that’s what this book is aimed towards. While it contains many useful bits of information, some of the things mentioned by Mr. Kelly would most certainly be detrimental to a new investor. Allow me to explain.

First, the good. Kelly does an excellent job of defining various stock terms — everything from P/E ratio to beta — and doing it in simple language. As a side note, his writing style and prose is significantly better than that featured in most investing books, since he was an English major. Additionally, Kelly provides excellent research resources, including ones that I had not found in my extensive internet searches. More information and more sources is never a bad thing, and Kelly provides the latter in spades. Finally, his introduction to such investment greats as Warren Buffett and Peter Lynch — while rudimentary — are very helpful for the new investor. I find it particularly good that he utilizes Lynch extensively in his own strategy, because Lynch is (arguably) the best fund manager that has ever lived.

Unfortunately, Mr. Kelly adds a bit of his own intuition and thoughts into the strategies he presents in this book. First and foremost, his notion that investing in the UltraDow mutual fund is sound is beyond ludicrous. Not only is this an ineffective use of money, but its volatility and risk far outweighs its gains. Secondly, Kelly seems to be a bit full of himself, calling Wall Street professionals “gurus” who know as much about the stock market as YOU do. In the preface, he states that using this book “always works” — a pretty bold statement from someone who is A) not a business major and B) not really even a market professional. Only later, towards the very end of the book, does Kelly admit that he has “limited experience” in the area of stocks. Er…what was this about “this book always works”? Kelly’s strategy is, in essence, based upon filling out a worksheet and setting arbitrary numbers as “good” or “bad” — i.e. when X ratio outweighs Y number, this stock is a good buy. Get enough of these “good buy” signs together, and you have a stock to buy. Not only does this show his lack of knowledge on the subject, but worse, he makes these statements as if they are guaranteed to make you money. Interestingly enough, Kelly almost always talks about buying shares in the HUNDREDS. That’s right, as in 200 shares of Microsoft. Almost anyone who knows something about the market will tell you that investing ,000 or even ,000 will yield underwhelming results. The # of shares Kelly is dealing with proves to show that he is not only small time (re: has not made a lot of money off trading) but probably hasn’t been at investing for very long. Remember, the market has returned an average of about 9%. Even if you’re the worst stock picker ever, by probability, you will earn 9% on your picks over your lifetime. The question really isn’t whether you’ll make money, but how much will you make? If you follow Kelly’s advice, prepare to be underwhelmed.

By far the worst part of the book is Kelly’s complete and utter dismissal that short term trading works. Essentially, the strategies outlined in his book — which you shouldn’t use, if you value your cash very much — are all for very long term investing. While that’s a valid strategy, somepeople are exceptionally successful owning a stock for three months, six months or a year. You don’t have to be in a stock for three years to see wild gains, and you can perform sound technical analysis on a stock you plan to hold for three months. Kelly makes it seem as if short term investing is not only impossible, but not profitable. For some, though — even those who do it part time — it may prove more effective.

As a glossary of investing terms, list of investing resources and a quick overview of how the market works, “The Neatest Little Guide…” is a winner. Unfortunately, Kelly’s strategies are inherently flawed, and while they may appear to be solid to a new investor, they should not be trusted. Kelly’s view is a narrow-minded one and a rudimentary one at best. In some instances, this reads like a “Fisher Price” version of meatier, more substantial investment books. While it is worth the — for the definitions and list of investment companies, research sites, newspapers, magazines et al — you should take Mr. Kelly’s strategies with a grain of salt.

A better book for the novice investor — which isn’t bogged down too much with technical terms/complex numbers — is Jack D. Schwager’s “Stock Market Wizards” book of interviews with market professionals (fund managers, independent traders etc.). This should prove to give you an overview of many different strategies and things to look for. It was the first thing I read before I started buying stocks, and it was a tremendous resource.

Review by :

Wow…this book was (and still is) such a great help to me.I really do not like money-talk. But let’s face it: in our world, you’d better be somewhat savvy in money management if you want to be able to retire on your own terms.I do not find all the “Dummies” series books useful. However, this one by Tyson was indeed a gem. It took me a week to read through it, and in that time I was educated on all the different kinds of investments, debt reduction, and stock evaluation.If you have debts, you need this book. If you want to be financially secure on only a modest salary, Tyson is full of all sorts of common-sense strategy. Like I said, I do not particularily enjoy money talk, but this book presents the essentials in a surprisingly interesting-to-read format. Even now that I have read it, I know that I’ll still go back and refer to it for many years to come.If you are thinking of investing, invest in this book first. It’s a wealth of investing info. A tremendous bargain!(Also very helpful is Tyson’s book on Mutual Funds, also in the “Dummies” series)

Review by :

I bought this book after reading Mr Tysons first book on Personal Finance. This investing segment in the dummies serial takes the guesswork out of how to start investing. Like Personal Finance for dummies, this edition is also a easy read. I also strongly recommend “More Wealth without Risk” and “Financial Self Defense” for even more strategies on powerful investing. Read and grow rich!

Review by P. Chu:

I read this book quickly shortly after I got it, and I was blown away. Many reviewers pick this as a book for “beginners”, but I don’t agree with that.

My background: I have read (and own) dozens of investment books. I have subscribed to many newsletters (including Morningstar’s, which is decent but unnecessary after you read this book). I have owned many individual stocks and for the last 2-3 years before I got the Boglehead religion I was lucky and beat the market averages buying individual stocks (although for most of my life I’ve lagged far below the market). I opened my first brokerage account in 1990, and I’ve been self-directed ever since. I’ve had 400%+ years as well as -70% years. I’ve even been in the top 100 virtual mutual funds on Marketocracy (out of 70,000), and I’ve written custom software to analyze the daily performance of the top 1500 stocks.

Having said all that, I wish that I had followed the investment principles laid out in this book from the very beginning. I would have a lot more money than I do now.

Before reading this book, I already had all my retirement money in Vanguard index funds. So you would think, end of story, you’re already a believer. NOT SO! While I started out using the Target Retirement funds, which allocates your money properly for your age, I slowly deviated from those funds into the higher risk emerging markets index fund, because that fund was doing so well. It’s easy to read this book and say, “oh that makes sense”, stay the course for a year or so, then get seduced by the hot performance of a particular sector and lose your way. For these principles to work, you really have to apply them relentlessly, and I think that it takes either someone with an iron discipline or someone who’s acquired “experience” in the market (i.e., losses that hurt) to recognize the wisdom of this book and follow it.

Years ago, I read John Bogle’s book on index funds, and I agreed with the logic of what he was saying. Then I proceeded to ignore it for most of my investing career before I really “got” what he was saying.

Perhaps, if you’re a beginner, you’ll follow this book and avoid the pain and losses. The principles are easy enough to understand. In fact, if you want to save the price of the book, simply go to Vanguard, pick your retirement date, buy a “Target Retirement” fund for that date, and you’re done. That’s pretty much what the book tells you to do.

BUT, you’ll need the book (and, in my opinion, the “experience” of following the 99% of the misleading advice out there) to really understand why this is the real way to go. You almost have to read this book every year as an antidote to the temptation that assaults you nonstop from Wall Street and CNBC and all the financial magazines.

If you’re a beginning investor, this is it. This book is the mother lode. You can stop looking. Unfortunately, it may take you 10-15 years and many large losses to realize this (as I had to do), but take it from me (some random anonymous person on the Internet), this is the REAL DEAL.

Knowing what I do now, if at age 21 I’d had my choice of ,000,000 or the wisdom to understand the concepts in this book, I’d choose wisdom. Here are two examples from this book to illustrate why. On page 13 of this book Jack Bogle relates a letter that he received in early 2005 about someone who’s been investing with Vanguard for about 30 years, and whose portfolio had grown to over .25 million, but he’d never made more than ,000 in any year in his life. Although they knew nothing about his specific investing history (maybe he just got lucky? we don’t know), this figure is attainable investing 0 a month in a Vanguard stock index fund over 30 years.

On the other hand, according to an NBC News report related on page 180 of the book, more than 70 percent of lottery winners exhaust their fortunes within 3 years.

So, clearly, doing the right thing is going to have a huge impact on how much money you end up with.

Even the most experienced investors will benefit from this book (and in fact, may benefit more) by simplifying their portfolio. The chapters on asset allocation and taxes are extremely insightful, even to non-beginners.

After reading this book, I immediately re-balanced my Vanguard portfolio to better fit my age group, and to lower the risk that I was taking.

Even as an “experienced” investor already in Vanguard index funds, I learned something actionable that I was immediately able to apply. If you consider yourself an “experienced” investor, you will also benefit from reading this book. I highly recommend it. My ENTIRE retirement portfolio is in Vanguard index funds, allocated in the recommended amounts, so this is not an idle recommendation.

Read it and live it.

(Just so you know, I have never visited the Boglehead web site, and I have never corresponded with any of the authors. I’m just an uninterested third party who’s a big fan of this book).

Review by Professor Donald Mitchell:

Most people don’t have time to read dozens of books about personal finance and investing. Even if people did have that much time, they would seldom be able to integrate what different authors had to say into a consistent approach.

For several decades, people have been asking me what one book they could read to be more successful with their personal finances. Until now, I’ve been reluctant to pick any one book. Instead, I would usually provide a list of 6-8.

Having read The Bogleheads’ Guide to Investing, I can now safely recommend one book for the first time: This one!

Taylor Larimore, Mel Lindauer and Michael LeBouef have five important advantages over other personal finance authors:

1. They are experienced investors.

2. They are well read on the subject of personal finance.

3. They’ve been answering questions for years from those who want to know what to do on Morningstar Vanguard forum and its related site, diehards.org

4. They are an expert writing team rather than a writer or celebrity trying to be supported by experts.

5. They aren’t trying to sell you anything except their book which makes their advice more independent than usual.

The book’s range is impressive. Part I looks at the essential elements of successful investing and includes looking at your financial lifestyle, how to start investing young and regularly, different types of financial instruments, inflation-protected bonds, investing minimums, avoiding complications that lose you money, asset allocation, reducing costs, minimizing and deferring taxes, diversification, market timing, money for college, employing a windfall and whether to retain a financial advisor.

Part II looks at how to track your progress and rebalance assets, staying immune from daily “news” about investing, being in control of your emotions, building up enough money for retirement, asset protection through insurance and estate planning.

The book tackles head on a lot of the bad advice you get about investing, while also being realistic about how much time and effort most of us want to put into financial planning. The tone is friendly, the advice is good and the warnings are appropriate.

What more can you expect from the only personal finance book you’ll ever need?

Review by ttrenkner:

This book stands head and shoulders above the great bulk of what I’ve read on the subject of stock investing. Much of what’s out there these days seems to have been written either for the gullible, get rich quick types or for those who have completely given up on trying to come out ahead of the pack and have resigned themselves to the boredom of simply buying and holding index funds. But this book’s premise is that the small individual investor actually can beat the market, not through some secret, author-discovered formula, but by applying logic, discipline, and a bit of effort. If you believe, as I do, that knowledge and diligence tend to be rewarded in the Market as in life generally, you’re going to like this book.

The author does a great job of smoothly guiding the reader through a potentially dry and difficult subject, without presuming any particular prior knowledge or experience. In fact, the book could almost serve as a textbook on how the stock market operates if it weren’t such a quick and enjoyable read. The contents are well organized, and the writing is clear and to the point. The author effectively uses two real world portfolios to demonstrate the application of his techniques and at the same time buttress his credibility. There are also several helpful appendices, including forms for valuing companies and reviewing a portfolio, as well as a handy investment calendar.

One other thing that makes this book special is the feeling it conveys throughout that stock investing can and should be approached as an engaging, enjoyable hobby, like, say, belonging to a fantasy football league. I think an investor who maintains such an attitude is the most likely to stick with the sound techniques this book espouses while at the same time he or she reaps an extra dividend of happiness.

Review by A reader:

I have read a variety of books on investing, but have never before come across one which is so uniquely suited to the individual investor. That may be because the author is “one of us.” He appears to be a successful businessman who taught himself to become a successful investor. He is not from the “Wall Street” industry. Instead, he brings the perspective of the “Main Street” individual.

For example, Van Knapp has created easy-to-use tools to rate companies and their stocks–such as a simple point system which allows companies to be graded against each other. Forms like the one he calls the Easy-Rate sheet make for easy recording of the information. He shows you how to create a Shopping List, and how you should take a step back every few months to look at the stocks you own strategically.

This book is only about stock investing, and that is a plus. There is nothing here about how to manage your 401(k), how to allocate your money among asset classes, or whether to buy annuities. With all the space saved by leaving that information out, Van Knapp has written an amazingly informative book about stocks. Such subjects as how indexes (like the Dow) are computed are covered in simple language–things all investors should know, but usually only have a vague idea about.

Another strength of this book is that it covers portfolio management–meaning topics like how many stocks to own, how diversified they should be, when to buy, and (most important) when to sell. Again, topics that individual investors should be thoroughly familiar with, but often aren’t. Taken together, it all comprises a stock-investing system, one that can give you confidence that you are not just shooting in the dark or bouncing from theory to theory without an overall strategy.

Van Knapp writes in a conversational style that is suitable for beginners or experienced stock investors. He does not talk down. This is the kind of book that you read once and then keep referring to again and again, because the information is so accessible.

Highly recommended.

Review by Thomas Mongle:

William Bernstein, market historian, scholar, and strategist, writes this new book with the confidence of his experience and the courage of his convictions, just as he did in his earlier “The Intelligent Asset Allocator.” The work is an expansion on the theme that you cannot beat the market by timing or hiring active professional fund managers, so allocate, sit back, and enjoy the long-term ride. His advice is equally applicable to the novice as well as the veteran investor. You get a short course on what market returns you should expect, why you cannot beat the market, why the professionals can’t help you, and how to set up your own portfolio using index funds. In other words, he has no use for the investment business other than the index funds it produces.
Chapter 5 on Manias is an excellent history of economic progress, and obviously the groundwork that led to his soon-to-be-published “The Birth of Plenty” (mid-2004) on the origins of the West’s affluence. I particularly appreciated his credit to Hyman Minsky on the pattern of bubbles. Although Kindleberger has covered much of the same ground and with greater visibility in the press, Minsky’s contributions are more insightful to understanding the distinct nature of economic manias.
Another interesting tidbit is his portrayal of technology as being, in general, a bad business endeavor. Bill Fleckenstein has made this point frequently that technology, unlike Buffett’s desired “consumer monopoly,” is easily outmoded and supplanted with the new, new thing. Let’s just be thankful that earlier entrepreneurs took the time and the risk to create progress.
The true worth of the book comes under the heading of “Why investors lose money.” This is the cornerstone of Bernstein’s philosophy stating that if you can keep from losing, you will win:
(1) Instead of joining the herd mentality, get out when “everybody” knows that something is a good thing. It only means that everyone who wanted to buy already has; there are no buyers left. Prices can only fall.
(2) Overcome overconfidence by checking the performance figures. Few professionals ever “beat the market.” Why do you think you can?
(3) Understand that all investments return to the mean, thus past performance is no indication of future performance.
(4) Don’t trade for excitement. Look elsewhere for entertainment.
(5) Keep your eye on the long term and don’t be panicked out by emotional short term swings.
(6) Realize that there are no “great companies.” The 1000+% returns are few and far between.
(7) Accept that the market is random. Therefore don’t get fooled into believing patterns repeat. Index funds are the only way to go.
(8) Check your accounting carefully. Don’t overstate your successes while forgetting your losses. Keep track of the portfolio’s total return.
(9) Don’t get taken for a ride by the investment industry. Trust no one.
It gets a little trickier when he begins building portfolios. Using representative stereotypes, he sets up hypothetical investments using US stock index funds made up of large caps, small caps, large value, small value, REITs, plus Foreign securities. The remaining assets should be split up between cash and bonds (long and short). Your results will be dependent on how well you can approximate this theories. Another catch comes with “rebalancing.” Bernstein’s advice here is also well taken. Sell out a portion of the superior performers to bring your percentages back in line to their desired weigh in the portfolio and re-allocate those funds into the underperformers to bring their numbers up to desired percentages. Regardless of his distain for decision making, this does require skill and action on your part, but Bernstein has given you enough help to get the job done correctly.

Review by R. Love:

Right up front, I read Bernstein’s first book and thought it was a classic. However, it wasn’t a huge market success which the author admits for many reasons but it was/is still a fine book (The Intelligent Asset Allocator). Now Bernstein comes back with an even better book from the standpoint of being readable for just about any kind or type of investor, experienced or inexperienced. The math and the charts are still there but with less rigorous emphasis. …The Four Pillars of Investing is both a historical review of investment success and failure with a very honest discussion of risk and reward. The pillars are the theory of investing, the history of investing, the psychology of investing (which is now recognized as a critical component in understanding why we invest the way we do) and finally, the business of investing. BTW, the humor in many of these chapters has not been lost either. I don’t think your favorite stock broker or investment pro is necessarily going to enthusiastically recommend that you read this book.Much of what is in the new book should be almost automatic wisdom/rules for investors but as we all know, we usually stray far and wide from good advice and common sense. In this post high-tech bubble collapse period, some solid review of investment principles is necessary. Call it back to basics if you will. It’s just that Bernstein backs it up with the data to prove his points.What really makes this book different from the first book (for me personally) is that Bernstein has finally put the portfolio construction recipe on paper in Chapter 13 called Defining Your Mix. And now a special message to parents of high school and college graduates: buy them a copy of this book. Don’t worry if they don’t read it now. Or if they look at you strangely. For those that do read it, they’ll be ten to twenty years ahead of their peers in investment wisdom and hopefully, financial security. And that’s really what this book is all about; not how to trade or gamble on market timing but rather on how to use sound principles of investing to manage/understand risk while builiding a solid foundation of assets for the longer term.

Review by J. Thomas French:

I couldn’t wait to get my hands on a copy of this groundbreaking, new, investment book from two of most respected marketwatchers around today! Princeton economics professor, Burton G. Malkiel, and influential non-profit chairman, Charles D. Ellis, have put their brains together to come up with one of the most surefire investment strategies out there. The Elements of Investing is intelligently written in a pared-down-to-the-absolute-basics sort of way. It’s one of the rare books written in this vein that actually takes the reader’s ambitions seriously. It’s a pleasure to read, because it is peppered with real life examples of people exhibiting good and bad investment behavior and the twists and turns their lives take as a result.

Right off the bat, Malkiel and Ellis admonish readers to start saving as early as possible and continue saving regularly throughout their lives. Granted, in a runaway consumerist culture like ours, characterized by its easy credit and debt-addicted millions, this task is so often easier said than done. But a prudent, evenhanded approach to spending and saving is possible–and Malkiel and Ellis show you how with smart suggestions that range from the banal, to the downright devious. The real plus to becoming a habitual saver, the authors explain, is that it helps you keep your real priorities in perspective. According to Malkiel and Ellis, your number-one priority, along with that of every other, gainfully employed, taxpaying American, should be to gradually grow your net worth so that your safety net’s intact when your finally reach retirement age. Think of saving, they say, as investing in your future self!

Next, Malkiel and Ellis explore some innovative ways to grow your asset pool, focusing specifically on index funds because they are affordable, intelligently managed and because their unique formulations allow for risk to parsed out over a wide, representative swatch of the market. The authors inform readers about various other index products they may not have considered before, including index bonds and international index funds.

Malkiel and Ellis use statistics and compelling anecdotal evidence to reiterate the time-honored benefits of diversification for a new generation of investors. The authors emphasize the singular importance of diversifying across asset classes (stocks, bonds, money market instruments, commodities, etc.), across markets and over time. They explain how having a diversified portfolio gives the savvy investor a leg up as the market undergoes the upsetting process of rebalancing in the wake of a serious stumble like the one which followed the housing bubble burst of last spring.

In a final, bonus section, Malkiel and Ellis offer an insightfully rendered and detailed menu of IRA’s and other tax-deferred, savings options available to investors.

The Elements of Investing is a veritable goldmine of investing wisdom backed by two of the most trusted names in the investment industry. Malkiel and Ellis’ clear goal is to inspire readers to believe in their basic competency as investors and to chase their dream of financial independence and security!

For those interested in further, reliable reading on the subjects of developing good money habits, investing and personal finance, check out Thomas C. Scott’s Fasten Your Financial Seatbelt: What A Fatal Plane Crash Taught Me About Retirement Planning and John E. Girouard’s The Ten Truths of Wealth Creation.

Review by W. Strauss:

I was looking forward to the authors coming out with a new book to give their investment advice after the 2008 and early 2009 stock market crash. Their fundamentals appears to be the same with the use of broad based index funds, but their stock allocations have shifted to having more money invested globally outside of the United States. You’ll have to purchase the book to read their recommendations. Also, they have given their opinion about Vanguard’s new Total World index fund and both have given their individual asset allocations based on a person’s age with Burton Malkiel’s being more conservative and Charles Ellis’ being more aggressive. They both also give a list of recommended index funds along with a surprise for us regarding their individual stock picking. It’s not what your thinking like day trading. Trust me.

The authors’ do say that the book will help 90% of all investors, with the remaining 10% of investors seeking professional help with complicated situations.

All around very good book and a quick read. Its good for those relatively new to investing because they give personal finance advice also, and the book is also good for experienced investors for their expert advice regarding investing after the 2008/early 2009 stock market crash.

I highly recommend the book.

Review by Matthew Paolini:

As a novice investor, I wanted a book that covered all of the basics in detail. This book was exactly that! I wasn’t looking for a book that was loaded with ratios and technical data; This book covered everything from determing your risk factor by analyzing your current financial situation, approach, analyzing markets and companies. The basic fundamentals were discussed in detail and also included the important technical aspects of investing with very basic and straight forward examples that were very easy to understand.

I would and have recommended this book to anyone who is looking to invest in the stock market. I liked the book so much I’m going to read it over again.

I would also recommend that seasoned investors read this book just to reinforce the basics of investing that they might have forgotten over the years. Review of the basics is very important in any industry.

Review by DJ:

Solid, solid, solid. This book is very resourceful. I have never picked up one of these “Dummies” books before but got this one as a gift. It covers enough about investing in stocks and the securities industry in general so as to ease the befuddled neophyte. For the rudiments, start here. Then afterwards, you can move on to that other junk promising you the secrets of Wall Street.