8/6/2014 7:30 PM ET|
Books to boost your portfolio
Every investor could benefit from reading these business classics.
Can you read yourself rich?
Bill Gates, one of the world's richest men, set the book world alight last month when he recommended aspiring business leaders open a copy of "Business Adventures," a collection of articles written in the 1960s by the late New Yorker writer John Brooks. (Bill Gates is founder, technology advisor and board member of Microsoft, which owns and publishes MSN Money.)
Gates said "Business Adventures" had been his favorite business book for 20 years, since he was first given a copy by fellow tycoon Warren Buffett, who also rates it his favorite business book. Out of print, it shot up the best-seller charts within hours. It is being rereleased in print format and is already available electronically. Those who can't wait 'til September for a print copy can try to find a used one online. One enterprising seller offered his copy for . . . $2,000.
It is an underreported secret that, even in an age of spreadsheets and quants, the most successful hedge-fund managers and investors are typically avid readers of history and literature. Financial consultant Bennett Goodspeed argued in "The Tao Jones Averages" 30 years ago that successful investors need to use the arts-and-literature right side of their brain as well as the math-and-science left side.
Brooks's classic collection isn't the only summer reading for those hoping to brush up their money smarts. Fred Schwed's tongue-in-cheek book about Wall Street and investing, "Where Are the Customers' Yachts?" reads as if it were written last year, rather than in 1940, in the wake of the Great Crash of 1929 and the Depression that followed. It is accessible to those who know nothing whatsoever about investing and finance: Few introductions are as easy to follow, and none as entertaining.
Anyone living through a stock-market boom that seems likely to go on forever should pick up a copy of John Brooks's previous books, "Once in Golconda" and "The Go-Go Years." They tell the fascinating stories of the Wall Street booms of the 1920s and 1960s, and the crashes that followed.
"Reminiscences of a Stock Operator" by Edwin Lefevre, first published in the 1920s, is considered a classic by Wall Street insiders. It tells the true story of legendary trader Jesse Livermore, who made and lost several fortunes on the Street over the course of half a century.
Among the many lessons relevant to private investors today: After decades of active trading, Livermore realized that only a fool tries to fight the market, and that the biggest money is often made by long-term investing. "Money is made by sitting, not trading," he said.
Available for free online is the Victorian classic "Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay, the first description of the original stock-market "bubbles" -- in 17th-century Holland and the South Sea Bubble in 18th-century London. If you think great intelligence is enough to make a fortune in stocks, reflect that among those badly burned by the collapse of the South Sea Bubble was Sir Isaac Newton. Are you smarter than him?
And then there are the lessons to be drawn from the deep, deep well of the Bible. While anyone's reading of the Old and New Testaments will naturally be dominated by spiritual concerns, you can also find the simple, prosaic -- and humorous.
For example, it's impossible to read the story of King Ahab and his 400 "false prophets" in the first Book of the Kings without thinking of today's armies of consultants and advisers, including the analysts on Wall Street. Ahab's prophets thrived by telling the king what he wanted to hear -- advice that leads to his doom. The only prophet who tells him the unvarnished truth, Micaiah, ends up thrown in prison.
Three thousand years later, in 2010, the International Monetary Fund tried to work out why its brilliant economists had completely failed to predict the biggest financial crisis in 70 years. Its conclusion: Everyone was under pressure to be optimistic. Those who warned about the dangers were sidelined or silenced. Everyone went along to get along.
As those who read are apt to learn, the more things change, the more they stay the same.
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The problem with these books, especially the Gates & Buffett lauded "Business Adventures" is that it applies more to running a business than a portfolio. It is a series of 12 snapshots of things that occur in or to businesses rather than how to evaluate an overall business. Buffett says the ONE book he keeps on his desk at all times is Ben Graham's classic "The Intelligent Investor."
If you've completed your self-training in investing through books like Graham's classic, Phil Fisher's "Common Stocks and Uncommon Profits," Mary Buffett's "Buffettology" and "The New Buffettology," Lita Epstein's "Reading Financial Reports for Dummies," Jason Kelly's "The Neatest Little Guide to Stock Market Investing," and Greenwald et al's "Value Investing," THEN you may be ready to expand your knowledge with the books listed in this article.
when you use a monetary base economy the only thing business or investors think of is making more money and not the welfare of the people.
When people invest in will say (big oil because everyone likes to pick on them) the oil company don't care about the environment or the people other wise they would no be in business. There are batteries out there that can run cars at 100 mps for over 200 miles on a single charge and have for many years
However due to battery patterns controlled by the oil industry which maintains their ability to maintain market shares coupled with political pressures or the energy industries, the except ability and affordable is limited.
So why would you try to expand your portfolio in a institution that only thinks about making a profit for themselves and only shares with investors to keep them in debt. When a company files bankruptcy who pays for it, the investors are the one that losses everything. Not the company or the banks which loaned them the money.
How money is made.
Does any of this financial advice these so called experts make any sense to you. When the real truth about money is this! Let simplify this.
I(me) am a private institution that makes money(Central Bank/Federal reserve),( my Policy, Modern Money Mechanics) You (the government) need money for some reason will say $10 billion. So you call me up and I say sure I will by $10 bill in bonds from you, so you take some paper print some official design on them and call them treasury bonds and values them at $10 bill. I then take some impressive piece of paper this time and call them Federal Reserve notes also designated a value of $10 billion. Then take and trade with you. You then take these notes and deposit it into a bank account in at which time this money becomes added to the money supply. In reality all this is done electronically with no paper used at all. In fact only 3% of all money is in physical reality 97% is in computers alone.
Now by design your bonds are instruments of debt and I created the notes out of thin air you are promising to pay me back this money. So in reality this money was created out of debt. (Check out Zeitgeist - Addendum on Netflix for more information.)So the exchange is completed and $10 billion sits in a commercial bank account.
Now this is where it gets really interesting. According to my fractional reserve practice instantly become part of that banks reserve just like all deposits do and as stated in my policy (modern money mechanics) must maintain legal required reserves equal to a prescribe percentage of its deposit under current regulations which is 10% which means $1 billion is the required reserve and the other $9 billion is excessive reserve which can be used as a bases of new loans.
Now it is logical to assume that is $9 billion is coming out of the $10 billion deposit however this is not the case. What is really happening is the Federal Reserve creates the $9 billion out of thin air on top of the $10 billion this is how the money supply is expanded. In according to my policy (modern money mechanics) they the commercial banks don’t actually pay out loans they receive as deposits no additional money would be created. What they do when they make a load is to except promissory notes (Loan Contract) in exchange for credit (MONEY) to the borrowers transaction account. In other words the $9 billion can be created out of thin air simply because there is a demand for such a loan plus there is a $10 billion deposit to satisfy the reserve requirement. NEW MONY CREATED. Now let’s assume someone walks in and takes out a loan for the newly available $9 billion and deposits it into his/her own bank account. the processes then repeats, because that deposit now becomes part of that banks reserve 10% is isolated in turn 90% of the $9 billion or $8.1 billion is now available as newly created money for more loans and of cores that $8.1 can be loaned out and re-deposited . So for every deposit that accrues in the banking system about 9x of that amount can be created out of thin air. So what is giving this new created money value Watch Zeitgeist –Addendum
Invest in what you KNOW. Then only buy when it is well below what it is worth. I favor land now simply because my skills and knowledge are greater in that field than in others. But find (or create through study and trial and error) your own area of knowledge and work within it.
Look for 'free money'. It is ALWAYS out there. Example: zero interest credit cards. Not much of a deal now cause interest rates are so low, but in the middle of last decade I had a couple hundred thousand in debt on them...... where I had borrowed the money and invested in bonds. Everyone that offered me free credit for 12 or 18 months, Usually 10 to 15k limit per card, I took it. But instead of spending on stuff, I put it into interest bearing accounts and was averaging about 5% a year in 'free money' based solely on free loans. When one bill came due, either get a new card (if an offer was available), or cash in bonds to pay it off, and reinvest the profit. Then I went into tax certificates (Florida) and averaged close to 18% until the last 3 years. Now people are bidding them at 1/4%, etc. just to get them because the minimum return is 5% for the first year. And even if you do have to hold it for three years to call the tax sale, you still got right at 2% a year (compounded) which beats hell out of any other short term money market type investment right now. anyway,similar things are ALWAYS available, but YOU have to look for them cause I'm not gonna tell everyone and ruin it for myself (and any others who did their homework and found it). But the biggest thing to remember is that just like the examples I gave, by the time you hear about it in major media, the opportunities are GONE and it is just the bubble that is left. YOU have to research for yourself. But it's easy if you just try.
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