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Charles D. Ellis - Winning The Loser's Game

Winning The Loser’s Game by Charles D. Ellis

SUMMARY: Ellis suggests that you can’t beat the market so buy index funds.

Author describes how the institutions are the market. That they have all the best tools, and access to the companies. But since they are the market, it would be impossoble for them to beat themselves. He compares investing to tennis. That it is not so much about winning points but about not losing points. He says that index funds are a concensus of all the best investors.
I have seen stats that 75% of money managers don’t beat the market. That means that 25% of money managers do beat the markets. Warren Buffett has beaten the market. Peter Lynch beat the market. So it is possible to beat the market. Can I beat the market? Probably not. I am not Warren Buffet or Peter Lynch. Thus far my index funds have outdone my stock selections. It is an interesting book, but for the most part it is about his making a case to buy index funds.
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The Motley Fool – Money-Making Life-Changing Special.

I found this video at the library. I didn’t have high hopes for it as I listened to a Motley Fool audio book, and was unimpressed. The audio book covered the Foolish Four which is a variation of the Dogs Of The Dow strategy, and also talked about shorting stocks. This video is a lot more level headed. I found it interesting.
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I just finished listening toa book on tape of Discover the Wealth Within You : A Financial Plan For Creating a Rich and Fulfilling Life by Ric Edelman. At least I thought I had. Apparently what I listened to was just the second half of the book. The first half apparently is about goal setting, but wasn’t part of the book on tape I got from the library. The second half of the book deals with investing. The author spends most of it telling you why mutual funds are the way to go, and that actively managed mutual funds are better then indexed funds. I didn’t really get much out of it. Reading a description of the first part of the book that I didn’t get to listen to, sounds like I would have liked it. Maybe the book on tape is in two parts, and part one is at the library also. I will check.
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The Wealthy Barber by David Chilton.

This book is written as a story about some young people who go to a barber to learn about investing. It would be a great read for younger people. The barber tells them about how he got rich, and explains about mutual funds. He also mentions the possibility of real estate as an investment, but only after you already have a nest egg built up. In the next section, the wealthy barber begins to teach them about estate planning such as wills and insurance. Then he goes on to discuss retirement planning, and details different types retirement related accounts such as IRA accounts, Keogh plans, SEP accounts, and 401k & 403b plans. The following section is advise on home buying. Then comes thrift and budgeting, though he doesn’t stress budgeting saying that it really doesn’t work. The last part is on taxes in which he encourages the paying off of non-deductable debt. The book was okay. I would have rather found a book on CD, but oh well. The characters were two dimensional, and all had the same exact sarcastic sense of humor. Not sure if the advise written in the story format would appeal to younger readers better. I didn’t care for it much. Maybe if the story were better.
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The Motley Fool Investment Guide by David & Tom Gardner.

Written by the founders of the Motley Fool website, this book has some interesting investing ideas. The first idea they give is called the Foolish Four. It is based on the Dogs Of The Dow, but they take the 10 highest yielding Dow stocks. From these 10 stocks, they take the least expensive 5. The throw out the cheapest as this stock is usually in trouble, and that give you the Foolish Four. You invest 40% in the cheaspest of the fout, and 20% in each of the other three. This strategy has historically out-performed the market by large margin. I had already read about the Foolish Four, and might play with this.
In the next part the advocate buy small-cap growth stocks saying these are the more likely to double and triple than the large cap stocks. They give a set of 8 tests that the stocks must meet to be cosidered for investment. I might be interested in looking closer at this strategy.
In the last part they talk about shorting stocks. They give 3 tests that the stocks must pass to be considered for shorting. I personally am not interested in shorting stocks. I am interested in more conservative forms of investing.
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