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2.0 out of 5 stars
I can't take this book seriously, Oct 31 2002
I bought this book on the strength of his previous book Retire Early and Live Well, which I thoroughly enjoyed, though I did wonder about his sources and conclusions.This book, on the other hand, I don't trust at all. I'm contemplating returning it for a refund. In the first section he tells you that the goal of this book is to match the reader with their investment type - saver, investor, speculator. Are you the cash & bonds type, or are you the type to invest in IPO's? The problem is he repeats himself worse than a Victorian novel. Why does he need to repeatedly tell you what he's going to tell you? Why not just get to the meat of the book already? The second part of this book is a breakdown of the different investment types and various investments that make up each of the three types. He focuses heavily on the negatives of each investment type. "Marketed as simple and easy to own, stocks are actually the most complex and emotionally challenging of all asset classes. Powerlessness, unmanageability, regrets, fear, social pressures, herd behavior, and complexities galore are the norm." "The purchase of CDs and money market funds can lead to confusion and complexity. CDs have different interest rates and different maturities. Unpredictable forces including the Federal Reserve, the economy, and inflation undermine the interest rate on CDs, money market funds, and savings accounts." "Unmanagability is a big issue with municipal bonds." In fact, nearly every investment type is portrayed in this light with the exception of Real Estate and Real Estate Investment Trusts. In fact, the Real Estate section starts with "Many groups and individuals have a vested interest in keeping you in stocks, including financial journalists." He goes on to say "A sense of powerlessness, unmanagability, and helplessness are infrequent with real estate. Stock prices move quickly. An individual stock can lose half or more of its value in minutes. Real estate prices change slowly." And for Real Estate Investment Trusts (REITs) it's the same: "REIT investors experience less powerlessness than stock investors. REIT returns are less volatile than stock returns. The worst year for REITS since 1970 was negative 17 percent. The worst year for U.S. stocks was negative 26 percent. " Etcetera. And here comes, what I believe is the crux of this book: "My REIT report, REITs for the New Decade, explains everything you need to know about REITs in less than 100 pages." There it is, the book is an ad for his REIT report. I actually had to chuckle at the transition from REITs to Corporate Bonds. "The biggest emotional hurdle with REITs is a sense of bein out of sync with your fellow investors.... You must have the self esteem to run outside the herd to be happy with REITs. Those who need the herd to push them along will not stay in REITs very long.... Corporate Bonds... Unmanagability is the main issue here." The change was so abrupt and obvious from his sheer praise of REITs (oh and by the way, buy my report) to more doom and gloom for anything that wasn't REITs. The third section is a series of questions that "any serious investor should answer" along with several sample responses, which, by the way, show people who went from bad investments to - you guessed it - real estate. Todd: "He had great success with real estate, and no success with any investment that was trendy or could be purchased on a whim." Dillon: "Twelve years ago, I had about 75 percent of my money in stocks and 25 percent in real estate, REITs and oil and gas. Today my ratio is opposite." While this is one of the few books to address investing as an emotional and potentially addictive (read: 12 steps) activity, it's heavy handed scare tactics are unwelcome. Since we'll all be living off of our investments one day (when we retire), it's important that you understand the process and risks of investing and your emotions regarding investing. I just don't think this is the book to help you with it. Much more well rounded are The Only Investment Guide You'll Ever Need (Andrew Tobias) or The Millioniare Next Door (Thomas Stanley).
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