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on June 28, 2004
"A fool and his money" is the story of buyers remorse of one very lucky investor, who walked away with 50 percent of his money. Zero game means one person is a winner and another person is a loser. John got a bad taste, as he discovered the hazards of his margin being called and being forced too come up with 8600 dollars, too cover his investments and learned once again the average investor can not afford too invest. Bottom line, the lucky disappear into anomity, no one knows there name only their story; the losers feed the winners; and the winners are always looking for new losers.
John made a few mistakes, acted on weak advice, and held on too long after realizing his mistake. John gave some very insightful information about mutal fund managers. At the time of the book 9200 fund managers were controlling 75 percent of the wealth. John says, mutal fund managers don't outperform the averages because they collaborate between each other on selection. Outperformance is shunned because it distinquishes one mutal fund manager above another and makes the other look bad; and his claim for why mutal fund managers don't beat the average.
The Federal Reserve buy Bonds and use bonds too control the money supply. The Bonds represent assets which banks can loan money against increasing the available money supply to the consumer. If inflation increases, the Fed sells Bonds decreasing the money supply and increasing the interest rate. So, the Fed regulates inflations by controlling the amount of money supply.
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on July 27, 2002
This book was first published in 1988, after the 1987 crash. The wisdom and essence of the book is still as valuable now in 2002. It is entertaining as well as educational. The author went out of his way to describe his experience or experiments in various areas of investing, giving knowledge and first hand information on how the investment world runs from different perspectives. The author took a year to study investing and invest with his real money, with the assignment of writing this book about it at the end. As a result, his investment decisions and variety and frequency of his investment may be atypical of an average investor. However, his description of the phychology of an average investor is quite accurate.
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on October 25, 2001
Normally I would check the Amazon rating before I read a book. The average rating of this was 4.5 and so I picked it. I dont know whether I am not an average investor or what, I dont take it interesting nor helpful nor amusing nor.... Mr. Rothchild did try to write something good for his target readers with a different style and angle, something I can appreciate. However, something important, say lessons/points noteworthy for his readers, are absent. You read it but you can forget the content real fast.
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Mr. Rothschild did something in this book that you should never do. He took a year off to learn how to invest, and looked into every financial category available. As a result, he was soon inundated with advice that he often followed. Usually, he didn't understand the risks of what he was doing, and he almost always ended up making costly and unnecessary mistakes. You will find this book a funny cautionary tale about the relevance of keeping it simple and focusing on what's important.
The book is filled with short bits of advice that give you a flavor for its content.
"Never buy the June call nor sell the October put simultaneously, unless you know what they are." This is a reference to a strategy for making money in very volatile stocks. The stock he used was not volatile enough, and he lost on the position.
"'Expert' advice does not agree." So who can you believe?
Mr. Rothchild's downfall was that he is an obviously intelligent, curious person who was too good at finding sources of information. Along the way, he met more different investment brokers, security analysts, professional portfolio managers, market makers, commodity traders, and options experts than you can shake a stick at. Although no one held his hand into a fire, he often tried out an idea that he heard about along the way. The salespeople were all trained to let the investor do whatever he wanted, so he was able to get himself into deep water in the process of trying these things. Someone should have pointed out that he could have learned the same lessons by simply taking a theoretical position on paper, and tracking the results.
One hilarious sequence has him changing hotels during a vacation to avoid the margin calls that came every few hours. He didn't want his wife to find out that he had raided the household funds to float the first margin call. He could not meet the second one.
All the time this is going on, he has been telling his wife and friends how well he is doing. That was technically true for awhile, but did not last long.
Soon, his losses are so large that he was embarrassed to let anyone know. "The larger the sum you've lost, the smaller the sums you'll worry about." So he became incredibly stingy in every other part of his life.
Meanwhile, his wife's account was doing very well with being handled by a stock broker that Mr. Rothchild decided not to use. This made him feel even worse.
Then, the crash in October 1987 happened, and his wife's money was slashed, too. It was a tough year for the Rothchild family, all the way around.
After reading this book, you'll be ready for John Bogle and his Common Sense about Mutual Funds. With this information, you can match the market inexpensively, spend little time on investing, and have limited risk of taking a large, permanent loss. Sleeping well is the best revenge.
After you read this book, consider your own psychology. How good are you at making rational decisions in an area where the value of what you buy can go up and down wildly? Are you likely to be attracted to the overly complicated parts of investing? Are you good at containing risk? Mr. Rothchild's intelligence and access did him more harm than good. How can you apply his experience profitably to your own situation?
Protect your capital against losses for the best results!
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on January 20, 2001
I have read a quite a bit of books on finance (and work in finance). This book is one of my favorites...I could not put the book down. The book is realistic and entertaining. Definitely worth reading.
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on December 27, 2000
I thoroughly enjoyed this book. Whilst Rothchild is not giving out specific advice on the stock market, he does provide a good general overview by relating his one year's journey into the stock market. A clear message from this book was that the "experts" are incorrect more often than not and that there is more rumour than fact floating around.
Written with a lot of honesty, great humour, and most definitely worth reading.
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on October 13, 2000
I must say that Rothchild has successfuly written a book that an average investor loke you and me can identified with.
Just think about it, how many times we purchase a stock because we heard a conversation in the toilet about a particular company and regret for our action later.
We always insearch of a get rich quick formular in the financial market, but we ended up poorer instead. Rothchild illustration of how an average investor trying to make the big bucks definitly can make people like myself to identify with him, thus relating out own experience with his character in this book.
Great reading for the weekend!
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on July 20, 1999
Thoroughly enjoyable and more than just slightly humorous, Rothchild takes Finance 101 and compresses it into "a year in the life of...". The text gives an uninitiated investor a chance to read about the mistakes, which are only too easy to make, before actually making them. While Rothchild does not actually give any advice on what one should do (as opposed to the advice on what to avoid), I'd highly recommend this book as a method of sparing ones self the pain these lessons help you avoid.
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on May 9, 1999
Its a very humorous and informative story. Reading through the book, lot of common investors can relate the story with their own story on investing in the stock market. A good insight into the con job undertaken by the research analyst, the trading community. you will laugh through the book. very interesting. must read.
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on May 6, 1999
Rothchild writes with a very negative or should I say sarcastic perspective. But his sarcasm is very well directed. I think this book has tremendous value for an investor that has been around the block once or twice and is looking for more insight to market mechanics. Some areas of great insight covered:
Selling newsletters or get rich schemes.
The Stockbroker (1 notch above a used car salesman).
Insights to the mechanics of stock prices.
Sell side - buy side analyst relationships and the Fund Manager.
This book belongs in your collection AFTER you have the basics down and have some experience to understand what Rothchild is really talking about.
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