A Wealth of Common Sense Summary

A Wealth of Common Sense SummaryWhy Simplicity Trumps Complexity in Any Investment Plan

Let’s face it: as far as most people are concerned, the simpler a plan is, the less credible it seems. However, most of the algorithms of life are fairly simple. And, according to Ben Carlson, the same holds true for investing.

Hence, if you want to be the next Warren Buffett, what you need is not some complex strategy, but “A Wealth of Common Sense.”

About Ben Carlson

Ben CarlsonBen Carlson is a chartered financial analyst (CFA) and the Director of Institutional Asset Management at Ritholtz Wealth Management.

He has written two books so far, the second of which is “Organizational Alpha.”

You can read more from him at http://awealthofcommonsense.com/.

“A Wealth of Common Sense Summary”

For some reason, we tend to give complex ideas unwarranted credibility.


Because, simply put, if it’s simple, then the obvious question is “why everybody doesn’t do it?” Just think of Monty Python’s “Meaning of Life.” When at the end of the film, they finally reveal what it is, we learn that it’s nothing very special.

But, how could it be? So many books and millions and millions of pages have been written to uncover it. So, how can it be so simple?

Well, why shouldn’t it be? Who says that it has to be complex?

The same applies to investing too.

You may have heard of many complex strategies on how to get rich (usually, in fairly short period of time), but the simple fact is that most of them are either for already rich people or work from time to time because of luck.

Because, every investor is different and, consequently, every investing strategy should be different as well.

Consequently, don’t expect Ben Carlson to put yours down in writing. In fact, he states clearly that any investment strategy should begin with a personality test – and he can’t make that one for you. However, expect him to give you few common-sense advices which will be applicable in any case.

First of all – the three don’ts.

And the most important among them: never – ever – enter the world of investing with an expectation to get rich in a relatively short time. The simple fact is – that almost never happens. There’s no such formula, no shortcut to instant success.

Don’t believe anyone who tells you anything differently.

Secondly, don’t be overconfident! We can’t predict the future, and the same is true for the markets. The intelligent investor knows this and tries to find a safe strategy which will make him as independent from market fluctuations as possible.

And the third “don’t”: don’t follow the herd. If everybody does something – it’s probably the wrong thing. Because, then, everybody would have been rich, wouldn’t it?

Now, that we summed up the three don’ts of common sense investing, let’s have a look at the three dos.

First of all – be emotionally intelligent. High IQ has nothing to do with being a good investor. Managing your feelings does.

Which brings us to our second point: stay calm and invest. The reason why some people can perform well under pressure is that, unlike you, they are still rational even then.

Finally, be wary. Or, as Warren Buffett would say – don’t invest what you don’t understand. No matter how tempting it looks like: see don’t #3 for that.

Key Lessons from “A Wealth of Common Sense”

1.      Want to Invest? Take a Personality Test!
2.      The Three Don’ts of Investing
3.      The Three Dos of Investing

Want to Invest? Take a Personality Test!

If you want to invest, you shouldn’t forget two general truths. First of all, every investor is a story in itself. And secondly and consequently, that there can’t be one applicable-in-all-situations investment strategy.

So, before embarking on your investment adventure, a good common-sense idea may be to take a personality test. So, you can find out whether you’re a trend follower, risk taker, short-term trader or what-not?

Then, develop your strategy accordingly.

The Three Don’ts of Investing

However, no matter which strategy you choose, there are three common-sense don’ts of investing you must take into consideration.

First of all, don’t expect to get rich in a short period of time. Because, that will almost certainly not happen. Secondly, don’t be overconfident. Because, nobody knows what will happen on the market. And, finally, never follow the majority. They are probably wrong.

The Three Dos of Investing

Of course, there are three common-sense dos as well. And these are even simpler and as important to follow.

Firstly, be emotionally intelligent and try to manage your feelings well. Secondly, stay calm and don’t stress out when the stocks (inevitably) fail. Finally, be wary: don’t invest in anything you don’t understand.

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“A Wealth of Common Sense” Quotes

It’s amazing how easy it is to do worse by trying to do better. Click To Tweet Investing doesn’t have to be about beating others or beating the market. It’s about not beating yourself. Click To Tweet One you start to take the market’s movements personally you’ve already lost. Click To Tweet Only invest in active strategies or factor tilts if you are prepared to do worse for the possibility of doing better. Click To Tweet Diversification is the best way to admit you have no idea what’s going to happen in the future. Click To Tweet

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Get a Financial Life Summary

Get a Financial Life Summary

Personal Finance in your Twenties and Thirties

It is never too early for saving. It is time you read our Get a Financial Life summary and start investing for the future.

About Beth Kobliner

Beth Kobliner

Beth Kobliner is a writer, a contributor to the New York Times, and a former a staff writer at Money magazine

“Get a Financial Life Summary”

If you have so far tried to save money many times but without much success, you share similarities with most people.

However, living like that should not be an option.

There is no better time “to get your financial life in order” than now.

And to do that, you can look at the following seven steps which will help you in your quest.

First, get health insurance.

If you do not have it, a single health problem can take you to the verge of bankruptcy. If your company does not offer it, buy it yourself.

Second, reduce your debts.

The interest rates on some of the loans are far greater then what you would get if you invested the money. So, put all spare cash into reducing your debts.

You can do this by either paying it off entirely, if you have big savings, or you can refinance it, by transferring money from high-interest debts to ones with lower interest rates.

Third, start saving for retirement early.

As we already said, the best time to start saving is now, while you are still young.

Next, reduce your banking costs, such as ATM and checking account fees. Some banks do not charge them if you have a minimum balance.

Furthermore, save up for emergencies, before you think about investing.

A good rule of thumb is saving enough money that could cover your expenses for the minimum of three months, in case you experience a setback.

After you do this, it is time to become an investor.

To reduce your risk consider joining a mutual fund. Just make sure it is one with low expenses and that you embark on this journey wisely.

Lastly, reduce your taxes, by calculating if you can save money by moving from standard deduction to itemizing your deductions.

Key Lessons from “Get a Financial Life”

1.      “The Debt Rule”
2.      “The Housing Rule”
3.      “The Savings Rule”

“The Debt Rule”

Your total incurred debt should never exceed 20% of your annual salary. Of course, student loans and mortgage payments should not be calculated as part of it.

“The Housing Rule”

Never spend more than a third of your monthly salary on housing. If you live in a big or an expensive city, you may consider moving in with roommates to succeed obeying this rule.

“The Savings Rule”

Savings are a serious matter, and you should treat them as such. They are just as serious as your bills.

Save at least 10% of your pay each month. Some months, when you feel you can handle it, put away 15%.

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“Get a Financial Life” Quotes

Many people in my generation - those now in their 20s and 30s - do not expect to live as well as their parents. Click To Tweet Be forewarned that you’re likely to come across people who’ll tell you you’re too young to lock up your money in a retirement savings plan. Ignore them. Click To Tweet Saving isn’t easy for most people, and putting aside a fixed amount each month seems like an impossible task. Click To Tweet One reasonable approach might be to put about half your holdings into stocks, one-third into bonds and the rest in money market funds. Click To Tweet The good news is that there has never been a better time to get your financial life in order. Click To Tweet

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Currency Wars Summary

Currency Wars Summary

The Making of the Next Global Crisis

The world is consistently in the midst of “Currency Wars.” Take a look at the three wars that we have gone through.

About James Rickards

James Rickards

James Rickards is the senior manager of the New York City-based merchant bank – Tangent Capital Partners and is an advisor of government agencies on global finance.

“Currency Wars Summary”

Currency conflicts occur on an assortment of fronts, yet they, for the most part, they start inside a domestic economy.

A country is enduring high joblessness, low development and decreased demand can choose to devaluate its currency to support its exports and drive demand.

Yet, in an undeniably interconnected global economy, such moves would wind up harming that nation’s trading partners and welcoming countering like “tariffs, embargoes and other barriers to free trade.”

By no doubt, currency wars can turn ugly.

Nowadays, the US faces various threats from “rival nations and transnational actors such as jihadists,” which include biological, chemical and Internet-based attack systems, as well as financial weapons.

The risk of fiscal assaults provoked the Pentagon to build up a war game to mimic a global financial war and to investigate how such battle could undermine the US.

The players included Wall Street experts, international strategy specialists, Department of Defense staff members and military personnel.

The gathering met in late 2009 of in a secluded research center close Washington, DC, to plot the primary financial war game in US history.

The members partitioned into contending groups and scripted locale-specific objectives and political moves.

Utilizing notes and blueprints, players scrimmaged over gold, currency and cash supply.

They created different scenarios.

This game yielded a pivotal disclosure: Even in case of an effective assault on the dollar, the US claims enough gold to survive a financial war.

Key Lessons from “Currency Wars”

1.      Currency War I (1921-1936)
2.      Currency War II (1967-1987)
3.      Currency War III (2010 –)

Currency War I (1921-1936)

Toward the end of World War I, combatant countries in Europe confronted enormous debts.

World countries soon looked for a return to the gold standard they relinquished amid the war.

Strategy makers concurred that the US dollar would keep up a settled value relationship to gold, and that nation could hold the American currency as an intermediary for gold reserves.

This did not take care of the issues: Cycles of currency devaluations went from nation to nation.

Currency War II (1967-1987)

The second global currency war began in 1967 as the US government budget wavered under the twofold weight of the Great Society antipoverty program, a domestic social agenda, and the Vietnam War.

Inflation took off, and the estimation of the dollar started to slide relative to gold.

Currency War III (2010 –)

The 2007 worldwide fiscal crisis started the cutting edge period’s third currency war, which began in 2010 and nobody knows where and how it will come to an end.

Apparently, this war’s stakes are substantially higher since the geographic outcomes go past particular trade issues to the core of the global fiscal framework.

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“Currency Wars” Quotes

Today we are engaged in a new currency war, and another crisis of confidence in the dollar is on its way. Click To Tweet The fact that a currency collapse has not happened in a generation just implies that the next crash is overdue. Click To Tweet When the dollar collapses, the dollar-denominated markets will collapse, too. Panic will quickly spread throughout the world. Click To Tweet If the dollar falls, America’s national security falls with it. Click To Tweet Gold is not a commodity. Gold is not an investment. Gold is money par excellence. Click To Tweet

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The Disciplined Trader Summary

The Disciplined Trader SummaryDeveloping Winning Attitudes

Human history carved a new mentality that is driven by a hunger for either food, success, love or motivation.

The Disciplined Trader” gives a few thoughts on improving your trading skills and reducing the chances of a potential loss.

About Mark Douglas

Mark DouglasMark Douglas is a trade expert, who gained a lot of experience while traveling the world.

“The Disciplined Trader Summary”

Trade is an ancient way of satisfying the needs by exchanging the goods you possess for either money or other pleasures. The world instigates a new mindset that is no longer based on routine and superficial beliefs. Successful trading requires more than just know-how and communication skills.

The capitalist regime and democratic rule stimulate free markets that influence the world economy. Acting in a specific way is no longer regulated, the banks and international funding organizations insist on enforcing a fair competition. Trading has been a part of the modern civilization and continued to support the prosperity.  

Traders are independent masters of their own little world. As a trader, you must be self-sufficient and a smooth talker who is not afraid of making mistakes.

The market price varies according to the external reality. The ability to make compromise distinguishes prominent from mediocre traders. In truth, the market price is defined by neither traders nor banks. It’s merely an outcome of the supply-demand ratio. To confront monopoly, we must allow the market to regulate the price and consequently improve the economy.

Aversiveness to risk is only natural because the threat of potential losses is overwhelming in every trade. For instance, gamblers can much more easily calculate their chances of winning than traders. Their knowledge about each transaction or exchange is often based on intuition.  

After the transaction is being completed, traders unlike others, analyze their “shrewdness” and the outcome deriving from it. Losers hope for a quick turn of events to compensate for the loses. Winners are always on the lookout for new possibilities in the open market.

  • Traders must not be driven by emotions because in such regards the decision-making ability is affected.
  • Trading blindness occurs when a merchant refuses to acknowledge bad decision-making and accept loses.
  • Don’t rely on past strategies, whatever worked yesterday may not be suitable tomorrow.
  • The market has nothing to do with right and wrong – The market is a force, that’s it.
  • Your beliefs and thinking patterns create your reality. Don’t allow superficial occurrences to destroy your chances of winning.
  • Memories are a subtle form of energy that can affect anyone’s behavior.

Key Lessons from “The Disciplined Trader

1.      The mind affects your decision-making
2.      Memories can be dangerous
3.      No one is responsible for neither your failures nor successes

The mind affects your decision-making

It’s evident that we live in one world, shaped in billions of ways. Our minds create a new sense of reality that forms an inner environment and develops a mental shield against any potential threats.

Don’t forget that you are not supposed to become a slave, but the master of the house.

Memories can be dangerous

Often, we come to a conclusion based on some previous events. It’s not advisable to rely too much on what has happened; it’s best to use current assets to control the situation.

Beware of all hidden dangers that may generate severe financial loses.

No one is responsible for neither your failures nor successes

It is you who is accountable for designed a strategy under which you will operate on the market.

Make sure you invest in expanding your knowledge, but never neglect your intuition when it comes to making the final decision.

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“The Disciplined Trader” Quotes

Much of what we experience of the outside environment is shaped from the inside. Click To Tweet Any new knowledge comes from those who question the status quo and have a willingness to go beyond it and a willingness to accept the next answer. Click To Tweet Once you know what traders believe about the future, it’s not that difficult to anticipate what they are likely to do next, under certain circumstances and conditions. Click To Tweet Losing all my possessions was a complete life-altering experience, an experience that taught me a lot about the nature of fear and the debilitating effects it has on a person’s ability to trade effectively. Click To Tweet Furthermore, I discovered that my mental framework was structured to avoid losses at all costs and in my desperate attempts to do so, I actually created them. Click To Tweet

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The Way to Wealth Summary

The Way to Wealth Summary

“The Way to Wealth” is a short essay by Benjamin Franklin, first published in 1758, and later translated into many languages and reprinted in many countries.

About Benjamin Franklin

Benjamin FranklinBenjamin Franklin, one of the founding fathers of the US, was an author, a statesman, a revolutionary, author, a scientist, a firefighter, and chess master. He is a signatory of the Declaration of Independence and the US constitution.

“The Way to Wealth Summary”

“The Way to Wealth” discusses many different topics, such as idleness, procrastination, and trust.

For Franklin, time is golden. It is your most valuable possession.

Whatever time is given to you-you can never get back. So, spend it wisely.

Every day should be a step toward your goals. Do not waste your time by idly thinking about your dreams, since “he who lives upon hope will die to fast.”

Franklin advises people to rise early, to work hard. Activity, according to him, keeps you well and healthy.

Related to the topic of time is the problem with procrastination.

We all procrastinate, but it is essential that you tackle all your important tasks now, because you cannot foresee the future and the obstacles it may bring.

You have to understand that “one today is worth two tomorrows,” and live according to this wisdom.

Wasting your time worrying about your problems does nothing for you – only makes your issues grow.

Instead of just thinking about it, work hard, and everything will get resolved easier.

When you are not working, try to wake the feeling of shame within you, so it can always alarm you when you start procrastinating.

Procrastination is much more common when it comes to challenging tasks.

However, if you wait longer, it is not going to resolve itself. The more you slack off, the more work piles up.

So, tend to your task every day, and in the end, you will see excellent results.

In every job you do, you get to choose whether you are the mule or the plowman.

If you are a mule, someone guides you, if you are a plowman, you have to plow every single day.

Do what is yours to be done, and pay attention to your workers and what they do.

Show your authority and guide them in the right direction. Do not give unconditional trust, since trusting too much can destroy you.

So, keep your eye on the job and make sure you do not neglect any of its aspects.

Key Lessons from “The Way to Wealth”

1.      Work Hard and Use Time Wisely
2.      Early to Rise
3.      Attaining Leisure Time

Work Hard and Use Time Wisely

Spend time wisely. Make sure that every day is a step toward your goals.

Early to Rise

Wake up early and tackle your most important tasks. Stop procrastinating and spending your days idly.

Attaining Leisure Time

If you are a diligent worker, you will be able to finish your tasks efficiently and attain some leisure time. But even in your rest-period, do something useful.

Lazy people will always wish for this time and never truly get it.

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“The Way to Wealth” Quotes

An investment in knowledge always pays the best interest. Click To Tweet The people heard it, and approved the doctrine, and immediately practiced the contrary. Click To Tweet Vessels large may venture more, But little boats should keep near shore. Click To Tweet If dost thou love life, then Do not squander time, for that is the stuff life is made of, as Poor Richard says. Click To Tweet Beware of little expenses; A small leak will sink a great ship, as Poor Richard says; and again, Who dainties love, shall beggars prove; and moreover, Fools make feasts, and wise men eat them. Click To Tweet

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Hedge Fund of Funds Investing Summary

Hedge Fund of Funds Investing SummaryAn Investor’s Guide

As its subtitle states, “Hedge Fund of Fund Investing” is a guidebook for investors interested in this fairly new type of investing. And it does a pretty good job both as an introduction and as a manual for specialists even ten years after its publication.

Illustrated with neat graphs and charts, “Hedge Fund of Fund Investing” explains what FOFs are, what are the risks and benefits of using them, and how you can use them to get richer – particularly if you are already rich!

About Joseph G. Nicholas

Joseph G. NicholasJoseph G. Nicholas is both the founder and the chairman of HFR Group, LLC. The conglomerate encompasses Hedge Fund Research, one of the world’s leading providers of hedge fund data, HFR Europe, an advisory service, and HFR Asset Management, a FOF management company. Nicholas has authored two other books, “Investing in Hedge Funds” and “Market-Neutral Investing.”

“Hedge Fund of Funds Investing Summary”

If you are interested in investing – or merely want an alternative pension plan – you’re probably already aware of what a hedge fund is. However, there’s a big chance that you know a little – or nothing at all – about hedge fund of funds.

And that’s where Joseph G. Nicholas’ “Hedge Fund of Funds Investing” comes in handy. When it was published in 2004, it was the first of its kind. And, a decade later, it’s still one of the best.

But, to pick up where we left off.

In a way, a hedge fund of fund (FOF) is to a hedge fund the same a hedge fund is to a regular investment fund. It is an investment strategy which attempts to circumvent the obstacles an investor may face while trying to find the best hedge fund. (After all, there are way too many now, aren’t they?)


By simply pooling multiple hedge funds under the same hat. So, double the investments, double the risks, double the adventure. And, of course – double the possible returns.

But, also – let’s not forget – double the necessary expertise!

So, what do you need to start right away?

Well, you need to have some money. In fact, a lot of it! You see, FOF investments can easily reach as high as $10 million per investor! So, basically, “Hedge Fund of Funds Investing” is only for a selected amount of people.

However, that selected amount of people knows its fair share of investing strategies, from the 101s to some of the best-kept secrets. So, why would they risk it with a hedge FOF?

Well, as usual, they won’t. The key to a working FOF is finding a good FOF manager. Because that’s the only way, you can be sure that it won’t be another money-down-the-drain story!

And good FOF manager constantly analyzes the downsides and the upsides of the all of the hedge funds available before combining the right ones. It seems that they are doing quite a good job because so far, hedge FOFs have shown a great success.

And, yes, that means returns even in a state of crisis!

There’s a caveat though. FOFs are a lot less transparent than hedge funds. In other words, once you give your money to the FOF manager, you don’t know where he or she will invest it.

That may be a bit scary, but – hey, let’s face it: you don’t win big without taking a risk or two.

Or ten million, for that matter.

Key Lessons from “Hedge Fund of Funds Investing”

1.      What Is Hedge Fund of Funds Investing… in Few Words
2.      Hedge Fund of Funds Are Less Transparent – But More Successful
3.      You Have to Have Money – to Make More Money

What Is Hedge Fund of Funds Investing… in Few Words

To quote Joseph G. Nicholas a “fund of funds is a pooled vehicle for investing in multiple hedge funds.” So, it’s a multi-manager investment strategy, aiming to provide investors with a ready solution to all their hedge fund headaches. To put it in even plainer words – if you’re having a hard time choosing the right hedge fund, combine them! And that what hedge FOF is!

Hedge Fund of Funds Are Less Transparent – But More Successful

Now, it it’s pretty difficult to navigate through the sea of hedge funds, why should it be any easier to combine them?

Well, it’s not!

That’s why you’ll need a good FOF manager. But, you’ll also need to trust him, because, once you’ll give him your money, you won’t have a direct relationship with the hedge funds they’re invested in. However, don’t worry: it seems that, with the right manager, hedge FOFs are not a risky investment!

You Have to Have Money – to Make More Money

Of course, the prerequisite is money. And, as we said above, a lot of money. Because, the minimum investment is, say, about $100,000 – but it can go up to $10 million! You don’t need an average with such high amounts, but Nicholas gives you one: about $1 million. We guess the lesson is: if you have that much, you’ll be able to make a lot more with a hedge FOF.

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The goal of this book is to provide investors who are new to the hedge fund industry with a practical guide to understanding and evaluating funds of funds. Click To Tweet The fund of funds is a pooled vehicle for investing in multiple hedge funds. Click To Tweet The minimum investment restrictions mean that building a diversified portfolio of hedge fund investments requires considerable capital. Click To Tweet Hedge funds differ from traditional mutual funds in the range of allowable investment approaches, and the goals of the strategies they use. Click To Tweet Hedge funds and funds of funds have very similar investment structures. Click To Tweet

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Security Analysis Summary

Security Analysis Summary

Do you want to learn a thing or two about securities from the father of security analysis himself?

Then read on to get a glimpse of what you can expect from “Security Analysis.”

Who Should Read “Security Analysis”? And Why?

“Security Analysis” has been in print continuously ever since it was first published in 1934. This alone witnesses this book’s relevance.

Numerous investors have made fortunes basing their investing practices on Benjamin Graham and David Dodd’s principles of value investing.

Even the legendary Warren Buffett calls this book his Bible.

We recommend “Security Analysis” to all investors who want to work on their investing-craft as well as to students of financial history.

About Benjamin Graham and David Dodd

Benjamin GrahamBenjamin Graham passed away in 1976, but until today his theories remain relevant. He was the founder of the value school of investing, a co-author of several books on finance and investing and is considered the father of modern security analysis.

David Dodd was an assistant professor of finance at Columbia University in New York City.

“Security Analysis Summary”

Security analysis is a process of deciding which securities would be good investments.

What is a sound investment anyway?

It is an investment which keeps the principal safe, and on top of that delivers a return.

Any kind of investment that does not meet these two conditions is not an investment, but speculation.

Market analysis, unlike security analysis, tries to forecast the action of the market, or the prices on individual securities, without looking at facts about different companies.

There are a few types of market analysis.

One of them, called technical analysis, uses past market values to forecast future prices.

The other one uses indices of external economic activity, that has influence over the prices of the securities.

However, experience has shown that none of these market analysis is valid. In fact, the only thing they do is promoting speculation over fact-based investments.

A term you should know about when it comes to security analysis is intrinsic value.

It is “an elusive concept. In general terms, it is understood to be that value which is justified by the facts…the assets, earnings, dividends, definite prospects, as distinct…from market quotations established by artificial manipulation or distorted by psychological excess.”

Investors are not able to calculate an intrinsic value for particular security since there are too many variables involved.

However, a careful study can end up in a conclusion if the price the market puts is proper.

Traditional economics divides securities into two categories: stocks and bonds.

However, this division is inappropriate since it accentuates the form of the security, instead of focusing on its purpose and safety.

A better classification can be done by grouping securities in three groups: fixed value securities, including preferred stocks and high-grade bonds; variable-value senior securities, consisting of preferred shares and speculative bonds; and common stocks.

Now, you should not mix the soundness of the bonds with their form. The security of the bonds comes from the issuer’s financial strength.

Granted, no industry, and hence no company is depression-proof. However, there are two factors that make a company resilient in hard times:

  • A dominant size within its industry
  • Sufficient earnings to cover its bond interest by a large margin

Companies that do not meet these conditions are not a right place to invest in, even though the bond may seem very attractive.

Preferred stocks are a mix between the instability of common shares and the limited return of bonds.

These may sound like unwanted characteristics, but preferred stocks can be safe investments as well. They only have to meet the safety requirements of bonds that we mentioned before.

You will notice that following these requirements and searching for investments that have these characteristics will limit your choice of investments.

This, you need to consider, as a positive sign.

Income bonds are also called adjustment bonds and should fulfill the same criteria as preferred stocks.

Guaranteed issues are placed somewhere between preferred stocks and bonds. Investors should do the same as they would do with bonds: examine the guarantor’s financial soundness.

Remember that there is no such thing as a permanent investment.

Of course, there are always exceptions to the rule, so although you should stay away from many of the preferred stocks and bonds that do not meet the criteria, you can consider purchasing some of them, since you will buy them at a discount to their artistic value.

However, make sure that the company is not selling at a discount because it is not financially stable.

Now, common stocks are much more speculative than other securities.

So, when investors decide to purchase common stocks, they can decrease their risk by portfolio diversification.

When investing in common stocks analyze the following vital factors:

  • Dividend rate
  • Earnings
  • Asset Value

Key Lessons from “Security Analysis”

1.      The Three Functions of Security Analysis
2.      Questions an Investor Should Ask Himself When Purchasing a Bond
3.      Criteria for Purchasing Speculative Senior Securities

The Three Functions of Security Analysis

  • “Descriptive function.”
  • “Selective function.”
  • “Critical function.”

Questions an Investor Should Ask Himself When Purchasing a Bond

  • Is the value of the company’s business more than the value of its debts?
  • Can the company meet its financial obligations even in the worst-case scenario, such as a recession or depression?

Criteria for Purchasing Speculative Senior Securities

Some senior securities come with privileges that make them tempting:

  • “Convertible issues.”
  • “Participating issues.”
  • “Subscription-warrant issues.”

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“Security Analysis” Quotes

The fact that no good bonds are available is hardly an excuse for either issuing or accepting poor ones. Click To Tweet Needless to say, an investor is never forced to buy a security of inferior grade. Click To Tweet An institution with securities of its own to sell cannot be looked to for entirely impartial guidance. Click To Tweet Safety does not reside in titles, or forms, or legal rights, but in the values behind the security issue. Click To Tweet There is very little altruism in finance. Click To Tweet

Our Critical Review

Many things have changed since the 30s when “Security Analysis” was first published, however, the concept of investing in companies that are undervalued has stayed the same.

This book explains investment basics and gives a glimpse of the times when policymakers were still learning the lessons that the Great Depression had to offer them.

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Profit in the Futures Markets! Summary

Profit in the Futures Market! SummaryInsights and Strategies for Futures and Futures Options Trading

You follow the trends. You have heard about people making a lot of money by trading options in the futures market.

You think you should try it too.

But, should you?

Read our summary of “Profit in the Futures Market!” and find out the answer to this question.

Who Should Read “Profit in the Futures Market!”? And Why?

Jake Bernstein knows what he talks about.

If you are thinking about speculating, this book will make you diversify. If you want to know the importance of options and hedges, puts, and calls, then this is a lesson you shouldn’t miss.

We heartily recommend “Profit in the Futures Market!” to all investors who wouldn’t mind going through hundreds of recommendations.

About Jake Bernstein

Jake BernsteinJake Bernstein is an author, a lecturer, an analyst, trader, financial consultant and president of MBH Commodity Advisors Inc.

“Profit in the Futures Market! Summary”

If you are one of those people who looks at the futures market as a possibility to make more money, it is time you reevaluate your beliefs.

Before we continue, let us explain the crucial difference between stock and futures trading.

Stock trading relates to profiting from an appreciation of the amount which is already invested.

Futures trading, on the other hand, relates to predicting volatility, which quite honestly, cannot be predicted. Volatility depends on so many uncertain factors such as consumer confidence, panic, weather, strikes, politics, mania et cetera.

By definition, futures are contracts to purchase a commodity for a specific future price of a particular future date. People buy futures hoping that their value will be higher than the value of the actual product they are for.

However, if their predictions are wrong, they enter losses.

Of course, once you know this it becomes logical that future markets offer a higher potential for profit since the risk is higher than in stock markets.

Now, let’s get one thing clear: some people earn a living by trading in the futures market. However, future professional traders who work at institutions are more numerous than individual traders.

This means that the part-time trader in possession of limited capital has low chances of earning extra money.

Even if independent traders have all the required skills and information, they can expect for at least half of their speculations to fail.

This becomes even clearer when you understand that the greatest opportunities lie in the markets with the greatest volatility and most substantial trading value.

However, these opportunities lure people, so the trades in traditional markets are declining for years now, while trading in interest rates, currencies, and stock indices became the norm.

These changes brought a new set of rules, techniques, and software for trading.

Now, if you still want to try futures trading, we recommend you to buy a computerized system first, to gather and analyze market information. Some people will tell you that as a new trader you will learn much faster if you do your trends and charts, but computerized systems will save you time.

You can choose between technical, fundamental and contrarian analysis system.

Furthermore, you need to know how to use this information, when to place an order and how. You also need to understand the market you are trading in.

Other than that, you can purchase chart services and specialized statistical services, which will give you recommendations, report, analyze and interpret your data for you.

If you think that a decision which is not the same as the crowd’s is the best, then go with information sources that require no analysis.

If you decide to use your own system, test it first. You can check it by using a computer program to see how such a system would perform in a past market about which you have information.

In this way, by comparing the result with the actual past data, you will check whether your system is on point.

Even with all this advice, bear in mind that most probably you will lose at least half of the capital you invest.

Ultimately, those who can stand long streaks of losses the longest, have the biggest chance to earn big bucks.

Key Lessons from “Profit in the Futures Market!”

1.      Tips for Traders
2.      Market Mania
3.      It’s the Discipline, Stupid

Tips for Traders

  • Most futures portfolios should consist of no more than ten positions at a time.
  • Buy a call option instead of going long.
  • Buy put options in expectation of a down move.
  • In expectation of a significant up move, buy futures and buy put options for protection.
  • Sell futures short and buy a call for protection.
  • Buy a put and a call when you expect a significant move, but you don’t know which way.
  • Buy covered options to limit your risk.
  • Buy option spreads to exploit the differences among long-term, short-term and intermediate-term moves.

Market Mania

The futures market is based on sentiment and mania. Buyers buy things that do not yet exist, following a feeling or opinion they have.

In all reality, the information that fuels futures trading is purely subjective, which later translates into a semi-scientific form.

You could consider futures trading as a mix of will, resources, discipline and the ability to make sense of piles of information.

It’s the Discipline, Stupid

Each trade on the futures market is a challenge. Those who cannot afford to wind should not even bother to enter the game since when it comes to futures trading, traders learn from their mistakes. Those mistakes are always in the form of lost capital.

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“Profit in the Futures Market!” Quotes

The majority of traders are, and will continue to be, losers. Click To Tweet The futures game is all about professionals versus the public. Click To Tweet While futures contracts allow sellers or buyers to trade in things that do not yet exist, futures options allow buyers and sellers to buy or sell the right to buy or sell things that don’t exist. Click To Tweet Futures trading should be only part of an overall investment program and, as such, you are unlikely to go bust. Click To Tweet A good trader does not let his ego compete with the market or any other trader. Click To Tweet

Our Critical Review

“Profit in the Futures Market” is not only well-written and thoroughly explained, but comprehensive and practical as well. The author gives real and useful lessons, which can be quite hard to find. It is noticeable that the author put an extensive amount of research into it, and that he knows what he is talking about.

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How You Can Profit From Credit Cards Summary

How You Can Profit From Credit Cards SummaryUsing Credit To Improve Your Financial Life and Bottom Line

When you hear the word “credit”, you immediately think of debt.

So do credit card companies. That is why they are giving you a credit card – hoping that you’ll immediately enter debt as soon as you are given the chance.

Unfortunately, most of the time – they are right.

Read on and find out how you can do the opposite, and protect yourself from heavy debt.

Who Should Read “How You Can Profit From Credit Cards”? and Why?

Curtis E. Arnold does a great job explaining the biggest problems with owning a credit card, and how you can avoid them.

You do not need to stay away from credit cards, but you need to spend wisely.

He gives alternatives and tips such as using the card companies’ money for little interest, earning airline miles, or getting a cashback on your purchases.

Sounds too good to be true?

Well, it’s not. In fact, it is doable.

We recommend “How You Can Profit From Credit Cards” to all credit card users, who feel they need a change in tactics.

About Curtis E. Arnold

Curtis E. ArnoldCurtis E. Arnold is a consumer advocate that has founded a website that advises consumers on the topic of credit cards.

“How You Can Profit From Credit Cards Summary”

Credit cards are great, and they have tons of benefits.

However, many people do not know about anything else about credit cards except that they can use them to pay for things they cannot afford at the moment.

Hence, all the benefits that credit cards can offer are practically worth nothing if you do not know how to use them.

Luckily for you, we are here to tell you how you can take advantage of all the great perks like partial mortgage payments, gift certificates, free airline miles, buying things with no interest and many more.

Hey, you can even use credit cards to increase your credit rating, and thus be able to get car loans, mortgages and many other deals on major purchases.

You don’t believe us?

But it’s true!

Credit card companies’ environment is highly competitive. So, they need to use different incentives to lure the customers in and make them choose their company over their rivals’.

If you are wise, you will use all of these benefits without stepping too far and without paying high-interest rates.

Let’s start with the basics.

First, what you want to do is to take your time and read all the critical information that the credit card company gives you before you sign up, such as annual percentage rates, annual fees, interest calculation methods et cetera.

Also, take notice of the rebates the company offers you. Some time ago, the discounts were low, but nowadays they are as high as 5%, which matters a lot since usually, the cash rebate cards have higher interest than other cards.

So, do not be fooled increased rebates. Credit card companies give them because they believe that you will not pay your whole balance each month. So, they may offer you a higher rebate if you carry a balance, but it will only bring you a higher interest rate.

Plus, these cards are bad for you since you will feel the temptation to overspend.  

Of course, we are not saying not to use them, but you should do that wisely.

Furthermore, spend some time understand how credit card companies calculate their interest rates.

Sometimes you can use some credit cards with a lower interest rate to eliminate the debt on another one, with a higher interest rate.

The best interest rate you can look for is below 10%. However, you can only get such bargain if you keep a high credit score.

You can also check out credit unions for low rates.

Whenever you want to negotiate a lower rate, do not hesitate to contact the credit card company. They will listen to you, since losing you will cost them money, especially if your credit rating is high.

When you do get the lower rate, keep it that way by paying on time and not going beyond your credit limit.

Also, do not apply for new cards more than once every six to twelve months, since issuing a new card will lower your credit rating as well.

As you can see so far, credit cards are great, but only if you know how to use them properly. If you don’t, they will sink you into debt.

The worst possible way to handle your credit cards is to make only minimum payments.

Think of them as ticking time bombs. If you use them incorrectly, they can kill you.

But if you know how to make them work for you, you can benefit greatly.

Key Lessons from “How You Can Profit From Credit Cards”:

1.      Strategies to Avoid Credit Card Debt
2.      Credit Cards and College Students
3.      “Targeted” Cards

Strategies to Avoid Credit Card Debt

  • “Don’t fall for the hype.”
  • “Manage your finances.”
  • “Get support and save money.”
  • “Avoid extra expenses.”
  • “Is a card right for you?”
  • “Pay before your due date.”
  • “Treat your credit cards like cash
  • “Limit the plastic in your pocket.”
  • “Cash advance = financial suicide?”
  • “Say ‘no’ to extra products and services.”
  • “Benefit from planning and saving.”

Credit Cards and College Students

Credit companies just love young people. Or, should we say, inexperienced people.

Students can easily be fooled by the seemingly great conditions credit companies offer them and amass a pile of high-interest rate overnight.

So, teach your kids and the youngsters you know about the dangers of debt and make them savvy spenders.

“Targeted” Cards

There are various targeted credit cards.

For example, you can use a secured card to make a deposit as collateral and increase your credit rating, which you can also rebuild by using different retail cards.

Wealthy individuals can use prestige credit cards, and use benefits such as hotel upgrades and frequent flyer miles.

Of course, these cards come with higher annual fees.

Ultimately, your choice of a credit card depends on how deep your pockets are.

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“How You Can Profit From Credit Cards” Quotes

Imagine getting 3% to 5% back just for using a particular piece of plastic. That’s more than we often earn on our savings at the bank. Click To Tweet Take a credit card, debit card and ATM receipts with you when you leave a cash register. Never throw them in a public trash container. Click To Tweet Many card issuers extend the length of a manufacturer’s warranty...if you use their card to make the purchase. Click To Tweet Moving debt from one card to another (attractive balance transfer offers excluded) is often aptly compared to moving the deck chairs around on the Titanic. It’ll drown you Click To Tweet Credit repair scams vary, but most charge their customers a fee to ‘erase’ bad credit – yet the companies offering such services can’t legally do anything of the sort. Click To Tweet

Our Critical Review

A very informative book. The only downside is that most of the advice is valuable for US citizens only.

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Life After Debt Summary

Life After Debt SummaryFree Yourself from the Burden of Money Worries Once and for All

Are you indebted? It’s okay, so are many other people in the world.

Although it may cause you stress, it should not be a constant preoccupation.

You can pay it off!

The only thing you need is right organization and knowledge of your rights.

Who Should Read “Life After Debt”? and Why?

We have all encountered debts be it a credit card debt or a mortgage.

But being in debt does not mean that you should stop living your life.

That is why Bob Hammond’s “Life After Debt” is an excellent read for all employees, unemployed and business owners who want to deal with their debt problems.

About Bob Hammond

Bob Hammond is an author and speaker on workshops, seminars and interviews, focused on the topics of credit and debt.

“Life After Debt Summary”

Debt is increasing all around the world, including the US.

People have lost their homes and lands, and as time goes by, they use an increasing portion of their salaries to pay off debts.

How can you know that you are entering debt before you go too far?

There are a few warning signs you should look for:

  • Using credit to buy some things that you were able to buy with cash in the past.
  • Extending existing loans of borrowing money to pay off debts.
  • Using your savings account to cover the expenses for bills, instead of using your checking account.
  • Borrowing from your life insurance.
  • Using your rent money to pay off other debts.
  • Using credit card advances to cover everyday expenses.

Even if you notice some of these signs in your life, do not worry, there is a way to start over. Now, we will discuss some of the possibilities you can use and climb out of your debt.

First, the next time before you borrow money or use a credit account, calculate whether you can afford the payments.

Study the annual percentage rates and the finance charges, since the credit costs may vary.

Your creditors are obliged by law to show you the finance charge, or the total amount it will cost you to use the credit, and the annual percentage rate, or the relative cost of using credit annually.

So, before you enter into a credit agreement, read these two types of information carefully.

Go a step further and look at the variations in monthly payments and total finance costs over the length of the loan.

Also, compare a few creditors based on these numbers, and make your decision only after you have calculated which of them is the most suitable one.

Second, you probably have different financing arrangements besides loans, such as credit cards, gasoline company cards, and overdraft checking accounts. These open-ended credit arrangements allow you to pay more money than your current balance is until you reach a previously established limit.

When you enter into such an agreement, do the same thing you would do with a loan: compare the creditor of choice with other creditors. Look at the terms of the credit agreement, and ask your creditor about the chargers.

Other things you may encounter are damaged merchandise and billing errors.

In such cases, the most important thing is to act quickly since creditors are lawfully obliged to correct errors promptly.

If you believe that a bill is incorrect, inquire about more information by writing to the creditor within 60 days after your bill was issued.

When you contact them, include details such as the account and the error, and the reason you believe it is wrong.

While you are waiting to hear back from the creditor, pay for the parts you don’t dispute, but do not pay for those, you have inquired about.

Keep in mind that as you are arranging a dispute, the creditor cannot do anything to threaten your credit rating, or even take any action to collect the disputed amount.

If you were wrong, use your negotiation skills to stop the creditor from filing a negative statement in your report. If necessary, you can even take legal action, but let’s hope it doesn’t come to that.

Finally, take care of your credit rating, since bad credit rating can increase your interest rates and finance charges.

Overall, you do not need to overburden yourself with your debt.

Be rational with your spending, and be serious about paying off whatever debt you may have incurred until now while staying away from any additional debts.

And remember, know your rights and always calculate your steps.

Key Lessons from “Life After Debt”:

1.      Most Common Methods for Calculating Charges
2.      Billing Errors
3.      Steps to Stop A Cycle of Increasing Debt

Most Common Methods for Calculating Charges

  • Adjusted billing method
  • Previous balance method
  • Average daily balance method

Billing Errors

  • Charges for something you didn’t buy or authorize
  • Charges for something that was incorrectly billed
  • Charges for something you didn’t accept when it was delivered
  • Charges for something that wasn’t delivered based on your agreement
  • Mistakes due to arithmetic
  • Failures to post a payment or credit
  • Failure to mail your statement to your current address

Steps to Stop A Cycle of Increasing Debt

  • Do not allow for any more unsecured debts
  • Keep your credit card away from your wallet
  • Contact a consumer credit counselor and ask them for help in setting up a credit repayment plan
  • Make a list of the debts you are in, and make a plan to pay them
  • Pay off the accounts with the smallest balances as soon as you can
  • Find opportunities to increase your income
  • Avoid debt-consolidation

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“Life After Debt” Quotes

Negative information in your credit files, such as previous late payments, collection accounts, or judgments, can prevent a lender from even considering your credit application - regardless of your ability to pay. Click To Tweet A creditor may not threaten your credit rating while you’re resolving a billing dispute, and until your complaint is answered, the creditor also may not take any action to collect the disputed amount. Click To Tweet Truth-in-lending laws require that open-end creditors tell you the terms of the credit plan so that you can shop and compare the costs involved. Click To Tweet There’s an easy and effective way to straighten out billing errors. The Fair Credit Billing Act requires creditors to correct errors promptly and without damage to your credit rating. Click To Tweet Open credit card bills promptly and compare them with your receipts to check for unauthorized charges and billing errors. Click To Tweet

Our Critical Review

“Life After Debt” is a wonderfully practical book, which can help anyone get out of debt.

However, since Hammond discusses only US law, most of the strategies resonate only with American readers.

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