Achieve Financial Freedom - Big Time!

by Sandy Botkin and Matthew Botkin

Here’s an edited version of the review I posted on Amazon:

"Back in college, a popular drinking game was “Hi Bob”. Everybody had their drink of choice and we all sat down to watch an old episode of The Bob Newhart Show. Whenever somebody on the show said, “Hi Bob!”, everybody drank up. The Botkins’ version of “Hi Bob” is the word “chuckled”. In this book, Sandy chuckles, Matt chuckles, Sam chuckles, Jeff chuckles, Lori chuckles, every gosh dang person in every information filled chapter chuckles. That is to say, Sandy Botkin and his CFA son Matt have taken a lot of highly useful information, broken it down into a bunch of scenarios and “discussions” with various subject matter experts in wide-ranging areas of financial expertise, and presented these dialogs as individual chapters in this book. (I do not believe any of these were actual conversations recorded and written down – far too contrived for that.) The information is sound, if a little basic, but the dialog format is easy enough reading. They cover everything the typical non-professional investor needs to know, from life insurance and mutual funds, to saving for college and retirement, to mortgages and commodities, and everything in between. It’s all, as I said, informative, important, and useful information.  It’s just that all that information is pushed along by a lot of not-very-funny lines that end with somebody chuckling that drove me to drink – just like Hi Bob – and made me subtract one mark from my rating."

I think book needed a little better editing and probably, the authors should not have used the dialog format for every single chapter. They would have done better to intersperse the dialogs more sparingly, perhaps with something like: “In this chapter, we’re going to tell you a few more things that Jeff taught us...” or something like that. Still, this is a good beginner’s finance book.

The Toilet Paper Entrepreneur

by Mike Micalowicz 

The title of this book, Toilet Paper Entrepreneur, suggests this is not your everyday business book. And it isn't  The author equates starting a business to a certain biological function, and then he continues to draw analogies between what we do when we do number two, and what we do when we start our own business. And although that analogy is something short of obvious, the author still succeeds in using it to provide a useful guide to entrepreneurship. TPE contains the usual hints, suggestions, tips and strategies of any number of self-help business books: how to obtain and keep customers, how to save money in everyday business, how to get motivated to start, and the like. Where it differs is that it takes a much more down-to-earth approach and is candidly realistic. The author continues the candor and refreshingly straightforward approach to tell the reader what will or will not (in the author’s opinion) work in starting one’s own business. The author also discusses the entrepreneurial mindset and even goes so far as to tell the reader that if you don’t possess a certain quality or foster a certain talent, you need to give up the idea of being an entrepreneur and go back to your day job. The book has a number of the money saving tips and is chock full of practical advice from the author’s own experience. Not everything in this book is for everybody. For example, there is a whole section about capitalizing on one’s youth, which as a pushing-fifty company man I felt completely alienated me and ruled me out as a potential entrepreneur. (Personally, I think my experience and knowledge are assets that are at least as valuable, if not more valuable, than the “vigor of youth”.) Anyway, the sections that are applicable to you as an individual reader will be interesting and definitely of some use if you plan to start your own business (and even if you don’t). This is a well written, informative, at times funny, and always earthy book. I recommend it to anyone who has an interest in business in general, or who is interested in becoming an entrepreneur.

Note: The author provided a gratis copy of the book for purposes of this review.

The Malign Hand of the Markets

by John Staddon

When a professor of neurobiology writes a book like this, it seems easy to pass it off as a cross-discipline, “make easy money from an obvious situation” kind of stunt, almost. But this book is extremely insightful, carefully written, highly detailed, and probably accurate. It points out that there is more to economics than meets the eye and that when human behavior is involved, financial markets are at risk from other forces besides supply, demand, interest rates and the like.

Your money is at risk because ignorance creates gaps in knowledge, gaps in knowledge cause specious thinking, and specious thinking causes illogical behavior. This leads to laws and regulations that actually work to make the situation worse, not better. Can all this be prevented? The author thinks so, but I think not nearly enough people are reading this book (or writing others like it) to change the economic policies of the world much. And that’s scary.

This is an interesting and original book. Not everyone will agree with what it posits, but there are enough graphs, illustrations, and logical arguments to convince most free-thinking readers. I don’t hold out much hope for positive change, but I’m glad I read this book. At least I can steer myself clear of the malign hand, even if the government won’t do it for me.

The Chinese Way to Wealth and Prosperity

by Michael Justin  Lee

The author, Michael Lee, has peppered this book with stories and anecdotes from Chinese history, both from the world at large and from the history of the Chinese experience in America. But telling these stories and sprinkling some common sense investment practices explanations with terminology in Chinese does not by any means make this a book about “The Chinese Way” to do anything. Just because there is a word for it in Chinese doesn’t mean it was absorbed by Western society from Eastern culture. It could just be common sense (and often, it is).

Still, this is an interesting and helpful book, clearly written, well organized, and short and to the point. There are a few inconsistencies that detract from it to make it only an average book on the “utility in investing” scale. For example, on page 4: “Your diamonds...are in your own back yard...” Page 54: (the title of one whole section, no less) “Invest Beyond Your Backyard”. The common sense can be boiled down to any number of simple topics, all of which have been written about before: Don’t waste your money, invest in an education, buy things with value, etc. These only have to do with “The Chinese Way” in that, people need to do these things to be prosperous, whether they are Chinese or not.

Given the tenuous connection of this book to (specifically) the Chinese Way (leaving the argument about whether the Chinese are, in fact, wealthy and prosperous), this is not the best book on investing, and certainly not the best book to learn about Chinese financial goings on and the like. But the average reader should be able to get through the book easily enough and pull out some valuable insight, making it well worth three dollar marks.

Backstage Wall Street

 by Joshua M. Brown

I didn’t know who Josh Brown was before I was given a copy of this book to review, so I wasn’t familiar with what he was all about. I’d never read his popular blog (still haven’t) and didn’t know what to expect from this book. As I started reading and well towards the middle of the book, I kept telling myself this could only be a two star book. This guy’s just telling a bunch of his stories from the trenches of Wall Street while not imparting any real, valuable information. And as the half way mark, I was still waiting for whatever investor advice he was going to impart from “backstage”. But such advice never comes. Thankfully, at the halfway point we found out why when he comes out and tells us: this isn’t a book about investing.

Finally knowing that, I was able to relax and enjoy the book. I began to appreciate Brown’s insight into some of the inner workings of the business of investment and how other people make money off of my money. I began to understand a lot of esoteric concepts related to fairly common things, such as IRA’s, ETF’s, 12b-1 fees, and so forth. Brown’s experience and candor may not help you invest better, but what he has to say may still make you a better investor. That’s because his information makes you want to ask some questions – possibly of your broker, definitely of yourself – and those answers should give you better investment judgment. It was certainly eye-opening seeing the world of stocks from a salesman/broker/sweat shop point of view, and the reading was, though not engrossing, at least enjoyable.

My two complaints about this book are minor. The first is that this book sounds a lot like a blog. As a dyed in the wool blogger, Brown can be disjointed and sometimes lacks good flow from chapter to chapter. He’s at his best when he’s writing jab-like sentences to make a short, right-to-the-heart-of-the-matter point, in other words, he’s effective when he writes like a blogger. When he writes like a Wall Street insider telling a story, his prose tends to breaks down, sounding quite unconvincing and contrived at times. My other complaint is how he uses asterisks in bad words. Maybe I’m wrong, but in a book like this, there really isn’t anybody to protect by putting an asterisk between an ‘s’, an ‘h’, and a ‘t’. Swear like a stock broker, if that’s what you are! I’m okay with it, buddy.

At various other points in reading this book, I felt it was a two, three, or four dollars sign work. Just when I decided I would give it four marks, Brown trots out a gratuitous section of famous Wall Street insiders echoing his points and expressing their similar views to his. It sounded like an artificial scaffold of ideological support for an insecure author (or a blogger trying to turn writer). That bumped it down to just above average, and into the three dollar sign range. “Backstage” is still quite different from other books on Wall Street, so it will appeal to most anyone with a passing interest in investing.

George Lindsay and The Art of Technical Analysis

by Ed Carlson

No, this book is not about Goober from Mayberry RFD. (That’s “Lindsey” with an “e”.) The George Lindsay of this book was a technical analyst from the 1930’s and ‘40’s through the early 1980’s or so. He was a guest star on Louis Rukeyser’s stock program and was considered a bit of a savant, I guess. This book sets out to be a detailed study of his technical analysis methodology. But don’t let that fool you: There is precious little this book that pertains to, or could be used in, modern equities markets.

I knew I was in trouble at the first chapter of a book, which explores the biography  of Mr. Lindsay, including his sexuality. The author says that an understanding of the whole person is essential to understanding his technical analysis methods, but I have my doubts about that. Thankfully, that chapter is relatively short. The remainder of the book is all about the technical analysis methods of Mr. Lindsay. It is a straight-forward, no nonsense explanation. Most of the methods are graphically and numerically illustrated, and I think that once upon a time, these methods, mainly charting highs and lows and comparing intervals between them, probably had some validity. I think now they are painfully outdated and not of any practical use in current equities markets. For example, one of the methods involves subtracting a market high from a market low and subtracting from that by another number derived from some ratio or something (details are not important here). From there, you get some other number that dictates some interval of rising or falling prices. Fine, but back when the formula was derived, the DJIA was at 300 points or so. And in one of the cases, the example talks about a 30-point movement – 10% of the market. Well, a 30-point movement now is less than 0.25% of the market and probably happens fifty or a hundred times a day. Likewise, if we were trying to get to a 10% difference (let’s say), you’d be talking about a 1,200 point movement. Not out of the realm of possibility (especially in today’s markets), but are you really going to do that analysis and place bets on the markets, hoping for a 10% shift one way or another? Really? Good luck. What’s worse, the book’s only case study, presumably to prove the value of the methods, uses stock charts from the 1960’s. Maybe it’s just me, but it seems obvious that the equities markets of fifty years ago are a completely different breed of market compared to today’s. I don’t think you can successfully employ investing strategies from half a century ago in this day and age. (Again, if you think differently, good luck.)

Technical analysis has come a long way, even in just the last few years. Maybe a thorough analysis and extrapolation of Mr. Lindsay’s methodology could be put to practical use in today markets. Maybe. But I’d doubt it. As a history of equities analysis and an insightful exploration into one of the early pioneers of technical analysis, this book is probably of some value, but as a primer for investing in today’s markets, it’s not. I can give it three dollar marks for being well-written and informative, but that’s it.

Maverick Trading

by three guys from that company

When I first heard the title of this book, I thought what I was getting into was another “Here’s a scary and crazy way to make money in stocks that you've never heard of before” books. I mean, I hear “Maverick” and I’m thinking cowboys, whiskey, and poker games that end in gunfights. So I figured Maverick trading would be just that: some bold new take on investing in stocks where you keep the whiskey close by in case things don’t go well. (If that were the case, what you do with the gun is another story, too.) Turns out that Maverick is the name of the company (and the trading philosophy) of the three authors of this book, and Maverick Trading’s only thread to the other Maverick is, you try to make money.

The book starts with basic explanations of what moves markets: buyers and sellers. It also discusses why buyers buy and why sellers sell, and what happens when they don’t. They cover the basics of stock charts so that even a raw beginner can obtain and understand useful information on market movement. From there, the nuts and bolts of how markets move, along with the intricacies of analyzing stock positions and behind the scenes movements in prices, sectors, and industries are covered in some detail. I suppose more sophisticated traders than myself might find some of what Maverick is about to be too basic, but I have been investing in stocks for 26 years and never really considered looking at the market the way Maverick does. And of course, I also never thought it might be possible to see when large movements take place and what the real opportunity to buy or sell an equity might be based on what other people are doing. To some extent that makes this a trend book, but Maverick teaches you how to get information, how to analyze it, what to do with it, and when to act on it, regardless of trends. That makes it a complete package for successful trading. The “tools” they put in your “toolbox” are understandable, logical, rational, and eminently useable. And because they advocate infrequent trading only after the big picture is understood, I’m thinking that Maverick trading is a good risk limiting tool, too.

I like this book not only because of the information it contains, but because of its earthy, friendly, approachable tone. Some of the authors’ analogies can at times be ridiculous but the points they are trying to make get illustrated and illustrated well. It makes learning the Maverick way a breeze and reading the book is a pleasure. I didn’t have to buy this book, but it’s one that had I purchased it for myself, I still would have been very satisfied. I give it five dollar signs for that reason.

What Works on Wall Street

 by James P. O’Shaughnessy

I first read this book two editions ago. I always considered it a sober and sensible book, and I found out about it because I invested in a fund that used this book as the cornerstone of its investing strategy. WWOWS has always taken a more than practical approach to investing in stocks. Being analysis intense, it is also quite detailed and wide-ranging. That’s mainly because, although there is always some shifting, there are plenty of strategies and methods that actually work on Wall Street.

This new edition retains much of the content and structure from previous editions. Most of the chapter titles are the same, and although the order of their presentation is changed somewhat, they are still eminently readable as a linear progression or as “one offs” on specific topics. This book has a much cleaner look than some previous editions, having gotten rid of the somewhat pointless (get it?) line graphs that illustrated certain points. These are often replaced by bar charts or tables, which although they are much dryer, they are also much more useful. Physically, WWOWS’s fourth edition is double the size of the revised edition, and as far as I could tell, all pertinent figures illustrating a point are updated with more recent data samplings and examples. The starting and ending points of samples of data, however, tended to be somewhat arbitrary, possibly to demonstrate a topic or theory more clearly and dramatically. The data that is supplied is extensive and always clearly illustrates the topic at hand. It’s smooth and informative reading. In other words, this work just keeps getting better and better.

In the volatile, unpredictable world of equities investing, it goes without saying that what works today might not work tomorrow, what worked yesterday might not work today, and what worked when the second edition of this book came out might be running out of steam at this point. Still, for a general introduction to stock investing, stock analysis, investment and speculation strategies, and quant perspective, WWOWS remains the quintessential handbook. I can’t think of a reason, therefore, not to give it a full five dollar signs.