Winning With The Market : Beat The Traders And Brokers In Good Times And Bad

Rating:
Summary: How can I find another 2-8% of my income to invest
Review: Douglas Sease's "Winning With The Market" is good stuff. He seems to have his head screwed on straight -- and his suggestions for how to navigate the shifting currents of the financial rivers seem sound.

The question is: without robbing a bank or playing the LOTTO, how can I find more money to invest wisely in order to really build up as large and secure a financial account as possible by the time I retire? It's a question that troubles me, and many people like me. I'm already trying to sock away as much as possible. I'd like to be socking away more. But how?

After you buy Sease's book, you might want to check out another book by a financial services CEO named Wade Dokken (of American Skandia, one of the fastest growing variable annuity and mutual fund companies). His new book is called "New Century, New Deal: How To Turn Your Wages Into Wealth Through Social Security Choice."

Dokken has a revolutionary premise: you already have more money with which you could invest for your retirement; the problem is that instead of using that money wisely and productively, you're sending it to Washington in the form of your Social Security taxes. Hmmm. Interesting. And frustrating.

But what if you could take 2%, or 4%, or eventually even 8% of the 12.4% you now send to the bureaucrats in Washington, and instead deposit that money in a personal retirement account conservatively invested in, say, stock mutual funds, or TIPS, for example?

In other words, what if you could apply Sease's sound investing advice with Dokken's revolutionary premise on how to scrape up more money to invest? Well, Dokken runs the numbers. They're astounding. You almost have to run them yourself, blink hard, and then run them again. But they're true: if you could invest 8% of your income (two-thirds of your Social Security taxes) in an IRA or 401(k)-like account you could retire with well over $1 million, possibly even more than $2 million. And even if Washington only created 2% accounts, you could still build up an account worth a quarter of million or more.

And the risk, over the long term, is minimal. Why? Partly because the markets have always grown 6-9% annually over the long haul. And partly because you'd be engaged in the ultimate act of dollar-cost-averaging. You'd be investing relatively small portions of money in equities out of each paycheck, every two weeks for the rest of your working life.

Sease is right -- invest what you have wisely and shrewdly.

But Dokken (interestingly enough, a lifelong Democrat) is also right -- turn up the heat on Washington for the freedom to invest more of YOUR OWN MONEY in your own personal retirement account.

Rating:
Summary: The Market made easier....
Review: Sease seems to me like a man with a good head on his shoulders. He understands the market very well and simplifies it for the average investor. We are all looking to make more money while spending as little as possible and Sease's investment tips are a good start.

He spans the field of investing from those who are interested in high risk stocks to those who wish to invest there money more safely into money markets. The book has tips for every investor, which is both a good and a bad thing.

Sease focuses on a broad scope of savings and investment strategies for the person looking to explore the field. Being this broad, I do not recommend this book to those who look to dig up information on more specific types of investment strategies. There are various books out there to meet the needs of the more narrow investor, but Sease's book is focusing on the entire spectrum to inform his readers of the possiblities that are out there.

To be honest, I read this book for an economics class that I am taking, and initially I was not thrilled. In reading it, however, I have learned much more about the market and investing then I could have imagined. It is a stretch, but I may have even enjoyed the book from time to time.

I highly recommend this book for those who are looking to make the kind of retirement/nest egg/tuition money that they really dream of having. It will allow the average investor to jump into what can often be a very confusing and sometimes scary market. If nothing else you will understand the market better should you ever decide that you would like to try investing.

Rating:
Summary: Use Savings, Stocks, and Bonds to Meet Your Financial Goals
Review: This book is an overview of simple ways to create investment income. As such, it is lacking in depth and documentation found in many narrower books. You will find that you will need to work with these more focused books in order to get the full benefit from this one. The main reason for reading this book is to consider the many sample portfolios for mixes of stocks and bonds for accomplishing financial goals at different ages, with different objectives, and with varying financial obligations.

"Do you want the stock market to go up or down?" Mr. Sease poses that question to help you decide if you are an investor or not. Investors want the market to go down so they can buy cheap. Those who are living from their investments or cashing them out want high prices, because they will be selling rather than buying in the future.

This book provides a good general overview of the role of savings, stocks, bonds, investment brokers, investment managers, financial advisors, mutual funds, public sources of information in helping you make money. Unlike many such books that then espouse one solution for all, the book segments its readers by age, financial obligations, and income to suggest different methods to be used to implement the book's ideas.

The book has a worthwhile goal: "to free you from the tyranny of the financial services industry and the wasted time spent chasing outsize returns . . . ." He has some candid views to share in this regard. "I don't like stockbrokers." He later clarifies this as the full-service stockbrokers.

Basically, Mr. Sease is an advocate of the efficient market hypothesis for financial securities. This means that most people will not be able to outperform the market averages. The track record of professional money managers certainly is consistent with this hypothesis. But you can match the averages cheaply by buying indexed, no-load mutual funds. Almost all of his portfolios have some of these in them. As you get closer to needing the money, he suggests putting money into bonds to protect your principal from the large fluctuations that stocks often experience. He also demonstrates the power of compounding to encourage you to save more and save sooner.

Despite the basic soundness of Mr. Sease's approach, the book itself does have some weaknesses that you should be aware of. Most of these weaknesses seem to relate to trying to cover too many subjects in one slim volume.

For example, the most important thing you can do to be more successful with your investing is to have written goals that you regularly review. These goals should include subjects like housing, education for your children, financial security for your family, long-term health care, and retirement. Some people will also want to include philanthropy and caring for other family members, including parents, siblings, and grandchildren. But that's up to you. Although the book does refer to goals, it does not begin to do so until the middle of the book and treats the goals as though you already have them. My experience in working with successful, educated, high-income people is that almost none of them have written financial goals that they review. For some ideas on how to do this, I suggest you review the excellent material in Charles Schwab's new book, You're 50 -- Now What?

Second, the subject of what you can expect from stocks and the case for indexed mutual funds is made much better than in this book by John Bogle in Common Sense About Mutual Funds. You should take a look at that book. You should also consider the new book, What if Boomers Can't Retire?, to understand the risk of common stocks failing to provide their historical returns in the future.

Also, financial investments are not the best way to build financial security. Books like Rich Dad, Poor Dad make the case for creating investments that generate cash from a young age. In most cases, these investments will either be real estate or businesses. These subjects deserve equal time in a book about investing, but are not considered in this one. In the new book, Rich Kid, Smart Kid, is a fascinating example of how a young man learned this lesson by his father refusing to buy the son a new set of golf clubs. In the process, the son learned how to start his own vending machine business, make investments for his own college education, and let his business pay for the golf clubs. That is a far more powerful paradigm than is presented here.

I agree in principle with almost everything said in this book, but I would not encourage most people to read the book until after they had read the other books I suggested. At that time, the reader will be ready for the sample portfolios in this book which present some interesting alternatives for getting good long-term returns from financial investing with acceptable risk for the timeframes involved.

After you have finished considering the model portfolios in this book, I suggest that you test them for risk by assuming that both the stock and bond markets perform as badly as they ever have in the past. Then look at what you projected returns look like. Imagine how you would feel if you experienced these returns. If you would be disgusted and unhappy, chances are that you are taking on too much risk.

Take out unnecessary risk first if you want to enjoy better investment returns, sounder sleep, and less emotion-tossed investing. Otherwise, you, too, could become another example of buying high and selling low.