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 Post subject: Investments
PostPosted: Fri Mar 11, 2011 10:43 pm 
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Anyone read any good books on investing?

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 Post subject: Re: Investments
PostPosted: Sat Mar 12, 2011 10:19 am 
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Morpheus wrote:
Anyone read any good books on investing?
No, not really. But I have watched many clips/videos/interviews off Warren Buffett online. Many off them contain great ideas/views on investing imo.
He recommened books he read by Benjamin Graham, such as; "The Intelligent Investor" (link: http://en.wikipedia.org/wiki/The_Intelligent_Investor ) and "Security Analysis" (link: http://en.wikipedia.org/wiki/Security_Analysis_(book) )
I never read them, so I can't say myself.

To add.
I have read/aduio book listened to:
* A great book about money: "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" by Thomas J. Stanley and William D. Danko.
* A great book about being an entrepreneur/businessman: (any book by Richard Branson).
And a book by felix dennis (link: http://en.wikipedia.org/wiki/Felix_Dennis ) with the bad title imo "How to Get Rich".

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 Post subject: Re: Investments
PostPosted: Sun Mar 13, 2011 3:06 pm 
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I follow Peter Schiff, one of the few guys who predicted the financial crisis (and he says that it's far from over).
He generally recommend to buy Gold (and Silver I think), to save yourself from the coming inflation (especially if you live in the US).

http://www.youtube.com/watch?v=2I0QN-FYkpw

Here's his youtube channels (he posts new videos almost every day):

http://www.youtube.com/user/SchiffReport
http://www.youtube.com/user/PeterSchiffChannel


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 Post subject: Re: Investments
PostPosted: Fri Dec 14, 2012 3:46 pm 
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scarface wrote:
Morpheus wrote:
Anyone read any good books on investing?
No, not really. But I have watched many clips/videos/interviews off Warren Buffett online. Many off them contain great ideas/views on investing imo.
He recommened books he read by Benjamin Graham, such as; "The Intelligent Investor" (link: http://en.wikipedia.org/wiki/The_Intelligent_Investor ) and "Security Analysis" (link: http://en.wikipedia.org/wiki/Security_Analysis_(book) )
I never read them, so I can't say myself.

To add.
I have read/aduio book listened to:
* A great book about money: "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" by Thomas J. Stanley and William D. Danko.
* A great book about being an entrepreneur/businessman: (any book by Richard Branson).
And a book by felix dennis (link: http://en.wikipedia.org/wiki/Felix_Dennis ) with the bad title imo "How to Get Rich".
An excellent book about beliefs and money/millionaires
is T.Harv Eker; Secrets of the Millionaire Mind.

Also Read the Millionaire Next Door.

...of course, by now, you do not support
piratism or illegal downloads. I pay for everything I get,
or get it from the library.

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 Post subject: Re: Investments
PostPosted: Fri Dec 14, 2012 10:51 pm 
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Ok buying gold is not as smart as some would lead you to believe. It is a highly speculative market and unless you are willing to stomach wild ups and downs then go for it. It is not the panacea of investing.

For starters unless you are willing to seriously dive in and study the matter I would suggest to choose a passive investment strategy. This means that you would invest on index funds following the market instead of picking out individual stocks, funds, options, etc.

Having said that the first step is to truly define your appetite for risk. This is tricky. Many people are not aware that they are more risk averse than what they assess themselves to be. In that regard, knowing exactly what you are comfortably willing to wager is important to determine your strategy. Brutal and ruthless honesty is required, and for this you could play out scenarios of how much you are willing to lose at a maximum in a worst case scenario.

The point of this is to create an automated investment strategy where impulsiveness is minimized. Making emotional and rash decisions sometimes pose huge consequences when investing. Therefore, it is critical for you to establish your strategies for buying, holding, and going out of your positions you are invested in. Failure to do so, will have you go through the motions and have to deal with the normal market swings where you are more than likely to act on your emotions and make stupid decisions that are not in your best interest.

If you choose to invest like planting a tree, then you would be likely suited to read about value investing: Warren Buffet, John C. Bogle, Burton Malkiel, Peter Lynch and others. Your strategy would revolve around picking investments were you have a sensible degree of knowledge, basic fundamental analysis and overall long term expectations of an increase in value. By long term I am talking about holding an investment for a minimum of 2-3 years.

This type of investing means that you are not worried about short term losses or swings, as long as they fit your threshold (you establish what is the most you would bear to lose in any investment before going out of that position). For people who are more comfortable with this style of investing, even Warren Buffett recommends to invest in index funds like ETFs that follow the market. Truth is the average Joe will NOT be able to consistently beat the market. Hell, not even 95% of financial professionals and wizes are able to do so on a consistent yearly basis, so might as well not go there, as luck is more a factor than many would like to admit.

On the other hand, if you have a higher appetite for risk and are comfortable with truly putting some effort into tracking your investments on a daily basis then you can try out picking individual stocks and other high risk high yield investments. I suggest that for this strategy you start in small steps, first dabbling with little money and gradually increasing the quantity that is invested. For this I suggest reading by Jason Kelly:

[url http://www.amazon.com/s/ref=nb_sb_ss_i_ ... vesting%20]

Don't be fooled by the name as it's an excellent primer on investing for the average person who isn't fully involved in the financial and investment world. I learned a great deal from that book and I work at an investment bank in my country.

I would shy away from self-help type of financial books as their main purpose is to dish out mainstream advice that rarely amounts to much value.

To sum it: for investments it is critical to be as cut-throat and logical about your strategy. Define your exact strategy based on YOUR personal preferences and follow it to a T. In this way, you avoid having that pesky human nature of yours (feelings and clouding of judgment) to get involved in making financial decisions.

Be extremely grounded in reality. You are most likely not going to beat the market. You won't consistently generate returns on your investments. You might have a terrific spree, and you might also lose a shit ton of money. Having returns as high as 10% in your portfolio is considered a success. Don't be greedy and make decisions to sell and capitalize your gains.


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 Post subject: Re: Investments
PostPosted: Sat Dec 15, 2012 6:03 pm 
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I'm not sure if by "investing" you're talking only about buying/selling stock/commodities, etc or not. Those are all capital gains investments.

The other half of the coin to consider are cashflow investments. Basically in a cashflow investment, the whether the price you bought the asset for is higher or lower than what you can currently sell it for is irrelevant, as long as the asset is still giving you cashflow every month. If you buy an asset for $20,000, and it delivers you $500 a month in cash, then it doesn't matter if next year you can only sell it for $15,000, because its still giving you the same amount of cash every month.

Cashflow is a much different game, and in my opinion, a much smarter one.

A good set of introductory books on this are the Rich Dad/Poor Dad series by Robert Kiyosaki.

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 Post subject: Re: Investments
PostPosted: Mon Dec 17, 2012 5:23 am 
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Robert Kiyosaki: invest in assets that will give you a steady cashflow. Any other use of money is therefore classified as spending.

Example: buying a car is spending money, not an investment. Buying an apartment and renting it, therefore getting cash from your asset, is an investment.

That is Kiyosaki's most valuable advice in all of his Rich Dad, Poor Dad book series. I have two of his books. This guy is deep in the matrix and I would certainly not recommend reading his material for two glaring and obvious reasons:

1) He has an entire series of books of Rich Dad Poor Dad which rehash the same concepts tailored to different audiences. Case in point: most of his income stream derives from his books on how to be rich, talk about gimmicky car salesman. The investment community at large despises this guy with good reason:

http://online.wsj.com/article/SB1160521 ... ge_left_hs
http://articles.moneycentral.msn.com/Sa ... wsignin1.0

2) He makes a strong point to talk about his real estate investments prompting the reader to seriously consider going down this line since he offers no practical solutions to his invest-in-assets paradigm other than real estate. Unless you have been living on a different planet, this advice is just plain stupid for the average person as of this time, as proven by the recent meltdown.

http://www.cbc.ca/marketplace/2010/road ... /main.html

That is why I said that for investments, stay clear of self-help type of books, because the main purpose of that type of literature is to feed the audience with you-can-do-it type ideas that have very little substance. It's the kind of pseudo-intellectual garbage that the self-help industry thrives on. Kind of like what PUAs do with evolutionary psychology.

Kiyosaki is a scam artist. Think about it. If he was as rich as he said he is, then why would he need to do conferences, write tons of books with the same idea about it, and do the shitty ass snake oil salesman marketing techniques?

Kiyosaki also claims he became rich because of real estate. I'm positive he got royally fucked if all of his assets were based on it in the recent crisis. No wonder why we see reports like the above where he is more aggressive in pushing his seminars and conferences out.

@Morpheus, look at John C. Bogle books or the book by Jason Kelly on investing.


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 Post subject: Re: Investments
PostPosted: Mon Dec 17, 2012 8:59 am 
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Diego, in your opinion, what's the best way to invest 10,000 US Dollars?

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 Post subject: Re: Investments
PostPosted: Mon Dec 17, 2012 10:14 am 
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diego makes some very good points in the posts above :D

Regarding the stock market, I would recommend you read: http://en.wikipedia.org/wiki/Reminiscen ... k_Operator

(semi biography of http://en.wikipedia.org/wiki/Jesse_Livermore )

The links above contains links to the full text, if you seek you shall find.

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 Post subject: Re: Investments
PostPosted: Mon Dec 17, 2012 2:44 pm 
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Thank you for all the info. Reading, planning, and taking action.

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 Post subject: Re: Investments
PostPosted: Mon Dec 17, 2012 6:02 pm 
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The Pokemon Trainer wrote:
Diego, in your opinion, what's the best way to invest 10,000 US Dollars?
It depends, that is a broad question that needs to be broken down.

For example, if those 10,000 US dollars are spare change you have, and have them lying on your bank account with no real urgency to use them, (be it saving for a particular goal, emergency funds, etc.) then I would suggest you pick individual stocks you are comfortable with.

That is the only real scenario I would suggest an average person with no deep knowledge of financial markets and basic fundamental analysis skills, to pick out individual stocks. The reason being, that you stand to lose more than going with safer risk-return investments, such as money market products like CDs and repos.

One of my best friends fits the scenario above, and he works in the IT industry so he has an advantage over the average investor at picking stocks in that industry. He has made a killing over 40% returns over two years, which is amazing, but bear in mind the money he invested was pocket change for him, and he only picked stocks in industries he was familiar with. He took high risk, and got rewarded for it, but odds are if he doesn't capitalize his gains he will stand to lose much of those returns if he keeps on to his positions.

Having said that, once you have established your real threshold for risk, then you can think about a suitable strategy. For someone who is risk averse, and doesn't consider 10,000 US Dollars as pocket change, then passive investing in index funds is the way to go. Your returns stand to be lower than picking out individual stocks, but you are betting with the market not against it, so it's a passive strategy.

This is not to say that it isn't risky to do so. Investing in stocks, indices or funds will always be riskier than safe-haven investments like T-bills or money market products. Investing in any funds such as ETFs that mimick the major indices such as the S&P 500 and Dow Jones carries with it systemic market risk. But bear in mind that the stock market has historical returns of approximately 8-10% a year, with this past year's return at 12% which is fantastic considering the type of absolutely shitty returns that T-bills and other safe-haven investments are producing.

As of now I wouldn't particular invest in the market right away, as the US government is about to announce their budget cuts for spending which is referred to as the fiscal cliff, meaning that government is planning to tax more people while spending less money, therefore adversely affecting the economy. This means that the markets will likely take a hit in the first quarter of next year.


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 Post subject: Re: Investments
PostPosted: Wed Dec 19, 2012 2:06 am 
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But remember, Diego, all the investments you're talking about are deep within the Matrix ;)

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 Post subject: Re: Investments
PostPosted: Fri Dec 21, 2012 6:34 pm 
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In my opinion, everyone interested in investing should start here: http://orcamgroup.com/educational-resources/

You should be thinking about your saving portfolio as a repository that flows form your primary source of income. And that means the best investment you’ll ever make is in your primary flow of income or your job or specific area of expertise. Instead, many savers fall for the Wall Street myth that your saving portfolio will generate returns that make you fabulously wealth thereby offsetting or replacing your primary source of income. (http://orcamgroup.com/1021/the-investment-myth/)

Additional sources:
http://pragcap.com/
http://moslereconomics.com/
http://macrobits.pinetreecapital.com/au ... -auerback/

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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 2:40 am 
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Zogler I checked out the links you posted.

There is a key distinction between savings and investments. What the Orcam group is arguing in that point is that it's better to focus first on saving rather than investing. But the truth is that really depends on the individual and what his/her goals are.

Semantics aside, I view personal finance as a broad topic involving both savings and investments, but this thread was about investments alone, which by it's definition according to the links on investopedia provided by Orcam is:

"The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit."

Therefore, claiming that the best investment is savings is a misnomer.

And it isn't a myth that if you invest there is a probability you might become wealthy. Sure, it might not be as high as expected, but claiming it's a myth is retarded based on the evidence of millions of investors out there who have become significantly wealthy by investing on capital markets alone. Warren Buffet, John Paulson and George Soros did not become wealthy from their wages.


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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 9:06 am 
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diego wrote:
it's better to focus first on saving rather than investing.
I agree fully with that.

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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 9:22 am 
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GoldenBoy wrote:
diego wrote:
it's better to focus first on saving rather than investing.
I agree fully with that.
It is easier and smarter to save 10€ than to earn 12€ (because of the TaxMan)

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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 3:20 pm 
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My economics teacher warned us against saving as inflation causes you to lose money in the end.

http://inflationdata.com/Inflation/Infl ... lation.asp
Quote:
Well, the total cumulative inflation for the almost 22 years from January 1990 through September 2012 is 81.64%.
Yikes!


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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 5:50 pm 
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foofatron wrote:
My economics teacher warned us against saving as inflation causes you to lose money in the end.

http://inflationdata.com/Inflation/Infl ... lation.asp
Quote:
Well, the total cumulative inflation for the almost 22 years from January 1990 through September 2012 is 81.64%.
Yikes!
Great point about inflation foofatron. Nowadays, interest rates are so low that it doesn't make sense for investors to flock to the money markets or treasury bills. The three month libor rate has been at about 0.3% which is basically free money for banks and absolutely shitty returns for the average person.

In fact, Greenspan kept the rates low for about four years after the dot com crash, which is a big reason why Wallstreet started chasing higher returns on subprime mortgages by packaging them. Accounting for inflation, if you keep that money on your savings accounts without investing it, you are currently losing purchasing power since inflation is higher than the rate of return of what you are receiving from your savings.

As for personal finance, I think Ramit Sethi's book "I will teach you to be rich" is a great introduction to the subject and he covers pretty much all there is to cover for the average person. I highly recommend his work because he is about setting up automatic systems, so that you don't have to consistently track and budget, strategies which have failed for most people.

http://www.amazon.com/Will-Teach-You-To ... to+be+rich


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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 6:02 pm 
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Jared wrote:
GoldenBoy wrote:
diego wrote:
it's better to focus first on saving rather than investing.
I agree fully with that.
It is easier and smarter to save 10€ than to earn 12€ (because of the TaxMan)
You have to bear in mind that saving is basically not spending money you already have. Earning $12 is the creation of additional $12 you didn't already have.

So of course it is easier to save $10 because all you have to do is not spend it. Is it smarter? I would say it isn't. There is much more value in creating an additional $12 even if you spend the $10 you were supposed to save.

Additionally, the $10 you are to save may have already been taxed or will be taxed regardless of what source that money came from in most cases. If that $10 came from wages it was or will be taxed. If it came from capital gains it was or will be taxed. If it was inherited it depends on tax laws. Exceptions do apply based on tax laws.

You can't say that any increase in earnings is a worse off option than savings because of taxes, since both options go through the same process. They both get taxed, and sometimes in the case of capital gains, assuming that you earn those $12 off capital markets in the US, the tax rate is 15%, while income taxes, which lets assume that the $10 came from your income, is above 30%. Based on this scenario, you get taxed less based on your earnings from capital markets and you get taxed more based on the money you have on your savings.

Why do you think that the truly wealthy gain most of their income from capital gains and not from regular income?

So the opportunity cost for saving $10 as opposed to earning an additional $12 is higher in this case, thus disproving that it is smarter to save $10 as opposed to earning $12.


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 Post subject: Re: Investments
PostPosted: Sun Dec 23, 2012 8:50 pm 
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Money goes merrily on its own way. The same 10€ or 12€ can be used
over and over again, in exchange for value to more and more people.

The most important thing isn´t income, it is net worth.

Income does nothing unless I sell it for a profit/ use it as a funnel
system for growing my net worth.

I keep a savings account that will cover my expenses for about 2 years
if I´m not to work during that time, with my current level of life style.

Other things for me are

1) going entrepreneurial (it cost me 30€ +75€ to start my 1st enterprise . 8-) )
2) living on a budget (healthy food, going to my own gym, jogging instead of new alternatives etc.)
3) (studying investing, not investing yet though)

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