OT: Book(s) on investing

[EmoryBellard]

So I'm looking to learn more about investing and various strategies/techniques. I'm not a total novice, but I have plenty to learn. Any books/websites you financial whizzes recommend.

Also, while I'm not looking to become a day trader or anything of the sort, what are people's thoughts on using websites like scott trade, etrade, etc vs utilizing a human financial adviser?

I'll hang up and listen.

 

[EmoryBellard]

So I'm looking to learn more about investing and various strategies/techniques. I'm not a total novice, but I have plenty to learn. Any books/websites you financial whizzes recommend.

Also, while I'm not looking to become a day trader or anything of the sort, what are people's thoughts on using websites like scott trade, etrade, etc vs utilizing a human financial adviser?

I'll hang up and listen.

 

[EmoryBellard]

So I'm looking to learn more about investing and various strategies/techniques. I'm not a total novice, but I have plenty to learn. Any books/websites you financial whizzes recommend.

Also, while I'm not looking to become a day trader or anything of the sort, what are people's thoughts on using websites like scott trade, etrade, etc vs utilizing a human financial adviser?

I'll hang up and listen.

 

[was21]

nm

 

[madisondawg11]

I am an FA and the thoughts towards using online trading vs a professional FA basically depends on how much your investing and how much experience you have. Any of the online stuff with "no load" funds will have NO professional management. All the investing is strictly up to you. If you go the route of a professional FA they do manage your assets and make sure they stay properly allocated. 91% of portfolio growth comes from proper asset allocation and 1% comes from market timing.

BTW don't buy Dave Ramsey's stuff. I know a lot of people love that guy, but truthfully the guy is not licensed. If he was licensed he would be sued for all he's worth for the comments he's made.

 

[was21]

Anyone with average intelligence can use this approach and manage their own money. Vanguard family of funds is great. Having said that, I understand that FA's have to make a living as well. So good luck. I'm sure you're a good honest advisor.

 

[madisondawg11]

It's going to differ from each investor on which fund would fit them best. Some investors are comfortable with taking on the risk of the no management. We do use "no load" funds in fee based advising as well so I'm definitely not* turning them down. I think it's important however that people know the pro's and con's of both and can choose which option from there. <div>
</div><div>ETA: left out the "not" in my sentence.</div>

 

[was21]

trained professional.

 

[patdog]

If you're holding less than about 30 stocks, your portfolio isn't diversified enough to spread the risk of any individual company tanking. Even if you do have $100,000 or more, mutual funds are a good choice unless you just want to put in the research to pick stocks yourself. Go to Morningstar.com to find a lot of information on the thousands of funds that are out there. Go with one that has a 4 or 5 star rating (unlike recruiting ratings, these are actually given by unbiased professionals who are qualified to rate funds). The type of fund you need varies depending on your circumstances and risk tolerance. A couple of excellent companies to invest with are Vanguard and Charles Schwab. Both have excellent target retirement date funds (Vanguard's isindex fundsand Schwab's is managed funds) that will allocate your retirement savings among different stock, bond and foreign funds depending on when your target retirement date is. </p>

 

[Spanky.sixpack]

BTW don't buy Dave Ramsey's stuff. I know a lot of people love that guy, but truthfully the guy is not licensed. If he was licensed he would be sued for all he's worth for the comments he's made.

Many people like to disagree with Ramsey's philosophies but never have the stroke to back it up and say why they dislike it. It's almost a popularity contest to be the Ramsey hater, sort of like being a "moderate" Republican. What is it you don't like about him, his investment strategy? Dividing your portfolio between the 4 mutual funds (international, growth, aggressive growth, growth and income)? Seems like that's pretty basic advice there. <div>
</div><div>Just curious.

</div>

 

[cheat2win]

NM

 

[vocaldawg7]

you obviously know nothing about the guy, other than the fact that you've heard he went bankrupt 20+ years ago.have younever failed and learned monumentally from your mistakes? And you can make the decision to not learn from someone who knows better than you, but I will take theknowledge that I've learned from him andwill continue to make smart decisions that have benefitted my family for years.

 

[madisondawg11]

I completely disagree with is "Buy Term life insurance and invest the rest.." He is a big hater on permanent insurance and it might sound like a good idea but could be a huge problem for someone. Say someone who is pretty wealth takes that advice and develops cancer. Your term policy runs up and either your stuck paying extraordinarily high rates to keep your insurance or your no longer insurable. Upon your death your hammered with estate taxes bc you weren't properly insured.
<div>
</div><div>Second thing is he's always talking down on Variable Annuities. While this is a very complicated product and should be explained thoroughly to the customer, they are awesome investments. VA's can provide a guarantee to double your money invested, if invested for a certain time. They can also guarantee you never run out of money during retirement.</div><div>
</div><div>All in all Ramsey has some great points such as your diversification one you mentioned. However, he is paid by certain companies to go on air and make the comments he makes. If he was licensed, he would be sued.</div>

 

[Spanky.sixpack]

I completely concede that you know about this than me, with you being an financial advisor. I guess I'm sort of the opinion that if you buy Term Life and invest, you keep the money you would have paid to the Whole Life policy. And I know nothing about Variable Annuities. These topics are above my head.<div>
</div><div>I see many people (particularly the kind whole live on credit and tell me I need to quit being stingy and enjoy my life more - by buying more **** I suppose) try to say Dave Ramsey sucks and you can't buy into all he says. That sounds like they are not hearing what they want from Dave, so they make excuses and try to discredit him. But alas, this thread is about investing after all, and not the horrors of debt.</div>

 

[vocaldawg7]

You must have a problem with your calculator.... first, you made your entire post invalid by speaking of someone that is wealthy. The purpose of life insurance is to make up for the loss of your income and to pay expenses related to death. "Investing" in whole life insurance for 30,40,50 years only to have that "investment" COMPLETELY DISAPPEAR at death is the definition of stupid. And estate taxes come no matter if you have insurance or not. My family can easily pay taxes on a real investment from all of the saved money over my life of NOT paying for whole life insurance. There would be 10x more money in investment than in the life insurance.

 

[RBDog82]

Basically it says that most "actively managed" portfolios don't beat the S&P 500 over an extended period of time. Go w/ an Index Fund (S&P 500 or Russell 2000) and sprinkle in some PIMCO Total Return ETF and you'll be good to go. If you want risk, buy individual stocks / options. Having worked on Wall Street in NYC and with a brokerage firm down here, I can honestly tell you that all the local firms do is recruit sales people to sell their products; most have very little knowledge about actual investing, market theory / behavior, etc.

 

[madisondawg11]

His ideas on debt and credit cards is some good stuff. I didn't mean to completely put the guy down cause he is smart. Just some things that I've mentioned that are questionable on his philosophies. <div>
</div><div>If your ever interested in more just PM me. </div>

 

[vocaldawg7]

and i do appreciate that you are willing to say that some things thathe teaches are good. I just completely disagree with you on the life insurance part. It is just simple math. That, and he has NEVER endorsed a single investment poduct.

 

[madisondawg11]

Estate taxes come upon a net worth of greater than $5 million or more. Looking to be lowered bc of Obama. I was making a scenario so something could be easily understood and your trying to make an argument out of it. WL insurance can be a great investment and will grow your death benefit. My point was if someone buys term insurance and develops some kind of illness, when their term runs up then they're stuck. With permanent insurance you won't have that problem. <div>
</div><div>Your post have a lot of problems that I could argue against which I'm not willing to do via internet.</div>

 

[madisondawg11]

S&P 500 is all equities. Of course its going to beat every portfolio as it should. Look at the down turns on the S&P as well. Are you willing to accept a negative 34% return one year? The point of a portfolio is to be spread out across all sectors and be designed specifically for the client based on their risk.

 

[RBDog82]

S&P 500 is all equities. Of course its going to beat every portfolio as it should. Look at the down turns on the S&P as well. Are you willing to accept a negative 34% return one year? The point of a portfolio is to be spread out across all sectors and be designed specifically for the client based on their risk.

The S&P 500 is all equities? Who knew. Sarcasm. It is the benchmark for most equity mutual funds, which by definition are "all equities" as well; hence an apples to apples comparison. That's also why I said one should include PIMCO Total Return in their portfolio to give them fixed income exposure. Also, the S&P 500 doesn't beat every portfolio, it beats most portfolios over an extended period of time. Very few actively managed mutual fund managers have complied a successful track record when compared to the S&P 500. <div>
</div><div>And thanks for enlightening me on the "point of a portfolio". I think I understand the concept quite well. You should compare the returns of "actively managed" portfolios by ML and MSSB to the S&P 500; they underperform as well.</div>

 

[madisondawg11]

Your point is similar to putting some money on the roulette table and putting some money in the slot machine. LOL

 

[RBDog82]

Your point is similar to putting some money on the roulette table and putting some money in the slot machine. LOL

You're right. Yours makes much more sense, especially when I suggest investing in SPY and PIMCO TR and your rebuttal is "the point is to be in all sectors". Why don't you take a look and tell me which sectors are included in the SPY? The proper term there is to be diversified across asset classes. Remember this, when things go bad, all correlations go to 1.

 

[madisondawg11]

Why PIMCO total return? PIMCO is a great company but its just funny you recommend that specific fund for EVERYONE. I was actually invested in that fund, but index mf and pimco ain't gonna be right for everyone my man.

 

[Barkman Turner Overdrive]

"One Up On Wall Street" by Peter Lynch and "The Mötley Fool Investment Guide" by the Fool.com founders, David and Tom Gardner. If you don't want to invest in your own stocks, buy John Bogel's book and buy the S&P 500 via a low cost index fund. I'm not fan of Dave Ramsey or Professional Advisors because neither are more interested in your personal investing goals as you are.

 

[RBDog82]

Why PIMCO total return? PIMCO is a great company but its just funny you recommend that specific fund for EVERYONE. I was actually invested in that fund, but index mf and pimco ain't gonna be right for everyone my man.

You're right again. It'll just be right for the 75-80% of people that want to outperform an actively managed portfolio over the long term. I'm sure you've already got the next Fidelity Magellan, Berkshire Hathaway, Apple, Walmart, and George Soros picked out.

 

[UpTheMiddlex3Punt]

And never invest in anything you don't understand or can't understand the basics of after ten minutes of research.

 

[6sigmadawg]

Four suggestions:<div>[list type=decimal][*]The Only Investment Guide You'll Ever Need by Andrew Tobias[*]Security Analysis (2nd edition, 1940 if you can find it) by Benjamin Graham[*]The Intelligent Investor by Benjamin Graham[*]Shareholder Letters- by Warren Buffett (a thorough reading & re-reading of these letters can be worth more than two years in many business schools)[/list]</div>

 

[SlickRick662.sixpack]

are the returns of the last 5-10 years the new normal?<div>
</div><div><div><h3 style="margin: 0px; position: relative; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; background-color: rgb(255, 255, 255); ">Average Stock Market Return per year: Last 5, 10, 20 ... Years</h3><ul style="padding: 0px 2.5em; margin: 0.5em 0px; line-height: 18px; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; background-color: rgb(255, 255, 255); ">[*]Since 1900 (end-of-year 1899),through 2011, I estimate the average total return/year of the DJIA (Dow Jones Industrial Average) was approximately 9.4% -- 4.8% in price appreciation, plus approx 4.6% in dividends. (Some numbers won't add up due to rounding.)[*]Since 1929 (year-end 1928 -- i.e., before the crash), thru 2011, the return was 8.8% (4.6%, plus 4.3%) [note: seeThe 1929 Stock Market Crash][*]Since end-of-year 1932 (i.e., after the crash): 11.1% (7.0%, plus 4.2%)[*]Returns for the last 25 years, 10.5% (7.7%, plus 2.7%)[*]Returns for the last 20 years, 9.4% (7.0%, plus 2.4%)[*]Returns for the last 10 years, 4.5% (2.0%, plus 2.5%)[*]Returns for the last 5 years, 2.3% (-0.4%, plus 2.7%)[*]For 2011, total return was<a name="more"></a>8.3% (5.5% plus 2.7%)<ul style="padding: 0px 2.5em; margin: 0.5em 0px; line-height: 1.4; ">[*]2011 year-end dividend yield was 2.6%[/list][/list]</div><div>
</div></div>

 

[EmoryBellard]

Some good stuff to pick through.

 

[was21]

than Vanguard. Cost matters. You don't have to go through a broker. You can do it yourself.

 

[EmoryBellard]

Thanks aGAIN.

 

[615dawg]

Sure its tempting to do it yourself on Etrade or something similar, but I have found that paying 1 percent to make 10 percent beats the hell out of spending a lot of time researching to make 9 percent.<div>
</div><div>Some things are just worth paying for Read a book and understand as much as you can, but find a reputable advisor that works on commission (he does''t make money unless you do) and let him buy you lunch once or twice a year.</div>

 

[615dawg]

and I think madisondawg will agree with me. Here's where I totally agree with Dave Ramsey:<div>
</div><div>Get your *** out of debt. Don't let the math fool you. I've watched family load up on debt and live the high life. All it takes is one small storm to bring a house of cards down. If you are paying $500 a month in credit card payments so someone will look at you a little different, or you want your child to like you more so you buy them everything they want on a credit card, you are a dumbass of the highest degree. Stop right now, and aggressively pay off your consumer debt.</div><div>
</div><div>Real estate is a good investment. I like to be 50 percent liquid, 50 percent real estate. We all have something in common here. We went to a school located in a town with one of the best rental markets in America. Take advantage of it, its a hidden gem, There are people making bank in Starkville, Mississippi. Something like Academy Village is raking in 15.7% before expenses, which on a bad year will still yield a 11 percent return. Dave Ramsey says this is how you build wealth and he's right.</div><div>
</div><div>Fund your retirement at 15% of your income. Do this and you will not worry one day in your retirement. There are so many people who aren't saving any or aren't saving enough for retirement and it is killing them. I talked to a 57 year old recently that has a $80,000 annual income. He has $250,000 saved for retirement and he thinks he is set to retire now. I explained to him if he kept putting in 10 percent (he was putting in 4%) for the next five years and got a 10 percent return, he'd likely have 6-8 years of that 80,000 income and he'd have nothing. You young 20 somethings can kick our 30 somethings *** if you start now.</div><div>
</div><div>
</div>

 

[patdog]

For the 99.5% of us who will never leave a $5M estate to our heirs, whole life insurance is a complete waste of money. And even for the .5%, there are other options that could easily be just as good. For your average person, the need for life insurance decreases over time (as it has to support children and a spouse for fewer years and as your retirement savings grow to fund those needs). The reason insurance salesmen push whole life and variable annuities so heavily is because the average commission on these policies is over 100% of 1st year premiums. If they were such a good deal for the consumer, how can the insurance company make money by paying a commission over 100%? Term is a much better option. Your premiums won't increase much until you're nearing 50, by which time your investments need to be enough for you to reduce your coverage some (and your kids should be nearing college). If you're concerned about premiums increasing, you can buy a 20-year level term policy for a lot less than you can buy a whole life policy.</p>

 

[cofreb]

is don't do it yourself. Or at least not with a meaningful portion of your net worth. Think of the piece you personally invest as tuition money. You are going to do stupid stuff and probably lose a bunch of it.

My second piece of advice is to read this three times and take copious notes. Then set it aside and re-read it every six months or so for a couple of years, noting what you learned that time around that you didn't see the first 5 times through. If you get bored, go to this website and just start reading. If you learn and understand the important concepts that Buffett preaches in these two places, you'll be well ahead of 99% of people.

My third piece of advice is to never trust anyone who offers a guaranteed anything. The iron law of investing is that nobody knows the future. There are sensible things to do, many already listed here (diversification/perhaps indexing, etc.) but there are no guarantees anywhere ever.

Last, as to the Dave Ramsey debate, I have barely listened to him, but I can sum up what he should be saying in about two ideas: 1) live below your means; 2) don't borrow money for anything but a house or an education that can reasonably be expected to provide strong returns on the tuition outlay (a Ph.D. in anthropological studies of indigenous eastern Amazonians would be a great anti-example here).

 

[TheStateUofMS]

Fidelity is the best brokerage account. I've been with Etrade and Scottrade. Scottrade is horrible and Etrade has higher fees with not as much research as Fidelity where trade fees are only $0.95 more than Scottrade. ($7.95/trade)

Also, Survivorship or traditional Universal Life in used to pay for estate taxes. You wouldn't want to use Whole Life to pay estate taxes because it costs way more than Universal Life.

The majority of what Dave Ramseysays is for people who are flat broke, but he's right on his stance on mutual funds. If you don't have the time, I'm with Cramer-close to an hour a week to study each stock you own, you don't need to be in stocks. There are some really great mutual funds out there. LookatBlackrock Global Allocation Fund, MFS Utilities Fund, Fidelity Contrafund and there are even some great bond funds like Mainstay High Yield Corporate BondFund.

If you're looking for a good book to read, Stay Mad for Life by Jim Cramer is a great read. Watching his show on a regular basis helps as well.

Dan Celia is a great financial guy who comes on American Family Radio (90.5 FM in Jackson) from 8-10am every weekday.

PM meif you want more info.

 

[was21]

no charge. ScottTrade is not involved. Nobody's involved except you and the website. You can call their toll free number if you need help...no charge. Of course, you need to self educate yourself adequately to know what you're doing. You have a choice of Vanguard funds, stocks and bond funds, on a range from conservative, moderate and aggressive, depending on your objective, your time horizon and your risk comfort level. There's a questionnaire on the website that will tell you what kind of investor you are based on those factors.

 

[dawgstudent]

they let me keep my money for 30 days longer. Just be responsible with your spending.

 

[patdog]

Use a credit card for everything I possibly can. Get a 1% rebate and they bank draft my checking account for the full balance on the due date, which averages about 45 days after my purchases. No annual fee and no interest (I think I've got a pretty decent interest rate too, but it doesn't matter). Can't beat that deal.