Current Investment Books Guide: Part II

by: Larry MacDonald

Here is Part II of the capsule guide to current offerings of investment books. You can view Part I here.

The Only Three Questions That Count (Ken Fisher et al): Manager of $30-billion in assets prescribes beating the market by asking i) what does the crowd believe that is wrong, ii) what do I know that the crowd doesn’t, and iii) what behavioral traps might ensnare me?

Rich Dad Poor Dad (Robert Kiyosaki): Inspirational to many, a waste of time for others, brunt of the message is: start a business and own assets like rental real estate instead of becoming educated, salaried, and indebted.

The Essays of Warren Buffett (Warren Buffett, Lawrence Cunningham editor): Although the essays, full of the value demigod’s wisdom and apothegms, are available on the Berkshire Hathaway Web site, Cunningham’s editing does add value

The Little Book That Beats the Market (Joel Greenblatt): Very successful hedge-fund manager says to invest in companies with high returns on capital and low price-earnings ratios -- but the real secret to outperforming is keeping the faith through the downturns

Fooled by Randomness (Nassim Nicholas Taleb): Random events shape performance -- a good track record (even Warren Buffett’s) reflects luck, not skill.

Fortune's Formula (William Poundstone): Story from the 1960s and 1970s about two Bell Lab scientists and a MIT mathematician who find a way to beat the casinos with card counting, and a way to beat the financial markets with arbitraging (i.e. selling a security in a market with a high price and buying it in a market with a low price)

Trade Your Way to Financial Freedom (Dr. Van Tharp): Not a description of a specific system but a guidebook for developing your own, with emphasis placed on certain aspects such as exits and position sizing (size of trade in relation to portfolio and risk tolerance)