Investment-management

Investment Gurus by Peter Tanous I enjoyed reading Investment Gurus. The bulk of the book is devoted to interviews with various portfolio managers who have excellent track records. What I found most interesting about the interviews were the many different ways/styles of investment these managers employ to make money in the stock market. Some of the styles are diametrically opposed to each other, though each manager sticks to his/her style and does well. The author gives some background information about the interviewee before the interview, then summaries the interview briefly at the end. While the interviews were useful in identifying an investment style I would feel comfortable with, for me the greatest value of the book came in the last section - Part 3, The Route. Here the author sums up the interviews succinctly while offering his own advice. I found his section on crafting an intelligent personal investment plan very enlightening. The author was writing to my level, unlike many of the popular money/investment magazines of the day. Overall, an excellent book for those who have at least an intermediate understanding of investing and want to get actively involved in managing their nest egg. And who wouldn't want to do that?

I recently read Investment Gurus, by Peter Tanous. This is one of the most informative and interesting books on investing I've ever read. In the book Mr. Tanous interviews a number of investment professionals who have compiled incredible records over extended periods of time. To balance the opinions raised, he also interviews several academicians who contend the markets are efficient and the most predictable road to investment success is through the use of low cost index funds. One of the interviewees makes a compelling argument that to beat the market averages an investor has to do substantial digging to gain any advantage. The cost of the digging negates the higher returns obtained. It was also pointed out by several of the academicians that studies show no correlation between past and future performance. In other words, those who had exceptional returns in the past, only have a 50 percent chance of repeating this in the future. It should be noted that high (expense ratios) cost funds have a tendency to perform poorly no matter what timeframe you look at. An interesting side note: The manager of the Brandywine fund was one of the professionals interviewed because his long-term record was exceptional prior to the publishing of the book. If you check the performance of the Brandywine fund recently and it has only been an average performer trailing the S&P 500 substantially over the last year. Maybe there is something to this idea of market efficiency. One of the active managers with an exceptional record, Laura Sloate, mentioned a couple of stocks during the interview which she felt were bargains and would rise. One was Marvel Entertainment. Ms. Sloate didn't feel it could go much lower than its price then of around $10 a share. Last time I looked Marvel was trading at less than $1 per share. Maybe she did just happen to get lucky in the past. But perhaps she has a good sell discipline which allowed her to get out of the stock before the big fall. One of the academic interview!ees, Rex Sinquefield, made a interesting quip. He called stock market newsletters "investment pornography," due to their dubious worth. I must say that I have to agree with him. Ninety percent of investment newsletters aren't worth the paper they're printed on. All in all, I came away reinforced in my belief that individual investors should have the majority of their funds going into index funds, preferably on a dollar cost averaging basis. If you feel compelled to "play" the market, do it with money you can afford to lose and keep track of your returns, or lack thereof. This way you'll discover the futility in trading your way to riches and not suffer as much in the process.

Tanous's effort is far superior to the other collections of interviews with money managers. Most books of this sub-genre fall into two categories, depending on the author. The first type of author is usually a journalist who knows little about the disciplines of stock picking and running investment funds, and you are usually hard pressed to find any new insight in their books, because they don't know how to ask their subjects the really insightful questions. The second type, which I'll call the John Train style, has a sophisticated investor/fund consultant doing the interviews, and can often produce real insight from the interviewees. The problem with many of these books, and Train's in particular, is that the author is often not trying to interview the successful money managers. Instead, authors like Train are often trying to play gotcha! with their interviewees, subjecting them to asinine questions and frequently diverging from the topics that made you buy their book in the first place. The Money Masters by Train is so full of political tangents and Train's forcing his opinion on the likes of Peter Lynch and Warren Buffett that I've wanted to scream at him at some points.

In contrast, Tanous knows how to ask questions that are of interest to professional and serious amateur investors, and he knows how to stay on topic. He does ask every interviewee about the efficient market hypothesis, but that's a theme of his book and can be excused. What you get from Tanous is an interviewer who knows how to ask really penetrating, really revealing questions of the world's best money managers, and the humility to realize that his readers don't want to know what he, Tanous, thinks, but what his interviewees think! What's more, he managed to get interviews with at least two money managers--Bruce Sherman of Private Capital Management and Scott Sterling Johnston of Sterling Johnston Asset Management--that have excellent track records but who speak very, very rarely to the press. There is real value to Tanous's book, and I'm a better investor for having read it. Serious investors should still read Train's books for their revealing interviews with Buffett, Templeton, Lynch and others, but in Tanous's book, you have all the strengths of the Train books without any of the that author's obvious, glaring shortcomings as a writer and interviewer.

As guarantee products are popping up all over the global banking and insurance markets, it is absolutely essential to ensure that the proper financial values are upheld in order to avoid many of the problems that the North American market has faced. 'Investment Guarantees' does a wonderful job of describing these risks in simple enough terms that the pages can be quoted to both financial and non financial people. A very powerful read for those looking to undersand the value of guarantees that are placed on accumulation type insurance products.

Shaw devises club accounting reports, stock study worksheets and investing approaches for clubs in this simplified how-to guide. Shaw provides some interesting checklists and step-by-step illustrations of club operations and investment decision-making.

Katheryn Shaw details the day-to-day (or month-to-month) operations of an investment club. An ideal starting point for anyone considering this approach to investing and an invaluble tool for an ongoing club.