Stock-market

While the author has tons of documentation about panics and bear markets, he fails to draw conculsions and suggestions together. Advice is scattered hither and yon. It looks like a collection of short pieces stuck together. It would have been much more useful to summarize the findings and organize the evidence behind it. This book doesn't know if it is history or "how to" book. However, it is the best (maybe only) summary of past panics and bear markets so it is good to have in an investor's library.

It seems that whenever prices are "too high", I tend to go looking for bargains in the cheap stocks department (read "losers"). Then when the whole market takes a dive, and brings even the strongest stocks down with it, I'm too frightened (or too broke) to think about throwing more money into this "beast" that ate my dreams of early retirement. This book showed me how specific events throughout the 20th century both internal and external to the market have over and over again provided excellent buying opportunities for those quality stocks you wished you had bought way back when they were so much cheaper. In a test of real life application, it gave me the historical perspective and confidence to jump in and buy at a time when everyone else was bailing out. It was largely responsible for my purchase of the two leading Internet portal stocks near their Oct 98 market crash lows; and my ability to buy the leading online "bookseller" (starts with an "A", and ends with an "mzN") at its exact bottom (less than a point) during the Feb 99 technology selloff. When applied to high quality growth stocks, "Panic Profits" offers you a fast, safe, and very simple (I love that word) approach to making big money in the stock market. Some gems of wisdom contained in this book: * "It's never too late to sell on a rally". * "Reflex rallies in the most hammered stocks offer ultra quick reliable profits". * "Rewards come from contrary action, not from sophisticated or complex strategy or analysis". * "IPO's & new ideas require more time, money, management, etc. than early investors ever expect". * "Recognize rolling declines of a bear market. Bear markets will bleed you to death - SELL!". * "Panic selloffs tend to periodically cleanse the market of weak money, and sets up for the next big advance". In my experience, the market sells off once or twice a year. "Panic Profits" will help you be prepared for the next big "opportunity", to see through your fear, and to act wisely (and profitably). It's simple. It works. I love this book.

Doesn't this book sound like a battle plan for investment success, maybe one filled with value-based accounting lessons? It's not.

In fact, we are spared math, and we are not given practical counsel, either. That was what I looking for, as the title suggests. The title should be How Can The Smart Money Be So Dumb.

Instead, this is an interesting run-through of recent horror stories on Wall Street from the Internet bubble to IPO's to pro forma accounting and Enron. Behavioral finance is discussed here, but Why Smart People Make Big Money Mistakes by Gary Belsky and Thomas Gilovich is far superior.

Or read Buffett: The Making of an American Capitalist by Roger Lowenstein. Or John Neff On Investing instead.

Mr. Cunningham is one of the new wave of Buffett explainers. (Where were you people 15 years ago when there was money to be made buying Berkshire?) And why does someone so incisive, so downhome funny as Mr. Buffett need so much explanation?? (Try Cunningham's The Essays of Warren Buffett: Lessons for Corporate America or the Berkshire Hathaway annual report.)

Unfortunately, the author lets slip his idea of a five-year holding period for stocks. That may turn out to be good advice, but which stocks would he choose to hold? We have no idea. (Tech stocks, big winners 2 years ago, have crashed back down to their 1997 prices. And non-tech Walt Disney is well below its 1997 prices.)

I think Mr. Cunningham is an extremely brave and patient investor.

I read Cunningham's book based on the review in Barron's rounding up the best investment books of 2002. They were right. The book is a eye-opening intro to the psychology of investing, important to investors and market observers/regulators. (Cunningham's other books have more of the basics for investors--also very good books.)

Awesome. Cunningham dissects the woes besetting corporate American using lucid, concrete examples, with boundless energy and enthusiasm, endorsed properly on the back cover by those who take behavioralism seriously, including Gary Belsky, who wrote the top-seller "Why Smart People Make Big Money Mistakes" (which is about general habits, not investment philosophy of which Cunningham writes) and Robert Hagstrom, prolific author (who writes about investment philosophy, and sometimes behavioralism). What an astonishing record Cunningham has developed as a writer and expert in invesetment theory and practice! A better title for this book would be Rational Investing in a Hair Brained Environment; the one chosen is unduly flashy for the seriousness of Cunningham's pursuits (he's a professor of law and business!).

John Merril sets up three portfolios,each holding stocks bonds and cash.He takes the reader thru every bull and bear market from 1926 thru 1997. Many authors of investment books avoid the investment history of the 1930s and other prolonged bear markets but Merril wants the reader to realize the risk and the reward that comes whith investing.I would urge anyone who has a 401k plan or Ira to purchase this book. Mr.Merril may have some different views then others when it comes to indexing and foreign investing but explains his views honestly.This is a great book and I don`t know why since it`s published over a year ago that no one has reviewed it.This is a book that should be updated every year.