Good Books On Investing ?

@NotMyRealName :)

Fascinating once you see through the philosophical and literary pretensions and start thinking about our old friend, the Cauchy distribution.
 
Jim Slater's The Zulu princpal

Although Jim got himself into many a scrape, the ideas in the book stand the test of time.

The Zulu principal is simply to do research, become an expert on a small number of companies. The idea is to ask yourself what do you know about the Zulus, probably less than you could write on a page. If you were to read a book about the Zulus you wold probably know more than the vast majority of people know about the Zulu's. Becoming more expert than the market on a small number of companies is not that difficult.

The second idea is the PEG. This is the price/earnings ratio divided by the growth rate. So a company with a P/E of 10 and annual profit growth of 10% has a PEG of 1.
 
If you are really talking about trading then try Mark Minervini. Trade like a stock market wizard.

He puts a lot of his success down to managing risk.
Knowing when to enter a trade and knowing when to exit a trade .Ever before you invest one penny have a plan to exit and stick to it.
 
cremeegg said:
The Zulu principal is simply to do research, become an expert on a small number of companies. The idea is to ask yourself what do you know about the Zulus, probably less than you could write on a page.
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But becoming an expert on the Zulus doesn't mean you will come to the correct conclusions, the " Zulus" maybe in an industry that never takes off or becomes mainstream. I know from history the Zulus turned out to be winners but what if they turned out to be losers even though you were an expert on them. In any case the zulus are not exactly an obscure topic sure wasn't there a famous film "Zulu" from the 1960s with Michael Caine.
 
joe sod said:
But becoming an expert on the Zulus doesn't mean you will come to the correct conclusions, the " Zulus" maybe in an industry that never takes off or becomes mainstream. I know from history the Zulus turned out to be winners but what if they turned out to be losers even though you were an expert on them. In any case the zulus are not exactly an obscure topic sure wasn't there a famous film "Zulu" from the 1960s with Michael Caine.
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And tell it to all the people who sat in their kitchens and attics pouring through Tesla’s financial statements and shorting the stock…they probably thought of themselves as “experts”!

Interestingly, I see Slater co-sponsored the 1972 Fischer vs Spassky Chess World Championship. Now there’s a fascinating character (Fischer). As a further aside, I’d recommend that people watch ‘The Queen’s Gambit’ on Netflix; it’s superb. It has nothing to do with Bobby Fischer per se, but I love reading stories about chess players who think they’ve come up against him online.
 
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I'm reading about - and not liking - how Slater did his thing.
But the idea of studying in depth the companies in which to invest is a rock sound one.
Especially for people who are professional users of the products/services marketed by the company invested in.
Naturally, the reading of financial statements is more one for a professional so that has to be lain off to friends.
 
So you are planning to study companies in depth without reading their financials.

interesting approach...
 
For most people - those who haven't the time to keep up with the homework nor the pros to study financials nor contacts within the companies - that's true. For all people investing on behalf of others it's true.
But some have made it work, clawed back respectable takings from it and put that into index funds and such-like.
Many millionaire farmers in Ireland are single-stock investors - though that is through necessity of originally being shareholders in their local creamery co-op and success therefrom.
 
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trajan said:
For most people - those who haven't the time to keep up with the homework nor the pros to study financials nor contacts within the companies - that's true. For all people investing on behalf of others it's true.
But some have made it work, clawed back respectable takings from it and put that into index funds and such-like.
Many millionaire farmers in Ireland are single-stock investors - though that is through necessity of originally being shareholders in their local creamery co-op and success therefrom.
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And if a hundred of us call a series of coin-tosses, after a number of iterations, there’ll still be some people who’ve been “right” every time.

I am very wary of the DIY investment approach; in my view it smacks of being penny wise and pound foolish or even worse of megalomania. Either buy an ETF or pay someone reputable who has a good track record and who charges a fair fee to manage your money for you.
 
trajan said:
Many millionaire farmers in Ireland are single-stock investors - though that is through necessity of originally being shareholders in their local creamery co-op and success therefrom.
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I doubt those farmers are experts on the financials of the co ops they are invested in, they just got lucky that those co ops turned out to be mostly successful, and they benefited from not selling their shares probably because they never handed out cold hard cash for them in the first place, they were more interested in the price they received for their produce by those co ops. The strategy of having just one stock that you work for didn't work out to good for the banks shareholders during financial crash, also happened during the dot com crash where some tech companies were wiped out. The worker shareholders would have been experts in the technology of the company but it still did not benefit them during the crash.
 
Gordon Gekko said:
Either buy an ETF or pay someone reputable who has a good track record and who charges a fair fee to manage your money for you.
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@Gekko

How many advisers out there would have much more than QFA ?
Those who have CFA . . . I would wonder how many of them fully understand the investment models involved.
And what is a fair fee ? A percentage of the fund annually plus a percentage of the annual gain aggregated over a surrounding 5 years ?
It can't be easy to show an index fund's putative spreadsheet (ignoring fees, of course) to an investor and have him see just ~ 4 times his total contribs after a long 30 years. And that's saying nothing about inflation which will halve the fund's purchasing power.
 
joe sod said:
because they never handed out cold hard cash for them in the first place, they were more interested in the price they received for their produce by those co ops.
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By God they did have to hand out hard cash for their shares !

They had to buy their co-op shares at the nominal price, e.g. £1 - when a pound was hard to have. Remember that the successful co-ops had to devise whole new products beyond mere bottled milk, butter and cheese. Even where they did, local banks would only commit after a commitment by farmers to so much stock in the new entity.

There were benefits for bold primary shareholders like bonus shares for doubling up in year 2 and many availed of that. But all shares bar the bonus ones (at most ~ 5% of total shares paid for) had to be paid for in hard cash. And held in all times with Mickey Mouse dividends till the co-op went public and needed to reduce the % ownership of the co-op shareholders. Only then were plc shares received - and in small amounts.
 
trajan said:
@Gekko

How many advisers out there would have much more than QFA ?
Those who have CFA . . . I would wonder how many of them fully understand the investment models involved.
And what is a fair fee ? A percentage of the fund annually plus a percentage of the annual gain aggregated over a surrounding 5 years ?
It can't be easy to show an index fund's putative spreadsheet (ignoring fees, of course) to an investor and have him see just ~ 4 times his total contribs after a long 30 years. And that's saying nothing about inflation which will halve the fund's purchasing power.
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The QFA designation is neither here nor there. That’s more for bank tellers rather than investment professionals. If I was looking for investment advice, I’d want to see a team of CFAs, CFPs, tax consultants, and maybe even a lawyer. I’d look for a holistic wealth management service.

In terms of what’s fair, that depends. An annual fee plus a percentage of any gains would be closer to the hedge fund model and wouldn’t be in the best interests of the client as it incentivises excessive risk taking.

I pay headline fees of circa 0.5% in the knowledge that there are other costs in there. I believe that the “zone of reasonableness” for fees is 0.4-1.0% depending on the amount with no transaction commission, no exit penalties, and no contribution charges.
 
Gordon Gekko said:
I pay headline fees of circa 0.5% in the knowledge that there are other costs in there. I believe that the “zone of reasonableness” for fees is 0.4-1.0% depending on the amount with no transaction commission, no exit penalties, and no contribution charges.
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Even if you finally come down in favour of a 20 year residency in Vanguard 500 which supposedly has fees of ~ 0.2 % ?
 
trajan said:
Even if you finally come down in favour of a 20 year residency in Vanguard 500 which supposedly has fees of ~ 0.2 % ?
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Yep, because advice can relate to making people stay the course, tax efficiency, retirement planning, estate planning, etc
 
@ Gekko

I take it the fees for purchasing blocks of a fund, e.g. broker commissions, are all on top of your own fees ?
If it's say €250 a month over 30 years, how do the fees work out ? Do people get charged 1.5% of €250 per month or what ?
 
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