Thursday, September 10, 2009

The Best Investment Advice I Ever Received - Liz Claman

The best investment advice in this book really is about the few same old principles that have been mentioned over and over again in magazines, newspaper articles and other books:

1) Diversify, don't put all your money in one basket of eggs.

2) Invest for the long term, don't focus on flipping, don't try to time the market cause nobody has been able to time it right.

3) Invest only in what you are passionate about so you have enough knowledge or the drive to pay attention to every news and financial reports about the company you invest in for you to make the sound buy and sell decision.

4) Invest with discipline.

5) Buy low and sell high.

6) Invest in value, not news, rumors or fads of the moment. Find great companies or funds with great potentials to invest in.

7) Work against the crowd, buy when the crowd sells, and sells when the crowd is in a buying frency.

Are any of the above new? There is no exact direction on how to find great companies with great potential to invest in. There is also no detailed instruction on how to really diversify a portfolio and how diversified should one's portfolio be in order to achieve great returns. Buying low and selling high is what everybody in the world has been chanting forever, but how low is really the low and how high is really the high?

The book is really general stuff that provides nothing new helping an indvidual investor to improve their investment returns. Most of the advices are repetitive. I guess the advisors are from similar schools on Wall Street and therefore follow similar golden rules of thumbs. This book is nothing really innovative and inspiring to me. I didn't learn anything I haven't heard of by flipping through TV channels and flipping through magazines (without even trying to be attentive)

I however think this book can be good for someone who is in highschool. For some kid who has been able to totally tune out of any TV chanting and yacking on investing while flipping through the channels, this book can get him/her started on some general ideas about investing.

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