Winning with the Market (Wall Street Journal Book) - Softcover

Sease, Douglas R.

Softcover

ISBN 10: 0743204204 ISBN 13: 9780743204200

Verlag: Free Press, 2002

Inhaltsangabe

A lifetime plan for building and maintaining low cost, powerful portfolios, whatever your means and financial goals
Winning with the Market simplifies the investment process, freeing investors from the tyranny of so-called experts who promise huge returns on the latest hot stock, junk bond, or costly mutual fund -- a strategy that has brought both financial and emotional strain to many investors in the volatile markets of recent years. Here, Wall Street Journal veteran Douglas Sease presents a systematic way to think about investment over the course of a lifetime, explaining:
How to save money for investing
Where to make initial investments
When to shift the balance of the holdings in your portfolio
Why your best strategy is to invest with the market -- in the form of stock-index mutual funds and inflation-indexed Treasury bonds
With Sease as a guide, you'll learn how to create a customized portfolio for every stage of your life. He provides nearly two dozen different model portfolios, offering options for a wide range of risk tolerance, income, age, and financial goals. As a journalist who has followed the careers of superstar investors Warren Buffett and Peter Lynch, he recognizes that their achievements lie beyond the reach of most people. With this simple, accessible plan, he makes it possible for ordinary investors to set and reach reasonable goals, making the most of their time and money.

Über diesen Titel

Über die Autorin bzw. den Autor

Doug Sease has worked for The Wall Street Journal for more than twenty-five years and appears regularly on CNBC. He is the author of several books on investing and the markets, and the editor of The Wall Street Journal Guide to Who's Who and Whats What on Wall Street. He lives in Vero Beach, Florida.

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

How This Book Will Make You a Better Investor Here's the defining question to determine if you're an investor: Do you want the stock market to go up or down?

If you answered up, you're one of two things: retired and living on the proceeds of your investments, or a short-term trader looking to unload a position. If you're an investor -- the person for whom this book is intended -- you want the market to drop big and stay down for as long as you can invest new money. You know that's the only way to find lots of bargains and make lots of money over the long haul. Only when you're ready to be withdrawing money to support yourself in retirement do you want the market to rally.

But I'll be the first to admit that actually wishing for a big market drop is psychologically tough. I think back to the fall of 1998, when, after a period of astounding gains, the financial markets weren't doing so well. Russia had effectively defaulted on its government debt and thrown enough gasoline on the smoldering ruins of emerging markets to start a worldwide financial firestorm. The Dow Jones Industrial Average dropped nearly 20 percent from its peak, an event that had not occurred in several years. Small stocks were in a virtual depression, the market for initial public offerings was barren, and even the vast bond market had stalled, with the exception, of course, of the supersafe market for U.S. Treasury debt. The fallout from this market malaise spread rapidly. Big banks took heavy losses, hedge funds that had made huge and risky market bets were foundering, and the Federal Reserve was sufficiently frightened of the economic consequences that might follow that it quickly cut short-term interest rates to head off a recession. Fear was rampant.

What a great time that was to be buying stocks!

Yet what did I hear? Groans and moans from people who had seen their 401(k) plan balances drop 15 percent or so (and these were people who wouldn't be retiring for twenty or more years). Older investors who had been thinking about taking retirement started talking about staying around a few more years "until things get better." The only people who seemed to be enjoying life during that upsetting period were those who had most of their money invested in bonds and other safe investments. They took full advantage of the rare opportunity to gloat about how smart they were to avoid risky stocks.

There will always be an element of emotion involved in investing. After all, the nature of investing is to take risks seeking reward. As long as the rewards seem to far outweigh the risks, life is a bed of roses and account balances can rise to the sky. The only intelligent thing to do is put everything in stocks and bask in the riches that result. But when the risks seize the upper hand, as they inevitably will from time to time, panic sets in. Prices of everything are falling and can only fall further. There is no end in sight to the bad news. The same stocks that had you anticipating early retirement now seem like lead weights that must be cut loose if you're to survive financially. The all-too-frequent result of such emotional turmoil is this simple but disastrous formula: Buy high, sell low.

One key, then, to a successful investment program is to minimize the emotional component of investing. The better able you are to set aside emotions and act logically, the better your investment portfolio is going to perform over the years to come. This book is aimed at helping you temper the emotional roller coaster of investing.

Another key to a successful investment program is knowledge. But not the kind of knowledge you're thinking about. You probably want to be able to analyze a balance sheet and income statement of a company, figure out if some stock's price-earnings ratio is in line with those of other companies in the same industry, and project where interest rates are going. All that stuff is great if you're working on Wall Street and need to impress your clients. But that isn't the kind of knowledge I'm talking about. I'm much more interested that you know what can't be known. And that's easy: you can't know where stocks or interest rates are going. No matter how deeply you delve into business texts, no matter how many finance courses you take, and no matter how much some Wall Street brokerage firm is willing to pay you, the simple fact is that neither you nor anyone else knows what is going to happen to any single stock, to the overall stock market, or to interest rates. And if anyone tells you he can do these things, he's either lying or deluding himself. That's why I'm going to emphasize throughout this book that you do everything you can to avoid contact with the investment industry. I want you to enter a brokerless world where you make your own decisions free from the pressures and solicitations of people who will make money on your investments regardless of whether or not you do.

I'm not offering to make you a great investor. My very firm view is that it is exceedingly difficult to be a great investor. Peter Lynches and Warren Buffetts are few and far between. I don't know what makes them tick, and apparently nobody else does, either. People who try to emulate them come up short for some reason. And don't think that both Peter and Warren haven't made some bad calls. But it is my equally firm view that it isn't difficult at all to be a very good investor. There is no reason you cannot earn a healthy return on your investments, one that is consistent with your appetite for risk, if you simply understand that there are limits to what you can expect. And, perhaps as important, you won't waste hours of your time and thousands of your dollars in a futile effort to beat the market.

Presumably most of your investments will be made in U.S. financial markets. The U.S. stock market is the most efficient in the world. It is huge, highly liquid, well regulated, and thoroughly studied. What that means in practical terms is that it is well-nigh impossible for the average individual investor to know something about the value of a particular stock that somebody else hasn't already discovered and acted upon. The price you're quoted by a broker for a stock already reflects all that knowledge. Stocks that seem bargains usually deserve the price at which they're trading. Equally true, stocks that seem ludicrously overpriced also probably deserve the price at which they're trading.

I certainly don't mean to discourage you from investing. There are times when overall stock prices, responding to the overwhelming emotions that can grip millions of investors simultaneously, do fall to levels that are attractive. Certainly the crash of 1987 is one example. Those who steeled themselves to buy heavily in the aftermath of that plunge can look back on the crash as a seminal event in their portfolio's growth. And individual stocks can also be subject to emotional tumult, affording quick-witted investors a chance to buy at a reasonable price (or, better yet, to sell at an unreasonable price). But those occasions occur infrequently, and to wait until they occur is not a sound investment strategy.

I'd rather you go into investing with your eyes wide open, recognizing that it is unlikely that your stock and bond picks will outperform the overall market by any wide margin for any significant length of time. They certainly won't if you don't take careful account of the costs of investing -- brokerage fees, research publications, and software, for example -- or the tax consequences (Uncle Sam will gladly take up to 40 percent of any profits you make if you let him). More important, I want you to be able to minimize the amount of time you spend investing. You can't put a dollar figure on the hours wasted chasing hot stocks or the consequences of the stress on you and your family as markets and brokers whipsaw you around, only to leave...

Details zur Ausgabe

• Verlag: Free Press
• Erscheinungsdatum: 2002
• Sprache: Englisch
• ISBN 10: 0743204204
• ISBN 13: 9780743204200
• Einband: Taschenbuch
• Anzahl der Seiten: 224
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: Simon and Schuster Netherlands BV; info@simonandschuster.nl; ; Herculesplein 96; Utrecht; 3584 AA; Niederlande