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By Chuck Jones
What beginning investors want is a Rosetta Stone, a
guide that will help them interpret the stock market and point them to
those stocks that will bring the highest returns. There is no such guide.
The closest an investor and an advisor new to the business might get is
to read The Wall Street Journal every day or visit kiplinger.com.
More important than having a market wizard telling you
what to buy and what to sell is a thorough but basic understanding of
why the stock market behaves as it does, and how you can help your client
navigate the investment roller coaster. That's where Bulls Make Money,
Bears Make Money, Pigs Get Slaughtered by Anthony M. Gallea comes
in.
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| "I can't imagine
Moses buying a semiconductor stock, but I can imagine him loading
up on Treasury bills." |
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Subtitled "Investment Wisdom That Stands the Test
of Time," the book is actually a compendium of common sense, wisdom
and strategy designed to help you make money in the stock market. Gallea
lays it out at the start of the book: "There has been a lot of blood
and money spilled over the past 100 years in the markets, and there are
many hard-won lessons that we would all do well to learn." And Gallea,
whose witty, punchy writing style keeps the explanations and advice from
getting preachy, teaches those lessons beginning with "A True Tale
of Woe" of his own misadventures in the stock market.
While Bulls Make Money . . . is divided into
general investment areas (Asset Allocation, Markets, Selling, Profits
and Losses, etc.), those sections are filled with short, often funny,
essays that explain a specific investing concept or give a piece of advice.
Few of these essays are more than a page, which makes them easy reading
for busy investors and advisors who are pressed for time.
Gallea is an author who writes with wit and much grace. Here are a few
examples:
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Bulls Make Money,
Bears Make
Money, Pigs Get Slaughtered
Anthony M. Gallea
New York Institute of Finance
$24.00, hard cover
www.phpress.com
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"Stocks beat bonds, but the flip side is that in
a bad market, bonds beat stocks. Contrary to popular myth, 'Thou shalt
only own common stocks' was not the commandment that broke off the tablets.
I can't imagine Moses buying a semiconductor stock, but I can imagine
him loading up on Treasury bills."
"[T]he words bear market are charged with
meaning. Somehow, a 'bear market' sounds much more ominous than a 'correction.'
A correction seems almost benign, as in 'I misspelled Mississippi, but
I put in a correction and now it's OK,' or 'Stock prices were a bit too
high, so we corrected that.' Nice and polite, no harm, no foul. But a
'bear market'? Oh my! And so commentators, fearful of the beginning of
a bear market, will often say, 'We believe a correction is overdue.' A
correction! We breathe a sigh of relief."
Gallea is a good storyteller and draws you into his lessons by involving
you in whatever point he's getting across. For example, in an essay on
whether or not stocks beat bonds, he describes the reader's investment
style, then brings up the reader's next-door neighbor and the neighbor's
investment habits as a personality contrast. This isn't textbook reading.
Here's another bit of advice: "That hot little stock that just rocketed
up 50 percent yesterday is not your friend. It is not your buddy. And,
because it isn't your friend or your spouse, you should not fall in love
with it. It can be vicious. It can turn on a dime and sink its teeth into
you. Whatever you do, don't fall in love with an investment. You want
friendship? Get a dog. You want trouble? Fall in love with your investments."
The book is filled with interesting bits of trivia (Did
you know that General Electric is the only member of the original Dow
Jones Industrial Average still on the list?), including an explanation
of its title. According to the author, if you are bullish—or even
bearish—in the market, you can make money. "But it's the pigs
who get slaughtered. It's the investor who loads up on a single position
and crosses his fingers and waits for that big move that will carry him
home. It's the investor who has a full position in a commodity, and the
contract moves in his favor, and he responds by loading up past all reasonable
and prudent risk. These are the pigs, and they are slaughtered with distressing
regularity."
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ADVISOR TODAY
also recommends
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Proactive Selling
By William "Skip"
Miller
AMACOM
800-714-6395
$18.95, paperback
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Open Book
Voices
from the Field
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About Us
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