The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies
By admin • May 17th, 2009 • Category: Finance
The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies
by: John P. Reese, Jack M. Forehand
The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies
By John P. Reese, Jack M. Forehand
Publisher: Wiley
Number Of Pages: 317
Publication Date: 2009-02-03
ISBN-10 / ASIN: 0470377097
ISBN-13 / EAN: 9780470377093
Product Description:
Today’s investor is faced with a myriad of investment options and strategies. Whether you are seeking someone to manage your money or are a self-directed investor deciding to tackle the market on your own, the options can be overwhelming.
In an easy-to-read and simple format, this book will dissect the strategies of some of Wall Street’s most successful investment gurus and teach readers how to weed through the all of the choices to find a strategy that works for them. The model portfolio system that author John Reese developed turns each strategy into an actionable system, addressing many of the common mistakes that doom individual investors to market underperformance. This book will focus on the principles behind the author’s multi-guru approach, showing how investors can combine the proven strategies of these legendary "gurus" into a disciplined investing system that has significantly outperformed the market.
Gurus covered in the book are: Benjamin Graham; John Neff; David Dreman; Warren Buffett; Peter Lynch; Ken Fisher; Martin Zweig; James O’Shaughnessy; Joel Greenblatt; and Joseph Piotroski.
Summary: One stop shop for stock investing strategy and creating investing philosphy by learning from the investing legends
Rating: 5
John Reese’s book "The Guru Investor – How to beat the market using history’s best investment strategies" fills the gap in investing books on how a person who doesn’t have a stock investing background (and struggles for some time with it) create a strategy to beat the market (and have a chance to beat the market) by learning from those who have beat the market consistently in the past. The book covers important most of the basic financial metrics and also covers value, growth and quants strategy. This book is basic enough and easy to understand. This book can be a one stop shop for investing books if you already know the basic of stock investing, but if you don’t know much about stock market or how stock investing works, then this is not the book that you want to read first.
The 6 principles of "Guru Investing" (what I personally called investing philosophy):
1. Combining strategies to minimize risk and maximize returns
2. Stick to the numbers or the market will stick it to you
3. Stay disciplined over the long haul
4. Diversify, but you can’t beat the market by owning it
5. Size and style – focused systems only limit investment possibilities
6. You don’t have to hold stocks for the long term to be a long term investor
Pros:
1. practical and succinct
2. covers most of the investing legends strategies and their "story" (Warren Buffett, Benjamin Graham, Peter Lynch, David Dreman, Ken Fisher etc)
3. Covers many important financial ratios
4. Covers in depth the topic of "Determining when to sell"
5. Relate to the audience well (as someone who is trying to learn about investing from the investing greats)
6. Includes interesting facts in the fact box (or key learning) for each chapter or for each important topic.
7. Covers the performance of "Guru" based stock model portfolio and yearly track record comparison
Cons:
1. Marketing (cross selling) their other investment service (validea dot com and Validea investing system)
2. Supporting a subjective topic of the drawback of market timing/short term trading (that "one have to be right at least 74% of the time to make money with market timing approach")
3. Should include more learning/strategies from Philip Fisher
In conclusion, "The Guru Investor – How to beat the market using history’s best investment strategies", is a very good resource to help us understand many of the proven stock investing strategies (as applied by several of the investing legend). This book is a nice hybrid of "the intelligent investor" type book (theory concentrated) and "One up on Wall Street" (practical and experience) type book.
Happy Investing,
Sidarta Tanu
Summary: Learn how to invest from the Gurus
Rating: 5
This is simply one of the best investment books on the market. Who better to learn from than the greatest investors in history? What better strategies can you use than the ones used by Warren Buffett, Benjamin Graham, Ken Fisher, Martin Zwieg or Peter Lynch? What this book does is review the lives and investing performance of the top ten investors who ever lived. Then the book presents how to invest like them using the same metrics and valuations that the gurus used based on their own books or from writings from people who have studied the gurus. The author has used model portfolios based on the techniques in the book to show that these approaches continued to work from 2003 to 2008 with most of them doubling and tripling the performance of the S&P 500 over that time.
The book will give you the knowledge you need to pick stocks using stock screeners based on price to sales ratios, price to earnings ratios, book value, liquidity, earnings growth, and many other metrics you will learn from the gurus. There is also a free companion web site that gives three stocks for each guru that currently meet their guidelines. The book recommends sticking with a strategy for the long run to really get results. It also explains the need to balance your portfolio at regular intervals, and sell stocks when the fundamentals have changed or they get involved in an accounting or other scandal. Excellent book for getting started in investing or for improving your investing performance.
Summary: Okay
Rating: 2
The author uses a proprietary model to invest in stocks, and I have been on his mailing list for a number of years, as I used to pay for his newsletter. However, I have noticed that in some VERY good years, the author has not done so well. At least he publishes a track record and is honest about it. Most newsletter authors will tout their fantastic returns of one particular year. Even if that might be true, they conveniently forget to mention all the bad years they have had.
It took Hulbert’s guide to sort out a lot of this misinformation. However, with all the newsletters and now website, it would be impossible for one person to sort it all out.
It would be best to find someone to give you financial advice who is a CFA–meaning a certified financial analyst–for this test a person needs five years of experience and has to pass 3 levels of this test. It is not an easy test and few brokers, personal financial planners, financial columnists, or newsletter writers have this credential. Second best might be to find someone with a Master’s Degree in Finance. I would love to have this credential myself and took all the courses as UCSD Extended Studies that apply to this test. However, as a multiple myeloma patient, since at one time the average patient only lives 3 years, and I have lived 5 1/2 years already, I did not know if I would ever live long enough to pass the 3 levels of this test.
I do have knowledge even some CFAs may not. And I have taken courses taught by doctors of finance where what was presented was actually wrong–I just could not make the professors understand this. I was once told there is no such thing, for example, as a non-diversified mutual fund (also known as a focused or select fund). Of course there are. I have done very well by investing in them actually.
At any rate, there are few people giving financial advice who know both economics, finance, and everything that is relevant very well. How many, for example, might give you the advice to invest in stock funds specializing in foreign stocks but try to find one who knows anything about specific foreign stocks. A different system of accounting is used–different than the GAAP rules we use in the USA–which will be adopted worldwide shortly.
Yet try to find a brokers, planner, newsletter writer or financial writer who knows anything about accounting and foreign stocks, exchange rates, non-systematic risk (risk outside of the risk of investing in stocks), or statistics.
It is very hard to find these kind of people unless you have millions of dollars in assets. John Validea tries hard to give the small investor the same advice he would give to these kind of clients, but as I said his track record over the last several years has been mixed.
But kudos to him for admitting his good and bad years.
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