The SmallIvy Book of Investing, Book 1 is Starting to Sell


Buy the SmallIvy Book of Investing, Book 1: Investing to Grow Wealthy at https://www.createspace.com/4306997

The SmallIvy Book of Investing, Book 1 BUY A COPY

It has gotten a slow start, but The SmallIvy Book of Investing is starting to see some sales. I’m excited to see people buying copies because I think it is very unique as far as investing books go. Rather than just talking about trading techniques, it gives a plan to apply at each stage of life for those who want to become financially independent. For example, it goes through starting retirement accounts (401k, IRA) and getting your budgets together when you are in your twenties so that you can have money for investing. When you are in your prime earning years (45-55) and starting to look forward to retirement, it talks about starting to unwind your investments and get ready for living on your portfolio when your paycheck stops. I’m really hoping some people in their late teens and early twenties find this book because if they start saving and investing early, they can really make a difference in their lives.  Of course, even if you are starting 40, you’ll need to save more aggressively than a 20-year old but you can still retire with dignity.

It also provides the basics for the different types of investments. For example, it explains what a stock, bond, and option are. It also goes through the risks of each type of investment so that people who are new to investing know what they’re getting into.  I sent a copy to my broker and he commented that it was nice to have a book that went through some of the more elementary topics since he finds there are a lot of people who need a primer.  Money is a private matter in many families so unfortunately many young adults never learn how to handle money before they are out on their own.

Right now the Amazon price is $10.79, which I think is a great bargain. (Buy four and you’ll get free shipping!) If you do buy a copy, please let me know what you think.  I’m just starting to work on Book 2 which will cover stock picking since that really needs a whole book on its own.  Please also let me know if you would like a Kindle version.  I haven’t done this yet because I wanted to see how well the paperback sells, but can get it onto Kindle if there is enough interest.

Thanks for reading the blog and thanks to those who have already purchased the book.  Happy reading!

The SmallIvy Book Of Investing is Now Available!


BookCoverPreview

Finally, after a lot of writing and editing, the first SmallIvy Book of Investing is available for purchase.   They say that there is a state of purgatory between finishing the writing on a book and getting it published.  I can say that is definitely true from my experience.

The book covers a lot of the topics I cover on the blog.  The central theme of the book is the Serious Investing idea, where large numbers of shares of a select group of companies are purchased and then held for a long time.  The book also gives the basic on different types of assets, talks about how to set up your cash flow to get money to invest and grow wealth, and gives information on what you should be doing at different stages of your life to become financially independent.  I’m hoping to sell a few copies, but I doubt I’ll make even minimum wage for the hours spent writing and editing it.  My main goal is to help people learn to handle money and grow wealth.  It is really within many people’s grasp to retire wealthy and not need to worry about money – they just do the wrong things.

It will be available on Amazon soon.  Copies can be ordered currently from Amazon’s affiliate, CreateSpace for $14.99.  To order, please go to this link.

Here’s a sample from the book:

Introduction

Many people dabble in the stock market. Just like the gambler in Las Vegas, people spend their time tracking different stocks, buying and selling on the latest news, and generally not making much money at the end of the day. The 1990′s saw the rise of the penny ante day trader. These individuals would sit at home on their computers or go to rooms full of workstations where they would attempt to make money trading stocks as they went up or down by quarters or eighths of a dollar.

They had visions of trading during the mornings and then playing golf in the afternoons. It was shown that an individual would need to be right about 80% of the time to make a profit this way, after paying all the fees and commissions. Obviously very few people did well over time.

For some who have already made their fortune through running a business or other means, the stock market is merely a form of entertainment – a way to get a little excitement during otherwise bland days. These people are not investors and they will never really make much from their activities. It just gives them battle stories to tell at parties.

A true investor is like the fisherman on the American frontier back in the 1800′s. Unlike the modern angler who plays around with different lures and may throw back much of his catch, the frontiersman needed to catch fish to eat. He would do what was effective, like placing a net under a waterfall or building a fish trap, rather than what was sporting. He did what worked, even if it wasn’t particularly exciting.

Investing for growing wealth, what I refer to as serious investing, is not exciting. It is not the talk of cocktail parties and chit chat for the water cooler. It is doing what works and doing whatever is needed to put the odds in one’s favor.

A serious investor is not the favorite of the broker since he rarely trades. He builds up large positions in a few great companies and then holds for years or even decades. He buys companies, not stocks. The price patterns of stocks, e.g. trends, ceilings, floors, etc… are not important to him except perhaps as a way to get a better price on a purchase or a sale.

The serious investor saves and invests a portion of his income because he understands that it is worth the delay of gratification to have a steady stream of revenue that requires no additional labor. He understands compound interest and knows that to become wealthy, one must receive interest instead of pay interest each month. The serious investor first wants to use investing to grow wealth and thereby gain economic freedom. Once there, he then wants to be able to ensure a lifelong stream of income without losing the principle he worked so hard to build.

This book is for the small investor who is serious about growing and then maintaining wealth. It first presents a strategy for a young investor with a long time to invest (30-50 years) who has little money and wants to grow assets. This strategy is not the typical investment spiel about diversification, proper balances of stocks and bonds, etc… provided by many financial advisers. It is not that diversification is a bad thing, it is that diversification is designed to preserve capital, not grow capital. The goal of this book is to present strategies to beat the market, not just match it, at least while one is young and has little capital to protect.

The strategy presented for the new investor is to invest concentrated amounts in a few stocks that one believes are going to grow for years and years, and then hold them for years and years. One wants to catch the next Microsoft, IBM, or Cisco. One may get a few losers along the way, but one big winner will make up for a lot of losers. As gains are made, some of the money is diversified into mutual funds and spread among a greater number of stocks to preserve the gains.

The book then presents strategies for the investor later in life who has grown a substantial portfolio and would like to preserve it while gaining some income for living expenses. It is here that diversification is increased and cash is maintained to reduce the risk of market fluctuations affecting one’s income stream. Some exposure to equities is maintained even at this stage, however, as a hedge against inflation, but mutual funds are more important.

Information on stock picking is not included in this book, but will be included in a second book. Indeed, stock picking is worthy of its own book since there is a lot of information one must absorb before becoming a good stock picker. Even then it is a craft that is learned through experience rather than something that could be distilled down into a procedure.

Having dispensed with the preliminaries, let’s end this introduction with a brief summary of the reasons for wanting to become wealthy. It goes well beyond the superficial lifestyle portrayed by celebrities and rock starts. In fact, if the reader is looking to have lavish parties and buy tons of superficial things, he will be sadly disappointed. The lifestyle of celebrities is more due to their large incomes than their money management skills. People who attain and hold onto wealth have nice things but tend to be more frugal than the average NFL quarterback.

Instead, the reason for becoming wealthy is to have freedom and security. The ability to just pay for things when life’s little disasters happen. To have all the things that coworkers have, but to actually own them rather than rent them with a credit card and a home equity loan. To not always be living always on the edge of default if a paycheck is lost. To be able to choose a job you love, instead of working to support a lifestyle.

It is also ethical to live in an economically sustainable fashion. Indeed, there is virtue in the growth and maintenance of wealth and many benefits to society. In the very least, those who can take care of themselves don’t burden others. It is also those who are firmly on the shore who can best rescue others who are drowning. It is the people who have money who are able to support churches, charities, and neighbors.

Investing Strategies for the Individual Investor


I’ve been spending a lot of time this past week working on the final edits for the book.  Hopefully I’ll be able to get it out and available for purchase early next week.  In the mean time, please enjoy this “classic” SmallIvy Post from last year in case some of you missed it.  (Yes, I know it is just like a lousy clip show when you’re waiting for a new episode, but please bear with me.  The book will be worth the wait.)

Different stock picking methods have been popular through the years.  Some people try to buy stocks they consider cheap and then sell when they get expensive.  Others try to buy stocks that are going up and then step out before they reach a top.  The first technique, called value investing investing, is buying low and selling high, the second technique, called momentum investing, is buying high and selling higher.

Today I thought I’d review a few of the strategies and plusses and minuses of each:

Momentum Investing:  In momentum investing an individual looks for the hot stocks of the day – those that are going higher and everyone is talking about – and buys them.  He then tries to jump ship before it reaches a top and fizzles.  This is sometimes called “building castles in the clouds” since the support for these types of stocks is normally fairly weak and eventually they come crashing back to earth.  The advantage is that the stocks to buy are fairly obvious – everyone is talking about them, like Apple until recently – and gains are generally made fairly quickly.  The disadvantage is that one risks buying into a stock that is overpriced near a top.  Usually the hot stocks come crashing down at some point.

Value Investing:  In value investing, an investor finds stocks that are cheap relative to their “fair value,” which is calculated based on earnings and other factors.  He then buys them while they are cheap and sells them when they start to get overpriced.  The advantage is that he is buying low-priced stocks which may not get beaten down as badly during a market fall.  The disadvantages are that one need to be very patient since it may take a while for the stock price to turn around and this strategy can be risky because some stocks are beaten down for a reason.  Buying companies that go bankrupt is more likely with this strategy.

Buy and Hold:  In this strategy, recommended by this blog, stocks are bought in companies that show potential to grow for long periods of time.  These stocks are then held regardless of stock price until the fundamentals of the company change or the position becomes too large and a portion must be sold for safety.  The advantages are that it is easier to find stocks that will do well over the long-term than it is to find those that will do well over short periods of time and one has a chance of picking a stock that will provide a very large return (in some cases turning a few thousand dollars into hundreds of thousands or even millions of dollars).  A disadvantage is that one can also lose a lot of time and potential profits if one chooses a stock that does not do well.  Another disadvantage is that when one does make a large profit, much of the value of the stock may be profit, resulting in a lot of taxable income when the stock is sold.

Dollar-Cost Averaging:  Rather than a way of picking stocks, this is a way of buying stocks in which an equal dollar amount of a stock is bought at a regular interval – say every month or twice a year.  Because an equal amount is purchased, more shares are bought when prices are relatively low than when they are high, resulting in a profit even when the overall price of the stock is fairly flat over the period.  This is a good strategy for buy-and-hold investing and generally works best with a stock that has a dividend reinvestment plan that allows purchases of stock since one can therefore avoid most brokerage fees.  The disadvantage is keeping track fo your cost basis for taxes.  This could be eliminated with the passage of the Fair Tax.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Finally – The First Book


Finally, I have completed the first draft of the first SmallIvy Investing Book, The SmallIvy Book of Investing.  For those who have been waiting, it should only be a couple of months now until the first edition comes out.  Things should go fairly rapidly from here as I edit and then find a publisher (from what I’ve seen so far, it may be difficult to find a good book-on-demand publisher, which is a shame given that the technology is there to finally break the publishing monopoly, especially with e-books.  If anyone knows of a good one, please let me know!)  I’m hoping to have both print and e-book copies available by early Spring.

The book provides a lifelong strategy to investing and growing wealth.  Ideally someone will pick it up when they are in their early twenties and use the advice to learn to handle money and invest, thereby becoming financially independent by the time they are forty-five or fifty.  Those at other stages of life who are new to investing or just not doing well with their investments should find it useful as well, however, since it gives a lot of good information on stocks, bonds, and other investments and investing strategy.  Also, while it is much easier for someone who is 20 to become financially independent, with enough determination there is no reason someone starting in their forties cannot be debt free and have a good nest egg by the time they are ready to retire.  It just takes more work.

An outline of the book is as follows:

  1. Investing
    1. Reasons for Investing – growing wealth, maintaining wealth
    2. Assets for growing wealth
    3. Assets for maintaining wealth
  2. Investment Options
    1. Common Stocks
    2. Bonds
    3. Preferred Stocks
    4. Mutual Funds
    5. Real Estate and REITs
    6. Commodities – Gold, Silver, Platinum
    7. Derivatives – Options, Warrants, LEAPs
  3. Understanding Risk and Reward
    1. Investing, Speculation, and Trading
    2. The relative risk of investments
    3. Asset Pricing and The Risk Premium
    4. Risk and Reward of Common Stocks
    5. Risk and Reward of Bonds
    6. Risk and Reward of Real Estate
    7. High Risk/High Reward Speculations
    8. Stages of investing
  4. Investing in your Stage of Life
    1. Factors to Consider
      1. Volatility
      2. Diversification
      3. Time Frame
    2. How the Small Investor can Beat the Mutual Fund Manager
  5. The Investment Strategy
      1. Stage 1– Early Career (Ages 16-30)
      2. Stage 2– Late-Early Career (Ages 31-45) 
      3. Stage 3– Middle Career (Ages 46-58)   
      4. Stage 4– Late Career (Ages 59-70)  
      5. Stage 5– Retirement/Second Career(Ages 70+)
  6. Early Life Investing
    1. Getting Ready for Investing
    2. Setting up an Investment Plan
    3. Budgeting and Saving for Investing
    4. How to start investing in stocks
    5. Dollar Cost Averaging
    6. Stocks or Mutual Funds?
  7. Mid-Life Investing
    1. Rebalancing a portfolio
    2. Shifting from Growth to Preservation
    3. Mid-Life Goals
  8. Late-Life Investing
    1. Getting Ready for retirement
      1. 401K Transfers
      2. Unrolling an IRA
    2. Asset Protection
    3. Income Generating Strategies
    4. Giving Money and inheritance

If interested, please send me an email or leave a comment.  I’ll let those who indicate their interest know when the book is available for purchase.

Once the first book is done, I’m planning to start working on a second book on picking stocks.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Periodicals to Read for Investing


When getting into investing, there is certainly a lot of information to be read.  Some of it is good, a lot of it is bad.  I’ve covered some of the good investing books to read in previous posts (browse the categories for Book Recommendations to find these).  Today I’ll provide some information on the periodicals I read.

Of course, with everything going from print to online, there are a lot of online resources as well.  I generally use printed material, however.  I spend enough time on the computer at work – I’d rather relax at home in an easy chair with a newspaper than spend more time staring at a screen.  In addition, some searching for stocks involves flipping through and looking for price patterns.  This cannot be done from a website.

Research has also shown that people don’t actually read websites (are you even reading this?).  They usually read the first few lines, then scan to the bottom, only reading the first few words on the left side of the screen.  They then maybe read the last few lines.  You may visit a lot of websites, but are probably not picking up a lot of information online.

So, here are the periodicals I read and why:

ValueLine Investment Survey:  If you are serious about investing, you need to get a subscription to ValueLine or visit your library and use their’s.  There is just too much good information in there for picking stocks.  I generally will look at the top rated stocks in each section as it comes out for good investments.  I also will look through the list of stocks with a 1 for Timeliness and then dig into the issue for more information for the ones that look attractive.

Wall Street Journal:  This is a good resource for learning about how to invest, as well as for keeping up on trends in the economy.  The third section usually has a column covering some aspect of investing.  They also has many articles on the upcoming housing bubble crash in 2006 and 2007.  The folks at the Federal Reserve who said they didn’t see it coming were obviously not reading the Journal.  I did and was short thrift stocks and oil stocks when the crash came.

Barrons:  This is the Wall Street Journal’s grumpier sister publication.  It has several good columns covering different sectors of the economy.  It also has a lot of different stock tables, although these have become less useful since there is now so much information online.

Forbes:  Forbes aggravates me sometimes since they promote ridiculous lifestyles of excess (most of the people who are buying all of these luxury goods don’t have two dimes to rub together at the end of the day).  They do have some good articles on investing strategies, however, and are a good way to keep up on the effects of legislation on markets.

Money:  I find that a lot of the advice in Money is really bad.  They are often talking about ways to get rewards on credit cards and go into debt.  There are some good articles on saving and investing, however.  It also gives you insight into what “normal” people’s finances are like.  If you want to be wealthy, you can’t be normal when it comes to money.  Normal is broke.

Please send investment questions to vtsioriginal@yahoo.com or leave them in a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Books to Read – The Warren Buffett Way


Warren Buffett is a long-term investor.  He looks for companies that have a special niche and are the “best of the best” in their business.  He tends to buy controlling stakes in these companies and then hold them for a very long time.  Some of his favorites include Sees Candies and Gillette.

In his book, Robert Hagstrom presents a biography of this legendary investor, and goes over the strategies that he uses to pick winning stocks and his investment style.

http://www.amazon.com/Warren-Buffett-Way-Investment-Strategies/dp/0471177504

Refer a friend – link to this page: http://smallivy.wordpress.com

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security.  Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Book Recommendation – A Random Walk Down Wall Street


My next recommendation for investing books is a classic by Burton G. Malkiel, A Random Walk Down Wall Street.

http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393315290

In this book, Mr. Malkiel describes what he calls the “random walk theory,” which basically says that all news is instantly priced into stocks.  Thus, keeping up with the news about companies does you no good because as soon as you hear about it, it is already priced into the price of the stock.  The best portions of the book are the information on Beta, a factor used to describe the level of random fluctuations that a stock will experience.  He relates that studies have indicated that purchasing stocks with high Betas, which have bigger fluctuations and therefore carry more risk, will provide greater returns in the long run.  Basically it proves the assertion that there is a greater potential for gains if more risk is taken (although there is also a greater possibility of losses).

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