investing Archives - Tight Fisted Miser

Why Are We So Clueless About the Stock Market?:Book Review and Giveaway

July 27, 2015January 4, 2010 by Andy Hough

I was recently provided a copy of the book, “Why Are We So Clueless About the Stock Market?” by Mariusz Skonieczny. As I usually do when provided with books for review I will be giving away a copy as well. The giveaway rules will be at the end of the post.

This book starts out explaining what stocks are and how the stock market works. This explanation is simplified so that even a novice investor should be able to understand it.

The author then goes in to some detail on how to evaluate a stock for purchase. He mainly focuses on the company’s projected earnings compared to its current price. He points out that if the stock doesn’t offer a return greater than you would get from a Treasury note than the stock is a pass. He also prefers to invest in companies with “moats”, which are barriers to competition.

The book also includes a chapter on when to sell. This is an important part of stock investing that is often overlooked.

His advice on diversifying goes against the conventional wisdom. He warns against over-diversifying which can prevent your top picks from having much impact on the overall performance of your portfolio.

In summary, I think this book would be a solid resource for anyone who is looking to invest in the stock market or simply wants to learn more about stock investing.

Leave a comment on this post if you would like to win a copy of this book. I will be choosing a winner at random this Friday. Only one entry per person and you need to have a U.S. mailing address. Good Luck!

If You Need Stocks, You Can’t Afford Them

July 27, 2015November 19, 2009 by Andy Hough

According to economist Zvi Bodie. In a Money magazine article he says that if you need the high return of stocks to reach your goals then you can’t afford to invest in stocks. You should read the article to get all the details but this is a general summary of what he says. He states that stocks are too risky an investment for retirement investing and suggests a portfolio of TIPS instead; you should only invest in stocks what you can afford to lose. He also says that you should save 20%-30% of your income or more so you will accumulate enough money for retirement despite not having the higher returns from stocks.

This is an interesting point of view and I can agree with it somewhat. As he states when you are saving for retirement you can either sacrifice by having a lower standard of living now, working longer, or taking more risk in your portfolio. If you are able to maintain a low standard of living and save a large percentage of your income than the returns you receive are not as relevant as when you are saving only 10% of your income.

Personally, I am still going to be investing in stocks. They are risky but since I have started saving late in the game and don’t have much income I need the high returns of stocks to accumulate enough money to retire. Even if I were young and just starting out I don’t think I would put 100% of my money into TIPS though. That just seems too conservative to me. Once I have accumulated all the money I need then I might consider putting a large percentage of my investments in TIPS or some other form of guaranteed income but until then I will stay invested in stocks.

What do you think of Bodie’s advice?

What Should You Do With Your Money Now?

May 19, 2022September 19, 2008 by Andy Hough

With the turmoil in the financial markets many people are wondering what they should do with their money. I don’t know what you should do with your money but I can tell you what I am doing. I just invested a little more in my Roth IRA which is 100% invested in a value stock mutual fund. I figure if the stocks were undervalued before they should really be undervalued now. It is a bit disconcerting to see my balance go down but I have faith that the market will eventually rebound. On the theory that stocks are cheap right now I hope to max out my IRA before the end of the month if I have enough cash flow.

If you’re worried about safety than putting your money in an online savings account is a safe way to go. As long as you put your money in an FDIC insured account you’re protected up to $100,000. This is a case where less risk doesn’t lead to less return when you compare them to money market mutual funds. The Reserve money market mutual fund recently broke a buck causing investors to lose part of their principal and the fund is paying less than 2%. In an online savings account such as FNBO Direct you don’t have to worry about losing your principal and it pays 3.50% APY. Why would you invest in a money market mutual fund?

I’ll end with the standard disclaimer. I’m not a financial professional and I’m not advising you how to invest your money. I’m just telling you what I am doing with my money.