5 of 5 Stars - The New "Gold Standard" in Explaining Market Investing.
Author Eric Prentis, Ph.D. has written a great, easy-to-read book for anyone interested in stock and/or bond investing. "The Astute Investor" is a book that novices can grow into as Prentis covers the basics of investing, all underlying theories on investing, and the interplay of markets. It will also serve as a great reference book for those who have investing experience but need theory validation or information from time to time (we all do!). Prentis also includes extensive information on how to use the Internet to find current, valuable investing data.
In the author's own words:
"The Astute Investor presents the collected wisdom from thirty-seven classic books on investing making it the essential investing classic and the one book to read to learn how to invest in the stock market."
Prentis has organized the "The Astute Investor" around the fundamental investing questions:
* Investing Principles and Strategies
o What investing principles and strategies are important?
* Theory and Practice
o What investing theory and practice are fundamental for investors?
* Equity and Bond Fundamentals
o Is the stock market currently overvalued or undervalued?
* Stock Market Technical Analysis
o Is the stock market in a long-term uptrend or long-term downtrend?
* Trading Psychology
o Why do human emotions get in the way of intelligent investing?
* Intrinsic, Market, and Bargain Values
o How are intrinsic, true, or fair value, market value capitalization, bargain value, and margin-of-safety multiples calculated and what do they mean?
* Interest Rate Principles
o What interest rates should be monitored that typically indicate a long-term stock market top?
* Interpreting the News
o Why do stock market prices often respond "illogically" to the news?
* Being Contrarian
o Being contrarian sounds simple, why is it so difficult to implement?
* The Ten Step Method for Investing Success
o What is a practical and simple method for success?
* Retirement Planning
o How can retirement income be safely doubled?
* Discounted Capital Market Theory
o What new investing theories are the bases for investing success?
The book exceeds expectations and will serve as the only book a purchaser needs to invest with knowledge and confidence. This book could easily become the "gold standard" for explaining stock market investing to all investors - new and old.
5 of 5 Stars - Knowledge + Judgment + Commitment + Patience + Courage = Astute.
As an increasingly greater number of people become directly or indirectly involved in investments of various kinds, their need for expert guidance also increases exponentially. For present purposes, let's segment individual investors within three categories:
1. Some prepare themselves to make their own investment decisions. It is noteworthy that Amazon now offers 3,634 books in the general category of "investing."
2. Others retain the services of an intermediary (investment agent or firm).
3. And still others fully entrust their funds to institutional investors (e.g. TIAA/CREF).
Prentis seems to have written this book primarily for persons such as I who can be classified within one or both of the first two categories. Then president of Harvard, Derek Bok, once observed "If you think education is expensive, try ignorance." Prentis presumably agrees with Bok. He carefully studied 37 primary sources, most (if not all) considered "classics" among the 3,634 investment books now in print and he then combined what he learned from them with what he had also learned during his own career. The result is this book. In it, he recommends seven basic "principles" which are best revealed within the narrative; more importantly, within the context (i.e. frame-of-reference) he carefully establishes for each. To me, Prentis' key points concerning "astute" investors are that
They are life-long learners. Only then can they make (or agree to) each investment decision based on the best information available.
They trust their decisions and have confidence in them unless and until there is overwhelming, verifiable evidence to the contrary.
They constantly analyze their investments, meticulously calculating the current status of each.
They have "the courage of their convictions" but also possess the courage to make (or specify) modification(s) of their investment(s) when there is overwhelming, verifiable evidence that such action is necessary. Astute investors appreciate the fact that there are situations when it takes greater courage to do nothing than it does to buy or sell.
They also understand that rigorously enlightened judgment always trumps so-called "scientific" research and "hard data" as well as any one mathematical formula or calculation.
Most individual investors will welcome Prentis' brief but sufficient coverage in Part 1 of investing principles and strategies; investment theory and practice; equity and bond fundamentals; stock market technical analysis; trading psychology; intrinsic, market, and bargain values; interest rate principles; interpreting the news; "Being Contrarian"; and "The Ten-Step Method For Investing Success." Then in Part 2, Prentis discusses retirement planning and then discounted capital market theory followed by a Conclusion, Glossary, Bibliography, and Index.
Basic stuff? Of course. Any head-snapping revelations? None which I (at least) encountered. However, I rate this book so highly because the material is intentionally fundamental but solid and well-organized. It soon becomes obvious that Prentis is attempting to share everything he knows (including what he has learned from others) so that both the information and counsel provided will help each of his readers to become an "astute" investor and thereby a successful one.
5 of 5 Stars - The "New" Intelligent Investor.
Professor Eric Prentis' stated purpose, as presented on the front flyleaf, is to position the "The Astute Investor" as the most important stock market book since Benjamin Graham's "The Intelligent Investor" which was written over 50 years ago in 1949.
To say that Prentis exhausts the subject would be an understatement. There is enough material here to cover entire college courses on finance, economics, and investments. In fact, the book is set up as something one might encounter in an academic setting. Questions are raised at the beginning of each chapter along with what the reader is expected to learn. It's a good overview of where he's leading you.
His statement early on that "Investors repeatedly find it more instructive to be taught the correct questions to be asked rather than to be given only a momentary correct answer..." (19) lays out the framework for what those correct questions should be.
Prentis seeks to make his mark by undermining the foundations of The Random Walk Theory, which rests on The Efficient Market Theory, and dates all the way back to the French investor, Louis Bachelier (1900). He intends to replace it with his own Discounted Capital Market Theory and Discounted News Theory - which, taken together, form his metric by which to gauge market value.
Perhaps the high point of the work is the way Prentis eviscerates The Random Walk. Anyone, today, who still believes that stock prices wander randomly across the financial landscape should spend a little extra time with Prentis as he expertly explains why it simply isn't true.
He completes his broad examination of investment philosophy with a well-thought-out 10-step approach to confronting stock market decision making, then fortifies it with a raft of reference material scattered throughout the book.
Whether "The Astute Investor" will replace "The Intelligent Investor" depends upon how well Prentis' theories age through the years.
Those investors looking for a well-rounded approach to long-term investing will find this is a good place to start.
5 of 5 Stars - It Beats Earnings Expectations.
We are living in a time when we are being drowned by information from all sides. While this can be a good thing, when you are a person who is interested in investing in the financial markets, so much information can get to be a nuisance. But thankfully there are books like the Astute Investor that ease the way toward achieving the goal of controlling your own financial future.
What investing principles and strategies are important? Why do human emotions get in the way of intelligent investing? What is the most promising stock to buy? And how can retirement income be safely doubled, are some of the fundamental questions that are answer in this volume.
Eric Prentis has taken bits and pieces of information found in some of the greatest investing books ever written and synthesize that data in this large piece of work. By reading this book, experienced and novice traders alike will find a ton of useful information. At first the book might seem a bit overwhelming due to its vast amount of information, but believe me, if you take your time you will get into the book big time.
The book is divided in two parts. The first part contains 10 chapters that include all the steps needed in order to develop a well rounded investing strategy. By following these steps you will never be in the wrong side of the market. The second part of the book covers the steps needed to develop a successful retirement plan. Overall the book can be a great addition to any financial book collection.
5 of 5 Stars - A Good Introduction for the Average Investor.
The first thing that struck my eye as I opened this book was the sentence: "A foolproof scientific method for flawless execution in the stock market has never been developed and one will never be discovered." It sounds like this fellow knows what he is talking about. Except for the special case of arbitrage, investing is really placing a bet on the future. And it's pretty hard to play in the arbitrage business because there are an awful lot of very smart people with very big computers already doing that.
The next thing that I noticed was the long list of web sites given in the contents. The amount of information available on the web is truly amazing, so much that just knowing where to look is difficult. Here is an extensive list along with some description of what to find there. Most of the investment books around haven't yet cought up to the fact that the web exists.
Finally I noticed the section on Technical Analysis. This is the first book I've seen that discusses this in simple enough terms that the average investor (I consider myself average) can make sense out of it. Most books on the subject turn out to be statistics texts.
In short, this book is intended to take the average investor and make him a more knowledgable investor, more "Astute." Dr. Prentis is trying to make the average investor a bit smarter, a bit more able to understand the investment world and how the big guys operate. He succeeds quite well.
5 of 5 - Stars How to build investment success.
Eric Prentis has written The Astute Investor for people who want to take responsibility for their own investment success. To be astute in any field requires hard work, study, and reflection. The book contains no magic bullets or supposedly sure -fire techniques. Rather, it presents a good introduction to the most important investing topics. Moreover, it also contains much advice on how to discipline one's mind and emotions in order to make wise financial decisions, as well as a thorough section on retirement planning.
Prentis offers three sorts of information in this book. The first sort, what I call "preparing the ground," explains the context in which stock and bond market movements occur. For instance, he explains how the federal government controls the monetary supply, how to understand economic indicators, how the business cycle works, and how interest rates affect the business cycle, among many other fundamental topics. Investing without understanding these topics cannot be more than a hit or miss enterprise. Reading through this material might be daunting for beginners, but the author explains it clearly and as painlessly as possible.
The second type of information has to do with how to buy stocks and bonds once you understand the context of the market-you could consider this the "techniques" portion of the book. Prentis is very much a fundamentalist-that is, he presents several methods of choosing companies to invest in based on studying their financial health, future possibilities, and style of management. However, he doesn't neglect technical analsis, and explains some elementary chart reading techniques, including a good basic discussion of candlesticks. He also discusses how to integrate chart reading with fundamental analysis.
Aside from fundamental and technical analysis, an important part of Prentis' strategy entails placing a large portion of one's portfolio in the S&P 500 Index, and he has some very persuasive arguments to support this. For bonds, he describes the types of bonds, their risks, and at what point in the business cycle bonds are most profitable to buy.
The third type of information involves trading psychology as well as the qualities of mind necessary to carry out investing in a rational manner. He emphasizes that good investors tend to be lifelong learners. He also devotes an entire chapter to the contrarian mindset-that is, thinking for oneself and avoiding the herd mentality. This is important material, as the best investors are independent-minded people who learn to manage their emotions and to work out their own way of understanding the markets.
The Astute Investor is an excellent guide for both beginning and more advanced investors. The information on economics and investing techniques is thorough and provides a solid foundation for further study. Learning to invest is a lifelong journey-there is always more to learn about the markets and about oneself. This is a great book to carry along on that journey.
10 Star Investment Out of 5 Possible.
The Astute Investor, by Eric L. Prentis is almost certainly the best book ever written about stock market investing. It should be compulsory reading for all investors and advisers.
How to make money in the stock market by using a practical ten-step method for investing success is presented. Learn what is actually occurring and likely to occur in the stock market over the long-term of perhaps two-to-five years. Identify whether the stock market is either undervalued or overvalued by using forward-looking data, and with the perspective of monthly data determine the stock market's long-term upward or downward direction. Invest like Warren Buffett by calculating intrinsic value. Discover a negative interest rate spread that helps predict a long-term stock market top. The new Discounted Capital Market Theory provides a theoretical justification for a portion of technical analysis.
The Astute Investor, clarifies where to find current data on the Internet and incorporates many useful examples, it expertly explains how to put stock market prospects in the investor's favor.
Don't let the page count fool you. Fast, interesting reading.