JSN ImageShow - Joomla 1.5 extension (component, module) by JoomlaShine.com
Home arrow Blog arrow The Intellegent Investor Summary
The Intellegent Investor Summary PDF Print E-mail
 I know you’ve been anxiously awaiting the Molifeney summary for Chapters 5 and 6 of The Intelligent Investor.  So here you go, you can thank me later.

 

Ch 5.
Graham and Zweig address a common investment philosophy that was extremely popular in the 90’s due to one Peter Lynch. Lynch, the famed head behind the Fidelity Magellan Fund espoused individual investors to “buy what you know”. He reasoned that you can “outperform the experts if you use your edge by investing in companies or industries you already understand”. This is great insight, but it is only half of the equation. Lynch also insisted that you research the company thoroughly; this is the forgotten half of his advice. Many an investor has been burned by buying what they know, and in many cases buying their own company stock, but not looking at the numbers. The numbers don’t lie(unless the books are being cooked). The lesson as always: DO YOUR HOMEWORK.
 
In Ch. 5 Graham also addresses the benefits of Dollar Cost Averaging. This way you can put your Portfolio on autopilot. Once you build your autopilot Portfolio you can answer every market related question with “I don’t know and I don’t care”. Try it with me. Me: How is the market doing today? You: I don’t know and I don’t care. Me: How will the Fed rate cuts affect the market? You: I don’t know and I don’t care. Good job class!
 
Ch. 6
In Ch. 6 the topic de jour is high-yield bonds also known as “junk bonds”. This chapter also delivers one of my favorite lines from the book. Zweig writes, “Buying a bond only for its yield is like getting married only for the sex. If the thing that attracted you in the first place dries up, you’ll find yourself asking, What else is there?” Classic. This advice resonates even stronger today with the worldwide credit squeeze and the “alphabet soup” of credit derivatives causing investment managers across the globe to lose even more hair. Having high-yield bonds in your Portfolio is fine, but be sure to check them out first. www.morningstar.com is a great place to start.
 
Chapter 7 & 8 coming soon…
Comments (2)add comment

Randy said:

What other books should I read about investing?
 
report abuse
vote down
vote up
May 01, 2008
Votes: +0

Dash said:

Peter Lynch has a book called One up on Wall Street you can check out Randy.
 
report abuse
vote down
vote up
May 01, 2008 | url
Votes: +0

Write comment
quote
bold
italicize
underline
strike
url
image
quote
quote
smile
wink
laugh
grin
angry
sad
shocked
cool
tongue
kiss
cry
smaller | bigger

security image
Write the displayed characters


busy
 
Next >
[ Back ]

Advertisement
Free Joomla Templates