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I had written a review with the same title and rating as this two weeks ago. It got published and soon had been removed. I think it's because I had challenged the actual performance of the author during the financial tsunami and so.In short, interesting with plenty of philosophical and anthological questions, but dont expect to improve your trading/investing performance by reading it.
Because short interest rates are set by the monopolies, but long rates by the free market. For someone who claims (rightly so) that he would under no circumstances work for the government, a curious claim.I agree that deficits are great for stocks, because it means tons of inflation and as people run way from the tsunami of cash and credit, stocks are a grateful recipient. The new borrower gets a claim on goods, but the lender does not forfeit a claim on goods. This is explained buy the Austrian theory of the business cycle.gold historic low returns: This just depends on what time frame you take. This is outdated. Any benchmark of long term real yields should be around 0%.leverage national debt:You say that the national debt is low, because everyone should strive for a debt level that holds the cost of borrowing equal to the yield on assets. You could only say that it was voluntary if the government gave the Chinese their money back and they went out and bought T-bills again.borrowing to heroine addicts/government:You claim this is a minor loss, since only the first time it is spend unproductively, but the subsequent times it is spent productively. As soon as it takes more than 1 barrel of oil to extract 1 barrel of oil out of the ground, oil winning will stop, no matter what the price.Inflation:You claim gold is not a good indicator of inflation and long bond yields are.
oil and stock market are correlated. I would say that countries do not buy, they are just a piece of land. This means in the end everyone thinks they have a claim on goods and prices go up. The Chinese government harvested the productivity of the Chinese people by printing 20% more money every year and thus amassing 2 trillion dollars without doing any productive work for it. Your challenge at the end of the book asks for data backed up claims.
I just listened to the audio book and since it had an invitation at the end: 'prove me wrong', I'll give it a go, although not before mentioning I agree with most of it. I will not use data but logic in my objections.Oil:You claim that oil will be obtained from shale oil if only the price gets high enough, because it is just a matter of price. That would be like saying: "I can leverage up because my neighbor makes a lot of money". The borrowing from central banks is therefore not real borrowing. You also speak of a disciplined FED, can I assume you take that back with current developments. The FED recently bought 300 billion long bonds and all kinds of toxic debt.
Foreign governments buy these assets and this is by definition not voluntary. Does this not mean longer interest rates are no longer a good indicator of price rises. I would contest that past correlation can tell you something with certainty about future correlation. Money is just a claim on goods. No venture/real estate survives a period like that. If you had to transfer wealth over a period of 2000 years, gold would the only way. current account deficit: Foreign countries voluntary buy our assets because of superior returns. It assumes that the government can freely confiscate the income of its subjects.
But again, if everyone would do that, it would lead to a logical contradiction, because for every borrower there needs to be a saver. Also with the warning I am not an economist, but that might also be a recommendation.My objections are more philosophical than data mined.-You claim truth about reality can be found by calculating r squared coefficients to see if e.g. This does not demonstrate the power of compound interest, but the absurdity of 4% real rates over longer periods of time, since many time the price of a load of bread was invested in the year 1009, but the total wealth of the planet does not equal 107979 trillion euro. A single euro invested in the year 1009, would at 4% interest rates be worth 107979 trillion euros today.
They forfeit consumption and I get it. Not everyone can be borrowed up, from whom would they borrow. But also, if I borrow a bottle of milk from the neighbors, they have to save a bottle of milk. I object because you can also calculate the price of getting a barrel of oil out of the ground in terms of barrels of oil. You derive what the government can borrow based on what the people earn.
Governments are coercive, so it cannot be said that a Chinese factory worker voluntarily chooses to put his savings in T-bills. Recent developments have shed a different light on the risks of borrowing to risky borrowers. Not at least if you hold that money is a claim on goods, and borrowing/lending is a temporary transfer for that claim.What's more, you conflate government and the people. Stocks have to compete for our attention (seduce us), while dollars/euros are an enforced monopoly (it is bullied upon us) and can thus be of lower quality, since you have no choice other than to use it.
I found this book to convince me to think more about my investments and to take less stock in brokers. Not an easy book to read but filled with good information.
If you are looking for a guide on the investment process, and maybe a few pointers along the way, I think the book can be very helpful. I've read this book twice now. Data that he talks about as widely available is often difficult to find and confirm. If you are looking for how to pick specific investments, this isn't it. one who's ok living with a healthy dose of uncertainty, among other things. I also think he's a little cavalier about gaps in his processes (which tend to be binary), regardless of what he claims in his three questions.
so I think I'm satisfied. Acknowledging it's faults up front, it's lengthy and disjointed, taking far too long to get to the several points he's trying to make. I would say it 'helped' me close on my decisions about how to handle the last year or so financially, and, well, the S&P is down about 45% from it's highs a year and half ago when I was 100% in equities, and I'm down about 14%, having quickly diversified but at a measured pace. However, I found some of the content and process questions very useful once I understood where he was going, if only to confirm several similar thoughts I've had. If you are looking for a stock picking guide, this isn't it. To find value in this book, I think as noted, you have to be looking for more general process type information, and frankly, i think you have to be a certain type of thinker.
Hope this helps.
It's easy. Use Microsoft Excel's Net Present Value function to do the grunt work.
The questions are a blend of finance, statistics, and intuition. Basically, don't bother buying with this book.
If a reader could answer the only three questions that count which the author doesn't really fully tell you how to answer, that reader wouldn't be wasting his time with this book because he would have the kind of expensive resources or financial genius that goes beyond the book. Additionally, search for writings by Warren Buffett which will give further explanation.
But it is worth picking up on your next trip to the library. Much more useful is "Margin of Safety" by Seth Klarman, 1991, which is freely available as a PDF on the Internet (Google it).
Search for values in businesses you understand. Not really.
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