Customer Reviews

The Astute Investor, Second Edition

5 star:		(9)
4 star:		(3)
3 star:		(2)
2 star:		(0)
1 star:		(1)

 

 

I'm sorry that I bought this book. The grammar is terrible, and the author (or his editor) doesn't even know the difference between principal and principle. The author cannot settle on one word or phrase for a concept, but generally, and repeatedly uses three. Save your money.

The Astute Investor is an in-depth investment guide book that analyzes the answers to such questions as "Is the stock market undervalued or overvalued?" "Is the market in a long-term upward trend or long-term downward trend?" and "What is the most promising stock to buy?" Organized by topic for quick and easy reference, chapters and subheadings include both fundamental information for the novice and advanced issues of analysis from the psychology of trading (including rational and irrational motives), how to interpret the news, a ten-step method for investing success, skillful retirement planning, and much more. An absolute must-read for serious investors that literally pays for itself with its wealth of tips, tricks, techniques, insights, warnings, and solid basic information. Highly recommended.

I'm also an engineer and MBA, as is the author.

Dr. Prentis has obviously done his research, and he has compiled an investing guide that addresses investing from a multi-faceted perspective.

Unlike many investment book authors, Prentis starts out by telling you he doesn't have a fool-proof method of flawlessly investing in the stock market. What he does offer is a distillation of the collective wisdom on the subject of investing. He brings this to the reader in twelve chapters, a conclusion, and an extensive glossary. The book contains many graphs, and it provides the addresses of relevant Websites.

Chapter One describes the seven principles of investing and delves into investment strategies. Chapter Two goes into theory and practice. The next two chapters discuss bonds, then stocks (respectively). Chapter Five talks about the psychology of trading. This chapter will help you understand the philosophy of technical traders (people who chart and predict stock prices, with no consideration of the company behind the stock). Prentis makes it clear that such trading is not long-term investing.

Chapters Six and Seven get very mathematical, as Prentis walks us through determining the value of an investment. If you don't know the difference between intrinsic, market, and bargain values, then you're not from the Warren Buffet school of investing. Chapter Eight explains the forces that drive the markets, and how unexpected news and expected news affect stock prices. Chapter Nine explains the viewpoint of the contrarian investor, who can succeed only through extraordinary courage of conviction.

All of the preceding chapters build up to Chapter Ten. It's here that Prentis gives his ten-step method for investing. He actually walks you through an example, so be prepared to do some work if you want to understand this method.

As an electrical engineer, I realize all systems are complex and consist of counterbalancing forces. Prentis, an industrial engineer, understands this also. Which is why he doesn't trot out a simple formula or say he's found the magic bullet. Instead, he lays out a methodology that will work if you work at it.

On the downside, The Astute Investor is badly in need of editing. The many grammar gaffes, spelling errors, syntax errors, and other deviations from Standard Written English (SWE) at times make the book hard to read. And the author's ultra-heavy use of passive voice sometimes makes reading the text feel like you're chewing gum that's still wrapped in aluminum foil. The chapter introductions and summaries are especially annoying in this regard.

Form is important, as it dictates readability. Fortunately, this book scored very well on substance, with one notable exception. The author used the Atkins Diet as an example of something good. That diet induces ketosis, creates nutrient deficiencies, greatly raises the risk of prostate and bowel cancer, destroys healthy tissue (such as bone and muscle), and poses a high risk of permanent damage to the kidneys and liver. What's to like? Further, the vast majority of people who abuse their bodies with this misguided, unsound, dangerous, and damaging diet are fatter a year later than if they'd never done it (see the Diets Exposed articles at [...]).

This book contains valuable information (except for the item just noted) in a logical structure. A second printing would be good for all concerned--but not until the author retains a copyeditor to correct the spelling, grammar, and punctuation--the quality of the text simply is not in synch with the quality of the information being conveyed. He also needs an editor to reword those intros and summaries to conform to any of the major style guides now in use. Presently, they detract from the book rather than add to it.

If you are a dedicated investor who wants to do well in the stock market, you should expend the effort to decipher the text. Is it worth the effort, when other investment books don't have the writing defects? That's like asking if delicious, nutritious walnuts are worth taking out of the shell.

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.

In a very down-to-earth style, the author presents very relevant information on a wide variety of topics. Ranging from fundamental calculations such as the various P/E ratios, to technical analysis, emotional investing, contrarian investing, impact of news on investing, and retirement planning, the book covers almost all main topics in investing. The chapter on interest rates and their impact is a well presented one and is a unique feature of the book. Established theories such as efficient market theory are also explained in a thorough but easy to understand manner. Certianly, the book is a good reference book to have.

However the reader should be aware that this book will serve mostly as a springboard to more detailed books on specific topics (the book by Murphy on Technical Investing, for example, or those of Siegel on stock trends). Using this book as an appetizer, the reader should be able to determine which topics he/she needs greater depth analysis and then choose more books accordingly. Nevertheless this book is a must-read.

There is also no talk on "the next big boom" or "hottest stocks for today" and such sensational topics...a very welcome aspect of the book. As the title suggests the intended audience is an "investor" not a speculator or trader.

The book recieves 4.5 stars only because of the lack of meaningful and detailed figures and charts. Almost the entire book is devoid of any figures/charts that could have been used to clarify some of the discussions. Apart from that, the choice of the cover page is certainly an interesting one, but then, serious readers are concerned about whats inside the book rather than whats on the cover page. A must read.

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.

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.

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.

In The Astute Investor, Dr. Prentis presents a lot of information on various topics from information on fundamental analysis of bonds, to solid guidelines on value investing in equities. There's even a quite solid section on portfolio analysis.

Now, i'm not saying the information is sufficient to replace specialized books on these topics, but it is more than a fluff introduction.

The only negative about the book is that it is a little disorganized. Additionally, I might like to see this section or that section more detailed, and less detail in other areas, but in a book such as this, compromises must be made.

It's recommended if you have some investing experience already, although it is not really suitable for your first investment book, I don't think.

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.