Customer Reviews

Investments

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I've read a lot of popular books about investing. Some of them were helpful in introducing me to investing in general. I decided, however, that I wanted a more thorough knowledge of the subject. I bought "The Portable MBA in Investment" by Peter Bernstein and found it utterly incomprehensible. If I wanted to be well-grounded in investing, this was unacceptable.

I borrowed Sharpe's text from the library and have been blasting through it for the past few days. It isn't an easy text; anyone who wants to tackle the subject should have some background in math and statistics. And I would suggest that people be at least somewhat familiar with investing. Otherwise, they may be turned off completely by the stuff. Once you're ready to go, though, make sure you read Sharpe's book first.

I've sampled other texts, and Sharpe's is the clearest and most relevant. Nothing is omitted. Everything from factor models to reading stock tables is included. The book is extremely well-written. Most of the material is presented simply. For example, the formulas are illustrated with examples that make understanding infinitely easier. And each chapter has a sidebar called "Institutional Issues" which puts a real-world spin on the chapter's subject matter. An invaluable book for the serious investor.

This is a great textbook for people who want to find their careers in investment finance area. It does not need very sophisticated maths knowledge to read this book. The scope is very broad, ranging from security analysis to portfolio management theories. For people already in this area, it is a good reference book.

You do not pick up this book to get "tips" on making an easy million. It does not teach you how to chart nor pick a value/momentum stock based on fundamental analysis.

It does, however, teach you about the foundation of modern investment theory and concepts. William Sharpe is a professor at Stanford and a Nobel Prize winner in 1990, along with Markowitz, for portfolio theory. Sharpe later extended this and introduced Capital Asset Pricing Model (CAPM) and it is explained as part of a lesson in this book. Their work is THE fundamental investment Asset Pricing Model.

As others have mentioned, to get the most of this book, you need some understanding of investments and a solid understanding of statistics. With these in hand, you will gain knowledge from this book. It is not an easy read and it used in graduate schools (I used it while obtaining my MBA), but Sharpe does an excellent job at explaining and illustrating investment concepts.

If you want to create deeper understanding of investment knowledge and really want to know investments, this is your book. For example, instead of just knowing that diverification is important, know how diversification works.

This is one of the handful of classic texts in economics and finance - it ranks with Samuelson's "Economics," Alpha C. Chiang's "Fundamental Methods of Mathematical Economics" and Hull's "Options and Other Derivative Securities" as one of the cornerstones of a financial education. Designed as a college textbook but also used in first-year MBA programmes, the authors begin right at the bottom with basic microeconomics and moves on through spot rates and yield curves, simple probability, expected returns and standard deviations. Once this basic toolkit has been establised, the reader is introduced to the efficient frontier and the Capital Asset Pricing Model, followed by arbitrage pricing theory. Further topics include fundamental securities analysis and a quick journey through option pricing. After a look at some institutional aspects of financial markets, the authors conclude with that holy grail of finance - portfolio management. Throughout, the pace is reasonable and the reader is provided with plenty of practice examples. For a one-stop introduction to finance, you cannot do better than this book.

I've just finished the first 3 chapters. So far the author has painstakingly explained all the concepts of a broad subject such as investments. Although the content is pretty much similiar to most of the textbook in the market i would say that the book is pretty good in terms of - girth of explanation.

Considering that i am a software developer who's been working in the securities industry since 1999 this should have have been 'the book' for a beginner going into this industry. I particular liked the explanation and the technicallities of margin trading becoz i've received quite a cryptic explanation from my seniors and this book clarified everything.

Can't wait to read somemore. Too bad there isn't an equivalent book on the securities market for the Malaysian Stock Exchange (KLSE)!

What will you learn from this book?

A lot of financial concepts, instruments and products.
If you do not know anything about financial markets, this is the book!!!!

Is it enough? NO, it is not enough even for a beginner. Why? Because it does not tell you how to think in financial terms, and mainly how to make up your portfolio.

Yes, lots of graphs, figures, nice words, you think you are learning finance, but suddenly you realize that actually you know nothing and that you read a lot of vain pages. Unfortunately, you will be in the end of the book.

If want to know how to implement the models presented in the book, or even if you want a book that says the same thing that Sharpe's but in less pages, consider:

- Modern Investment Theory by Robert A. Haugen; or
- Modern Portfolio Theory and Investment Analysis by Edwin J. Elton, Martin J. Gruber.

I had the opportunity to take a course at the University of Minnesota from Jeff Bailey while he was preparing this book. He provided an excellent mixture of pratical examples in addition to the theory involved.

In addition, he was very approachable.

Anyone seriously interested in investing should consider this book!