How a Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn (Hardcover)

~ (Author)
Key Phrases: golden tan, stock market fund, stock market game, Wall Street, United States, Las Vegas (more...)

Editorial Reviews

Amazon.com Review

Investing is simple, but never easy. We carry a lot of investment baggage, including hot tips from friends and the financial media, as well as complicated financial recommendations from Wall Street "experts." Yet, the biggest obstacle we face is the tendency to outsmart ourselves.

In order to overcome that obstacle, you need to follow straightforward strategies that will consistently push your portfolio ahead of the pack by an additional 3 to 4 percent annually. These are strategies that work in up markets, and especially in times of market crisis and panic. Most importantly, these strategies are basic enough for even a kid to understand.

In How a Second Grader Beats Wall Street, you'll follow the story of Kevin Roth—an eight-year-old who was schooled in simple approaches to sound investing by his father, seasoned financial planner Allan Roth—and discover exactly how simple it can be to become a successful investor. Page by page, you'll learn how to create a portfolio with the widest diversification and lowest costs; one that can move up your financial freedom by a decade and dramatically increase your spending rate during retirement. And all this can be accomplished by using some commonsense techniques.

Along the way, Kevin and his dad discuss fresh new approaches to investing, and detail some tried-and-true but lesser-known approaches. They also take the time to debunk the financial myths and legends that many of us accept as true and show you what it really takes to build long-term wealth with less risk. You'll also learn how not to confuse the unlikely with the impossible.

Whether you're young or young-at-heart, the straight-talking advice found here will help you:

• Design a portfolio composed of a few basic building blocks that can be "tweaked" to fit your personal needs
• Go beyond indexing, which owns the entire market, and actually beat the market
• Reengineer your portfolio to stop needlessly paying taxes
• Increase your return, regardless of which direction the market goes, by picking the "low-hanging fruit" we all have in our portfolios

Engaging and insightful, How a Second Grader Beats Wall Street takes you through Kevin Roth's real-life story, while driving home key strategies and tools you can implement in your own portfolio. With just a little time and a little work, you can become a better investor. With this book as your guide, you'll discover how a simpler approach to today's markets can put you on the path to financial independence.

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10 Dumb Things Adults Do With Their Money

By second grade, we all learn some simple and truthful lessons about the world around us and how to navigate it. As life goes on, however, what we continue to learn is less about making us smart and more about making us outsmart ourselves in investing.

Adulthood apparently brings with it the feeling that important matters, such as our money, are too important to deal with simply. Why go back to the basics when there is the sophisticated, complex path to take? Sure, continuing on such a path offers a 99.9% certainty of underperforming simplicity, and will also set our retirement goals back by a couple of decades, but isn’t that how grownups invest? Unfortunately, yes. There are many dumb things that adults do...

1. They love to buy high and sell low. They buy after the market is up and then panic and sell when the market falls.
2. They play important games without understanding the rules. Any kid knows that if you don’t understand how a game is played, you can’t win at it. Same goes for buying a product that has a 471 page disclosure document no one can understand.
3. They believe anything they want to believe. Why would sophisticated people give Madoff $50 billion without knowing what he was doing with the money?
4. They pass over the low hanging fruit in favor of the fruit that is way out of reach, if it is reachable at all. They are so busy chasing their tails and trying to find that mythical person who will beat the market, that they miss the easy stuff right in front of them that will make them money, no matter what the market does.
5. They think strangers want to help them. We teach our children the dangers of talking to strangers, then turn around as adults and hand over our nest egg to strangers that claim they want to help us. They’re helpful alright, helpful in transferring our money to them.
6. They constantly complain about taxes, but pay more than they need to. It’s so easy to lower taxes when it comes to investing, why do adults go out of their way to pay more? Though with our current deficit spending, this may be okay.
7. They lend money to people who they know can’t pay it back. Like a really bad chain letter, they sell the loans to other adults who think they are going to get their money back.
8. They follow the herd. Like heat-seeking missiles, they go after whatever has been hot. They get into markets like China and India just in time to see them collapse. Remember the rule “don’t put all of your eggs in one basket?”
9. They watch too much financial TV. Conventional wisdom tells us that a little knowledge is a dangerous thing, but so is too much information. Especially when it comes from the screaming, sound effect guy. Believing that the gurus on TV actually have a good track record and are giving good advice, is folly with a capital “F.”
10. They spend their investing lives in a futile attempt to disprove second grade arithmetic. They think 10 - 2 = 12, as in if the market earns 10% and they pay helpers 2% of that return, then they will get 12%. Anyone knows 10 - 2 = 8.

Adults seem to love to overcomplicate things. Only really smart adults seem to get it. As Albert Einstein said, “If you can’t explain it simply enough, you don’t understand it well enough.” This book will show you how to simply profit from those sophisticated investors who will never again understand the simplicity of truth they once knew when they were in second grade.

Review

"You can make investing as complicated as you want. Or you can make it simple. The beauty of Kevin Roth’s elegantly reasoned approach is not just that it’s clearer and easier to execute than most investing advice today. It’s also that in the long run, it’s likely to put more money in your pocket. " (Eric Schurenberg, Former Managing Editor, Money magazine) --This text refers to the Kindle Edition edition.

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Product Details

• Hardcover: 262 pages
• Publisher: Wiley (March 9, 2009)
• Language: English
• ISBN-10: 0470375949
• ISBN-13: 978-0470375945
• Product Dimensions: 8.6 x 5.7 x 1.1 inches
• Shipping Weight: 13.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.8 out of 5 stars  See all reviews (22 customer reviews)
• Amazon.com Sales Rank: #64,230 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

6 of 6 people found the following review helpful:

5.0 out of 5 stars Dare to Stop the Game, August 11, 2009

By	Jane Ringer (Englewood, CO, USA) - See all my reviews (REAL NAME)

Only read this book if you are willing to 1) learn something new, and 2) let go of old habits. I met Allan Roth when he taught a behavioral finance class for CPAs and attorneys at the University of Denver. I was so impressed by his presentation that I emailed him and asked if I could hire him as my financial advisor. I bought the book, which was pretty much the same as the class materials, but easier to carry around. I read the book several times and I still keep it out in my home office. His ideas are simple, logical, and completely contrary to everything I had ever heard about investing. Could this be why investing never made any sense to me? I used to think I was a weird CPA because I had no interest in finance. I wasn't interested because it made no logical sense to me, ever. I keep wonderfully detailed and useful spreadsheets (ask Allan, he'll agree) but I couldn't figure out what to do with this information. One thing I could certainly see was that...I kept losing lots and lots of money!! Suddenly, I didn't feel so dumb. I was right. Investing, as we know it, is a giant marketing scam. I turned my portfolio around and retired, as planned. I hope to never look back. I still find that I cannot discuss Allan's ideas with anyone because no one wants to listen to something so radical, so simple, and so logical.

7 of 8 people found the following review helpful:

5.0 out of 5 stars Entertaining and empowering read, May 22, 2009

By	Kerry Mcginley - See all my reviews (REAL NAME)

This is an excellent, common-sense guide that demystifies investing and offers a practical approach for building wealth. Allan offers a fun balance of entertaining family anecdotes and professional expertise to craft a book that's an insightful and enjoyable read. Most finance/investing books I read feel like homework; this is an enjoyable journey down a clearly marked path to navigate Wall Street.

4 of 4 people found the following review helpful:

5.0 out of 5 stars Valuable investment advice your commissioned or fee based advisor/broker is not going to share with you. , March 31, 2009

By	David P. Mcgrath (Colorado Springs, CO) - See all my reviews (REAL NAME)

Allan provides a common sense and effective method of investing presented in a format that will keep your interest. You won't get that "deer in the headlights look" as he takes you through the process of building an efficient portfolio. Do your hard earned money a favor and read his book. It tells what the commissioned and fee based financial advisors do not want you to know.