Customer Reviews

The Secret Code of the Superior Investor: How to Be a Long-Term Winner in a Short-Term World

5 star:		(12)
4 star:		(6)
3 star:		(4)
2 star:		(1)
1 star:		(9)

 

 

In a world that starts each business day with someone broadcasting from the floor of the New York Stock Exchange as if investing were some sort of a horse race, this book is much more than enjoyable. It's important to read.

Glassman takes the fear, uncertainty and doubt out of investing heightened if not created by the broadcast media's constant focus on what the fed, economy or Osama Bin Lauden will or won't do next and what it all means for the price of stocks tomorrow. He deals with the implied "action imperative" using what amounts to a logical, easy to read and understand three step process. First, he provides basic, factual and well-researched information that every investor should know. Second, he details a sound and time-tested investment strategy that anyone can understand. Third, he provides the information sources, tips and techniques to execute against that strategy. The sort of how to information that moves concept to action. Along the way he explains what is important to consider and to ignore. He also offers some really good advice on things to avoid.

The Secret Code of the Superior Investor has the rare qualities of being informative, enjoyable and actionable. The content is as superb as the writing. I am 53 years old, financially independent and retired. I have been an investor for nearly 30 years and read many books on investing. Take it from me. Glassman nailed it! Turn off the TV and read this book.

Contrary to what some may think, there is a secret to good investing, and Glassman does a good job of explaining it. It's an open secret, to be sure, but one most so-called investors ignore: generating cash (for example, through day trading and other high-turnover practices) does not lead to the accumulation of wealth. Only through a disciplined approach to investing, involving (1) the accumulation of quality stocks, mutual funds, and/or other preferred financial assets, and (2) patience that allows time to let these investments work for you, will it be possible to achieve your financial goals. Following the heady, market-drive craze of the late 1990s, it's a secret that even the most seasoned investor would do well to reconsider.

No question, it's the new or inexperienced investor who has the most to gain from a read of this book. For one thing, Glassman's review of the many investment vehicles available today provides, in one readily accessible volume, the information needed to make intelligent decisions regarding asset allocation. And the explanations that attend the presentation are written in language that even the novice will understand.

If you've already made your millions and view playing the market as a pastime, this book is not for you. But if you believe that there must be a better way to select from among the many investment theories touted and to identify, and invest in, preferred investment vehicles appropriate to your age and temperament, purchase of The Secret Code of the Superior Investor may well be among the best investments you could make.

This book is for people who are totally unfamiliar with the "buy and hold" school of stock investing based on selecting superior companies with outstanding management. The material in it is almost totally derivative from the research and experiences of others available in more detailed popular books.

The key points are that (1) you should know yourself, so that you invest in ways that fit your emotional makeup when stocks are doing poorly; (2) time is money, and you should start buying stocks at the youngest possible age; (3) pick stocks by the caliber of the company and its management; (4) own stocks in diversified portfolios to avoid excessive fluctuation risk; (5) risk of stock price loss is reduced by holding stocks longer; (6) avoid trading stocks -- buy and hold instead; (7) ignore what the media says about stocks (unless the information brings into doubt the reason why you own certain stocks); (8) ignore the Federal Reserve; (9) for short-term investments buy high quality bonds; and (10) pay attention to reducing expenses, taxes, and outperforming inflation. In support of these points, well-known studies and books are cited such as those by Jeremy Siegel (Stocks for the Long Run), about Warren Buffett (and other famous investors like Phil Fisher, Philip Carret, and Sir John Templeton), and by Ben Graham.

Mr. Glassman is one of the authors of the theory that stocks are way undervalued and the Dow should soon trade at 36,000. Although most professionals and academicians have questioned his theory, Mr. Glassman stands behind it in this book.

As someone who reads lots of books about stock investing, the only new thing I learned in this book was the Leslie Douglas Theory involving purchasing equal amounts of the 5 largest NASDAQ stocks each year (which produced a ten year gain of 39.1% versus 15.8% for the Dow). So for me, this book was a big waste of money.

I also thought that a lot of the material was wrong. Basically, you are encouraged to buy managed stock mutual funds. Over 10 years, hardly any of these will outperform the market indices. As mutual funds are required to say, past performance is also no indication of what future performance will be. You would probably be better off owning indexed mutual funds. The same subjects are covered much better in Common Sense on Mutual Funds by John Bogle, and you can learn more about the virtues of indexed mutual funds in that book.

So, I suggest that you skip this book. You would learn more by reading the popular books which it is based upon than by reading this book.

May all of your investments help you reach your financial goals . . . and always sleep well at night!

As a reader of the Washington Post, I get a chance to read Jim Glassman every Sunday. He offers a positive, long term approach to investing which is opposite to today's frenetic business press. If you are a follower the out smarter class of investors,(those that read the title and don't get the joke) you will hate this book. If on the other hand, you want a good read on how to treat money with patience, and perspective, this book will appeal to you. Glassman is to some of us the best business writer alive today. There are obviously lots of different investment approaches, Glassman's happens to appeal to me.

It wasn't until I recently read a piece by James Glassman in the Wall Street Journal that I learned that this guy had the audacity to write another book! After his ludicrous predictions in his ill-fated "Dow 36,000" book, you think the guy would want to stick his head in the stand forever. Frankly, I wouldn't trust anything that Glassman, who has been accused of misusing data, has to say. If you want to improve your investing prowess, I'd suggest relying upon the recent books written by William Bernstein and Lynn O'Shaughnessy. Don't waste your money on the Secret Code.

This book is a must-read for anyone with an interest in financial matters -- movement of markets, volatility of stocks and economic forecasting. In easy-to-read, easy-to-understand language, Glassman soothes and supports investing novices and investing specialists. Such a book should be on everyone's desk or nightstand as we navigate difficult times. Whether the reader has a personal interest or feels venturesome, "Secret Code" is a book that will find its way onto a "favorites" list. This is also a great book to give as a gift! I rate it 5 stars!

If you want to read a boring book, "Secret Code" is for you. Why boring? In a world of minute-by-minute market news and analysis, "Secret Code" cuts through the clatter and calms things down a bit. Glassman points out that, "when it comes to stocks, boring can be better than exciting," which is basically the subtext of the entire book.

I was immediately interested in the book as soon as I read the subtitle (though I must confess the Cold-War-spy-novel-looking cover made me chuckle). The difference between long-term and short-term is more than just the time horizon: it is a mindset. So I wanted to learn what the author had to say on the subject.

"Secret Code" is written to encourage investment primarily in individual stocks. Not bonds. Not mutual funds. Glassman begins with an introduction which, in essence, is the Reader's Digest version of the rest of the book and highlights ten basic principles on which the rest of the book expounds. The last two-thirds of the 318 page book supports the ideas presented there. Along the way, Glassman rails against the Fed, the financial media, the tax code, corporate bonds, day-traders, and Clinton. (Liberals and socialists beware: "Secret Code" may occasionally step on your collective toes.)

One of the most surprising facts I learned from "Secret Code" was that stocks are less risky (i.e., less volatile) than bonds in the long run. This seems counter-intuitive, but Glassman debunks the notion entirely. Indeed, his entire thesis rests upon this fact (as do all ten of his enumerated principles). As he explained this concept, he invoked terminology from the realm of statistics. Potentially, this might have put off some readers. I thought he did an excellent job of explaining the terms to the layperson, while weaving in enough technical detail to keep the "statistics-initiated" intrigued.

Glassman does, however, impose several parameter requirements on the notion that stocks are less risky than bonds. First, the longer the time horizon, the less the risk. Indeed, in the short run, Glassman emphatically supports the purchase of bonds (preferably treasuries) over stocks. He says that stock investments cannot be relied upon to preserve principle over short time spans. He points out the concept of random walk, and refers the reader to the work of economist Burton Malkiel and his 1973 book, "A Random Walk Down Wall Street." Glassman's bottom line here is this: Buy and hold. Sell almost never.

Second, choose stocks from quality companies with which the investor becomes a partner. In other words, not just any stock will do. Glassman offers the reader a crash course in financial accounting by explaining balance sheets, income statements, cash flow statements and several key ratios. Again, Glassman strikes a good balance between technical rigor and simple explanation. I personally found this portion of the book more enjoyable as a result of my recent coursework in the subject area than it might have been otherwise.

Third, maintain a well-diversified portfolio of stocks. The portfolio should contain large and small capitalization stocks, representing a large cross-section of market sectors. And, in Glassman's opinion, the portfolio should contain at least 30 stocks. The whole point to all of this is, of course, to minimize volatility (and, thus, risk). This is a bedrock principle, and there is very little dispute in the investment world that a diversified portfolio is less risky, regardless of time horizon.

"Secret Code" is comprised of 47 short chapters, which make for a quick read. His defiance of the ivory tower types was refreshing. For example: "Ignore the Fed," "the best rule for daytime financial television is this: Don't watch it," and, with regard to fund managers, "in some ways, amateurs do have an edge on the pros." Glassman never shied from an opinion, either. For instance, he said "margin buying is dumb," "investing in options [is] a sucker's game," and "I detest corporate bonds." It would be great if this kind of forthrightness existed among stock analysts.

"Secret Code" provides principled information on stock purchasing. Nevertheless, I felt the book had two shortcomings. First, "Secret Code" had the potential to be an enduring thesis on the topic of wealth-building, but I think Mr. Glassman undermined himself by recommending specific stocks (GE, Dell) and market sectors (pharmaceuticals, education). While I don't quarrel with his arguments in support of these companies and sectors, investors ten years from now will face different market conditions and may gain little utility from that portion of the book. In a way, Glassman didn't follow his own advice regarding the long term. Another, perhaps minor, shortcoming is his seeming, thought subtle, duplicitous opinion of mutual funds. In several places throughout the book, he points out that fund managers often have a lot of latitude which can negatively impact the individual investor's best interests. Investors retain less control over such factors such as taxes, diversification, bond ownership, and long-term focus when invested in mutual funds, says Glassman. Yet, somewhat contradictory, he recommends looking to mutual funds as a source of potential stock picks.

I don't like get-rich-quick books, and "Secret Code" is far from that. I also don't like books that speak down to me as if I couldn't possibly have any prior knowledge or experience. "Secret Code" doesn't do that, either. In sum, my parting thoughts on this book are simple. I found the book to be interesting, I learned from it, and I would recommend it to others interested in the topic. If you enjoy the excitement of daily stock price moves, if you await the Feds next utterance with bated breath, if you can't get enough of CNBC, then don't read this book. But if you want to experience the boredom of building wealth, then you must first learn the secret code of superior investing.

This book is perfect for beginners. Glassman strings together easy to read chapters chock full of tried and true successful investment ideas. Granted, the "secret code" might not hold any startling revelations for market veterans, but novice investors can benefit from this solid philosophy. Also, Glassman wields a very clear and concise voice, making complicated financials relatively easy to understand. A great addition to the business bookshelf.

Jim Glassman has been writing a very highly regarded investing column in the Sunday Washington Post for many years. His column has acquired almost cult status because Glassman has an uncanny knack for cutting through the mumbo jumbo and making the most complex financial issues seem simple and entertaining. This book is exactly what the beginning investor needs. It covers frontier financial topics carefully, gets the analysis correct, and makes it fun to read, even funny at times. If you have a friend or relative who wonders whether they should start playing the markets, this book is where they should start. The book does not break new academic ground, but it does make the latest findings easy to digest, and is aimed for a much more intelligent reader than many of the other popular investment books.

Glassman's latest is first-rate, a must read for anyone who is serious about investing -- and serious about making money! I learned more in this book than in the last ten financial books I've read combined -- and I make my living covering business and financial news. Best of all, he really knows how to write and it's a joy to read such clear and lucid prose about stocks and investing.