93 of 95 people found the following review helpful
on September 27, 2000
MFIG was a great book at the time, but Father Time has not smiled on the book or the strategies contained within. In short: if you a market novice looking for a good intro book, look elsewhere.
These are the sections of the book:
1. Mutual funds. They point out that most funds actually do worse than the market averages, and you would do better to invest in the average itself - an index fund. This is good, solid advice, but nothing too revolutionary nowadays.
2. The Dow Dividend Strategy, aka the Foolish Four. Unfortunately, this strategy has been all but shot down - it has done very poorly recently. Even the creator of the original Dogs of the Dow strategy has disowned it, and the Fool doesn't pay much attention to it anymore. Time to move on.
3. Small cap growth stocks. The Fool has abandoned this in favor of newer strategies.
4. Shorting stocks. The Fool doesn't do this anymore, and it is much too risky to be talking about in a beginners book anyway, because you can lose more money - potentially much more - than you invested.
If you want to learn the basics of finances, try Jane Bryant Quinn. If you want to learn to invest in stocks, try O'Neil's "How to Make Money in Stocks", or some of the Fool's newer books.
This is not to book to get anymore.
61 of 63 people found the following review helpful
Format: PaperbackVerified Purchase
This was the first book I read on picking stocks, and I still refer to it occasionally. It contains some very good information on how to evaluate companies. Some of this information has since been updated on the Motley Fool website, and continues to be. That's one thing I like about their outlook: they are willing to change their approach as they continue to learn. On the downside, I find that they completely rule out some very worthwhile aspects of investing as being worthless. For instance, they have a section in the back of the book which practically compares technical analysis (chart reading) to snake oil. Although I personally would not pick a stock only on the basis of its chart, I must allow that charts help us pick good entry and exit points, and provide other pertinent information as well. One of my favorite investment authors, John Murphy, has an entire book on technical analysis. I regard him as a scholar and a very astute thinker who would never dabble in snake oil.....with resources like Murphy's books out there I can't understand TMF's cavalier dismissal of the entire field. They similarly denigrate the entire field of options and futures, which I think perhaps shows a lack of understanding on their part. Aside from these criticisms, however, I recommend this book as a very good primer on how to evaluate a company you are thinking about investing in.
27 of 27 people found the following review helpful
on December 6, 1999
I highly recommend this book for people interested in investing but are not sure where to begin. It gives you the basics of getting started and the motivation to handle your own money. The Gardner's gives a little more attention to the "younger generation" and therefore makes reading comprehensive and entertaining. A Must Buy, for new investors.
49 of 54 people found the following review helpful
on January 17, 2000
-- People who *should* read this book: 1) Beginning Investors. 2) Conservative Investors. 3) People without the time to manage their investments, and who are willing accept smaller returns.
-- People who *should not* read this book: 1) Experienced investors. 2) Short term investors. 3) Day traders.
In short, this book is a good intro. to investing for beginners and has a long-term, conservative slant. The first part of the book is easy reading, but it gets a little drier toward the end.
39 of 44 people found the following review helpful
on December 22, 1999
The rating of four stars is primarily due to the edifying experience of digesting pages 71-180; though that text was worthy of five stars, it was necessary to penalize the fools for making me read through the rest of the very bland book, albeit in front the television. In "the rest of the book", the fools first take 70 pages to tell us that they have a strategy, which is like telling you to close your eyes and then boring you with self-congratulatory blather. Then, they yarble on and on from page 180 to the end discussing the kind of things they like to ignore. Who cares? The foolish striving to thicken the width of the book spine reminded me of page requirements that we all had to fulfil writing papers in high school.
Despite the odds, the book remains worthwhile. The excerpted section is a comprehensible, lively introduction to investing in the market. The fools' best skill is presenting their original and borrowed (Peter Lynch is a key figure) mathematical formulas and then massaging them to allow for human judgments based on interpreting financials and income statements (which they cover in palatable form). It is tempting to see this strategy (precise formula plus the leeway for human reevaluation) as covering one's bacon, the customary allowance for errors, namely the ones that the reader may make. But the pure numbers and their comparisons marking differences and similarities are brought to life, coursing through a company body. By the time you finish the book, you will know more than your fellow puffers.
58 of 68 people found the following review helpful
THE MOTLEY FOOL INVESTMENT GUIDE is a rare creature: A book full of valuable wisdom and ridiculous conjecture at the very same time. Pay attention to the former and you will be better off, and you face major risks with the latter.
As long as the book focuses on long-term research and trends, it is on solid ground. But the authors are quick to move into conjecture, based on no proof. That is where you are in danger with this book.
The section on short-selling is particularly naive. It makes it sound like you can always cover a short with only a 20 percent loss. Not!
The small cap investing advice is good up to a point. The authors totally ignore research that shows vastly better returns from small-cap growth stock investing at times when small-cap growth stocks are cheapest relative to the p/e ratios of the large cap stocks.
On the dividend-based Dow investing, the authors miss the most important point. Each of the techniques for buying "the dogs of the Dow" has quickly become obsolete in the past. Back testing provides great historical returns, and lousy future returns in this area.
On the most important point, how to use on-line investing to be more successful, the book is almost totally silent.
This book gives the impression to me of being written by inexperienced people who do not have the background to understand what they are thinking about. Through the index fund discussion, though, this is an outstanding and accurate book. It just dives off the deep end without enough swimming lessons in the other areas.
In an overpriced market like the current one, following the Motley Fool theories could make a fool out of you. If you want to try this Motley Fool approach, my advice would be to limit yourself to 10% of your stock investing. With experience, the Motley Fool approach will undoubtedly improve. Remember that fewer than 1 in 10 new techniques for investing work well thruogh an entire market cycle, which is another reason why mutual fund managers have problems.
19 of 20 people found the following review helpful
on June 11, 2002
This is the book that promises you'll make compounded annual returns to rival Warren Buffet's record by applying a brain dead strategy known as the 'foolish four'. This was touted as a thoroughly researched and proven method going back over 40 years. It has subsequently been proven by various university investigations that their "research" exaggerated the truth - hugely. In fact, in recent years, since the publication of this book, the 'foolish four' portfolio has been removed from their infamous website as it couldn't even keep up with a broad market index.
It is wonderfully tempting to find a simple technique that ignores all but a few pointers and sit back and collect over 20% compounded returns per annum for a decade. If it were that simple, would not such a formula have been discovered long ago and used by everyone?
Read for entertainment, but bear in mind what the "fools" said on their own web site when abandoning their own advice a few years later: "it was too good to be true". Read with caution!
61 of 75 people found the following review helpful
on October 21, 2000
This is a poor introductory guide to some forms of investment, specifically stocks. There is very little coverage of any other forms of investment, and what coverage there is, is biased strongly against anything other than stocks on the Dow or small-cap growth stocks fitting their criteria. Calling this book an "investment guide" is pretty misleading.
The book is written in a know-it-all style that you will no doubt either love (apparently a lot of other reviewers) or hate (me). The pages are full of their cheesy and repetitive medieval references concerning "fools" and "wise" men. And if those don't grate on you the unending plugs for their online services will.
The basic premise of the book is basically as follows: investing in mutual funds is stupid because you are virtually guaranteed an average 25.5% return by picking 4 stocks on the Dow Jones using a formula. Now, this is obviously absurd. Yes, the system worked over the past, but it isn't working currently (check fool.com under portfolios to see how they're doing this year -- DOWN 1.84% as I write this) and there's no proof it will work in the future. Also, the hypocrisy is overwhelming as they continually dis those who claim to have systems and also those who use technical analysis to make stock picks.
There are a couple of strong points to the book: the five chapters on small-cap growth stocks and how to evaluate them are very well done. They show you how to analyze a company's balance statement, and what sort of general financial indicators to look for when picking small-caps. Oh, and the Joey Roman penny-stock parody in appendix C is extremely funny.
I can't honestly recommend this book at all. There are many other books that explain the same material, and with a more even approach. This whole book oddly reeks of a get-rich-quick mentality, while they shoot down everyone else's get-rich-quick schemes. The poor advice combined with a hokey writing style make this book a pretty painful read.
21 of 24 people found the following review helpful
on April 11, 2000
The Motley Fool Strikes! When I first saw these guys on CNBC back in '96 I couldn't believe my eyes. "I mean, who are these clowns and why should I listen to anything they have to say?" was roughly what I remember thinking to myself as they bubbled-up investment advice from under matching joker hats.
Well, after reading their book, I still have my reservations, but I have to admit it does offer a good way of looking at investments for the mutual fund and buy-and-hold types. Good gains can be found in this type of investment methodology, but as a devout technician, I must say that I still find greater gains in short-term trading which makes a book like Jeff Cooper's Hit and Run Trading the best risk-to-reward value out there.
Don't get me wrong, this book speaks to folks like my mother who wouldn't know a bar chart from hieroglyphics on the wall. Additionally, their Dow Dividend portfolio strategy is just what my mother ordered - 15 minutes of research a year for an average 25% return over 20 years! Let's face it; in this time, in the world we live in, you have to learn how to read the markets somehow or risk facing financial under performance in the long-run. I think that it is a good start for the absolute novice.
23 of 27 people found the following review helpful
on November 29, 2003
The Motley Fool Investment guide by the Gardners was a fairly interesting primer on the subject of investing, with a particular emphasis on stockpicking. However, that is ALL you should take it as. It should merely be viewed as ONE type of overview of the stock market that may or may not be valid under current market conditions.
Note: Beginning investors should be very wary of following the strategies outlined in this or ANY investing book with any significant sum of money. Run a simulation portfolio and test out the validity of these methods before you plunk your hard earned cash into some particular system. Be warned. My opinions may sound very negative and you may be at a loss of confidence, but I do believe you'd rather take a beating in your emotions before you take one with your portfolio.
Now, overall, the book offers some nice stratagems for newer investors and is written in a very friendly style to keep people interested. The book is laced with the Gardners' personal style of humor(which I wasn't particularly fond of), but they did manage to keep the book fairly light-hearted and easy to read. With that said, I believe a key flaw of this book is that it makes achieving market-beating returns seem fairly easy.
Would it be feasible to believe that anyone could suddenly start playing NBA quality basketball were that person to read and follow some simple exercises in a book entitled "Play Basketball like Michael Jordan"? How about "Tiger Woods in 20 Minutes"? Yes my friends, it is very possible to play pro ball by doing my secret exercises for only 20 minutes a day, because in my new book, I have outlined some very secret and powerful methods that will make your growth in talent and muscle EXPLODE! *cue slightly altered techniques found in a basic exercise manual wrapped around in clever and seductive writing.
The notion that someone can play professional, all-star level ball by reading a book and following simple exercises would quickly be dismissed as utter BS. But in the world of investing, 'secret methods,' 'the methods of the pros,' etc. etc., always seem to entice new investors into buying a $15 manual to learn the secrets to beat the market. Maybe Peter Lynch can get by on beating the pros by looking at investments only a few hours a week because his decisions are built on experience... It may be easy for a professional bodybuilder to lift 350 lbs, but does that mean the average man can expect to do the same? To suggest that the newcomer can beat the pros by spending only a few hours a week and using a very simple system sounds quite like the 'pro ball' scenario, no?
You certainly won't get consistent market beating returns by following the very scanty guidelines offered in this book. Another area of fault with the book is that, at times, it seems like you've just spent your hard-earned money on a big advertisement. The constant plugging of their website is extremely annoying to say the least. It almost seems as this book was geared to get you to join their website.
With all of that said, the book offers a decent, easily followed write-up of long term investing fundamentals. It's a nice overview of the subject of investing, and beginners will learn some good lessons, but by no means should they believe that by reading a couple of investing books and following the simple guidelines within should they expect to beat the market over the long-term. There's a reason most mutual funds don't consistently beat the market over the long-term. And no, it's not because the majority of mutual funds are run by complete dunces (some of you may tend to disagree). The objective of obtaining market beating returns isn't nearly as easy as it seems.