Wall Street Journal Guide to Understanding Money and Investing
||List Price: $15.95
Amazon.com Price: $11.17
- Media: Paperback
Publisher: Fireside (02 August, 1999)
- Average Customer Review:
Based on 46 reviews.
Amazon.com Sales Rank: 686
Incomplete and Misleading Basic Definitions
To me a guide from a brand name source like The Wall Street Journal should always elucidate and never mislead. If this book were called a dictionary of money and investing, I would give it a five star rating. For it works well as a dictionary. In fact, it is better than a dictionary because the explanations are clearer, more detailed, and better illustrated.
In the sections on what money, stocks, bonds, mutual funds, and economic indicators are, the book functions as that five star dictionary.
Within each section beginning with stocks, the "guide" also begins to guide you in subtle ways that can cause you harm. Let me cite a few examples. The guide seems to suggest that when the market is going up, a company's earnings are doing well, and interest rates are not rising that is a good time to buy a stock. The illustrated graph seems to show other times when it is good not to buy stocks. As such, it suggests the mentality of buying and selling stocks to catch cycles. Yet research has shown that few people can master that process, so those who try will tend to do less well than those who buy and hold.
Another example is in failing to discuss the role of management fees, expenses, portfolio turnover, and diversification on which mutual fund to pick. As John Bogle shows in Common Sense on Mutual Funds, these are very important factors to consider. Yet they are not defined or cited.
The book also teaches people a little about short selling, commodities, futures, and other exotic investments. The book fails to point out that these are well beyond the skill of the average investor, and that many people get hurt in these areas. Basically, this is like a book of definitions about poisonous snakes that fails to mention that the snakes are poisonous if they bite you.
Other obvious omissions included no mention of tracking stocks, ADRs in the stock section (you find the definition in International markets, where to me it fits less well), the differences in discount brokers, electronic trading choices, and how to find information about stocks on the Internet (the only source cited in the SEC).
The focus is overly on the U.S. with only a small section on international securities. The area of interest rate futures, where Europe dominates, is barely referred to in this book.
Some of the information is just plain out of date. NAIC is cited as being the National Association of Investment Clubs. I believe it dropped that name over 10 years ago although it still goes by NAIC. The guide refers to there being 37,000 investment clubs in the U.S. I think that number was exceeded many years ago.
Further, much of the information is basically about how to read economic statistics. Many people would argue technical analysis is at least as important as economic statistics, but nothing about technical analysis is included in the book.
If you want to learn about investing, you need to know investing principles more than you need to know these terms (such as the various aspects of a stock certificate's printing and engraving). You will find most of the relevant terms covered in basic investing books like Louis Engel's book, How to Buy Stocks. You would be far better off reading ChangeWave Investing, Common Sense on Mutual Funds, and Rich Dad, Poor Dad's Investment Guide than this book for getting a sense of what the basic investing issues are.
Overcome your misconception that anything with The Wall Street Journal's name on it is bound to be the best resource. Certainly, that isn't true in this case.
My suggestion is that The Wall Street Journal revise this book and either cut it back into being an expanded dictionary, or expand it into an investing guide worthy of its name.
A good, easy-to-read explanation of the financial world
The Wall Street Journal is, bar none, the best financial paper in the country, but the "Guide to Understanding Money & Investing" is written in a very differnt and interesting manner: the information in it is top-notch, but there are pictures and drawings throughout it, many of which make the book seem like it should be in a junior high social studies class. Despite its physical appearance, the book makes an excellent effort at explaining the stock markets, world currencies, bonds, futures & options, and much more. It is easy for many people to simply dismiss the global economy as being something that they'd rather not be concerned with, but when you examine it closely, the world of finance may be one of the most complex creations ever made by man. The "Guide to Understanding Money & Investing" shrinks that world down into one that can be understood, and by the end of the book, you'll realize just how smart the people on Wall Street are - and just how much closer you are to their level of knowledge. This is not a book that is meant to be read in one sitting; it may be better used as a reference. An excellent addition to any investor's library.
Extremely useful for the amateur investor who needs a primer
If you, like me, are getting started in the wonderful world of investing, this is a book that you need to get. It covers in very simple-to-understand language everything that investing entails from the perspective of the Wall Stree Journal, i.e. if you were to get into and/or follow investments using WSJ as a tool, and what a tool it certainly is. The material is nicely laid out in five sections, all of which can be covered without any specific order, depending on the type of information you're looking for: they also can be read linearly, in order to get a better understanding of the complete picture.
The sections are:
-Money: allows you to better understand what money really stands for, the cycle of money, the role of the Fed in regulating the economy, etc.
-Stocks: from what they are, how they "look" like, to how the market works and what cycles characterize it, how to evaluate companies, etc.
-Bonds: same thing, but applied to bonds.
-Mutual Funds: "putting it all together."
-Futures and Options: the higher end of investment.
This book, which also will not take too much time to process, contains a world of wisdom if you're serious about investing, or if you just want to better understand money and investing. Perhaps, if you're not convinced now, after you read it, you might end up more interested in investing, somthing which all of us should in one way or another do!
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