by Scott Pape |March 21st 2007
This week Stella McCartney stirred a stampede of shoppers to line up (on a Sunday morning no less) to sample her signature range of clothing. I wasn’t there. Although I have a long list of consuming passions, fashion isn’t one of them. Most of my clothes are sourced from the market stalls of Asia – and the quality of the garments (or lack thereof) shines through.Even though I can’t muster the enthusiasm to acquire the latest look, I am a sucker for the latest business book. Throw me into a bookstore sale and I’ll soon start elbowing the next guy, just like Sunday’s Stella shoppers.
I often argue with my better half that there are only so many clothes you need – or can wear – but I’ve come to realise that I’m guilty of a similar sin.
You see in the finance field there are three broad categories of books.
Get Rich Quick
The first is the ‘get rich quick’ type of writing. You can spot these a mile away – the cover usually has the author standing in front of a mansion or a Ferrari or holding large amounts of money. The titles usually include the words ‘millionaire’, ‘secret’, or ‘rich’ (and sometimes all three). Due to their catchy titles these are often the first books that a novice will pull from the shelves.
Unfortunately most are merely glorified infomercials aimed at getting people into the author’s high-priced seminars. A good recent example is the book Why We Want You To Be Rich by Robert Kiyosaki and Donald Trump.
This book was dedicated to the Learning Annex, a US-based wealth seminar company that holds real estate and wealth ‘expos’ throughout America. Trump reportedly gets paid $1.5 million for his signature one-hour speech. This draws the punters to the expo, who are then encouraged to partake in a spruiking sideshow, selling various gurus’ high-priced boot camps and information products.
Why We Want You To Be Rich is based on the presumption that the rich are getting richer and that the middle class is slowly disappearing. The authors suggest that network marketing (which I discussed in a previous article), and firing your boss and going into business for yourself are the keys to getting rich. Yet like many of the books in this genre they’re big on motivation and small on specifics.
Our millionaire and (questionable) billionaire authors provide this important footnote; ‘A word of caution: if you believe that working hard, saving money, and investing for the long term in mutual funds and diversifying is good advice then this book may not be for you’. Nice.
Down to Earth Finance Advice
The second type of finance book that readers will encounter is a little more grounded, and covers the specifics of what to do to improve your financial foundations. They are usually written by finance professionals, rather than the ‘I made a million dollars (by getting gullible punters to pay me for my money secrets) and you can too’. These authors include (among others) Paul Clitheroe, Noel Whittaker, Peter Thornhill and myself.
While the get rich genre largely draws on motivational material, these more down to earth books succeed by distilling technical information and presenting it in an easy to understand format.
The Classics
This raw technical information forms the third category of finance writing. A few titles include; The Intelligent Investor by Benjamin Graham, The Intelligent Asset Allocator by William Bernstein, and Irrational Exuberance by Robert Shiller.
Although these books are classics that will generally withstand the test of time they do have their limitations. They are a snapshot of the author’s views at the time of writing and, as we’ve seen lately, investment markets have a habit of throwing curveballs at us every now and again.
As an investor it’s important to filter the white noise of the media and focus on what matters most. For an up-to-date commentary of where markets are moving I seek the counsel of two billionaire investors (neither of whom has a reality television show or a comb-over).
The Real Experts
The first is American Bill Gross, chief investment officer of PIMCO, one of the world’s largest bond managers, with about $830 billion under management for investors. Each month Bill dispenses his worldly wisdom via an audio podcast distributed on the internet. The best way to ensure that you get his up-to-date analysis is to subscribe via iTunes (which can be set to automatically download each month).
The second investment-made millionaire’s musing which whips me into a fashionista-like frenzy each year as I wait in anticipation, is none other than the Oracle of Omaha, Warren Buffett. He is arguably the best investor the world has ever seen.
While Gross talks like a multi-billion-dollar fund manager, Buffett’s prose is so simple it’s surprising that so few people actually apply his advice. Each year Buffett delivers a 10,000-word tome of tasty investment advice. His latest landed just last week. In it Buffett manages to make the complex and often boring process of investing come to life – while sprinkling the letter with humour and priceless insights for investors the world over. This year (amongst other things) he advises investors to ‘be greedy when other people are fearful and fearful when others are greedy’.
The Buffett letters are required reading for all serious investors. Don’t let the cheap-looking website deter you from seeking out each investment letter dating back to 1977 at www.berkshirehathaway.com – it’s all part of his charm.
The get-rich-quick authors usually market themselves as successful investors who have made millions. You can learn their secrets by buying their books or attending their seminars. You can even enrol in Trump University’s ‘Trump way to wealth’ for just $US99. Yet here we have two (on the public record) billionaires who dispense their much sought after advice for free.
Tread your own path!
Photo: http://www.flickr.com/photos/31189673@N08/3156805316/
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