GIVEAWAY: A Copy of “20,000 Days And Counting”

I have had FIVE SIGNED copies of this book sitting on my desk to give away for awhile now. I wanted to wait until I had a chance to read the book. I still haven’t read it.

Regardless, I want to give these away. For your chance to win a copy, I want you to leave a comment and tell us ONE THING you would like to do with your life that you haven’t been able to do yet.

Just remember that I can only mail copies of the book to residents of the U.S.

I’ll announce the five winners next Friday.

NOTE: First time comments are moderated. Don’t worry. I’ll approve all comments.

Harvey Mackay: Career Advice From the Masters

I get a weekly email from Harvey Mackay. I thought I would share this one that I found in my inbox (it’s from January):

Napoleon Hill, one of my favorite authors, devoted twenty years of his life to study what made people successful. His mentor, steel magnate Andrew Carnegie, helped Hill by giving him introductions to some of the most successful people in business, including Henry Ford, Theodore Roosevelt, Charles Schwab, George Eastman, John D. Rockefeller, Thomas Edison, Clarence Darrow and many others.

What Hill discovered is that all these individuals realized the importance of surrounding themselves with people smarter than themselves.

I couldn’t agree more. All of us together are a lot smarter than any one of us. Which leads to some of the best career advice I can give you: Networking is a skill you must develop.

If I had to name the single characteristic shared by all the truly successful people I’ve met over a lifetime, I’d say it is the ability to create and nurture a network of contacts. A network replaces the weakness of the individual with the strength of your network. You don’t have to know everything as long as you know the people who do.

A network can enrich your life. It can help you help others. A network improves your job security. If you build a network, you will have a bridge to wherever you want to go. So if you are ever up the proverbial creek, if you have a network, you always have a paddle.

Just remember, the more you exercise your networking muscles, the stronger they get and the easier networking becomes.

What other career advice can you benefit from?

You can’t forget the most important five-letter word in business – TRUST. How about integrity, reputation and treating everyone with respect? I might add that you have to continue your education, because you should be in school all your life. I’ve written extensively about all these topics, and will continue to hammer them home because they are the difference between a job and a successful career.

And because I follow my own advice and continually study the brilliant thoughts of others, I thought I’d share words of wisdom from some of the world’s most successful people:

Steve Jobs, co-founder of Apple Inc.: “When I was 17, I read a quote that went something like: ‘If you live each day as if it was your last, someday you’ll most certainly be right.’ It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: ‘If today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘no’ for too many days in a row, I know I need to change something.”

Michael Dell, founder of Dell Inc.: “Try never to be the smartest person in the room. And if you are, I suggest you invite smarter people, or find a different room.”

J.K. Rowling, author of the Harry Potter novels: “Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged.”

Carlos Slim Helu, telecommunications magnate who is considered the world’s richest person: “I don’t want to live thinking about how I’ll be remembered.”

Warren Buffett, chairman of Berkshire Hathaway: “I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

Mark Zuckerberg, co-founder of Facebook: “If we want to have the biggest impact, the best way to do this is to make sure we always focus on solving the most important problems.”

Cathie Black, president of Hearst Magazines: “Most people see taking risks as opening themselves up to unnecessary,

Richard Branson, founder and chairman of Virgin Group: “My mother always taught me never to look back in regret but to move on to the next thing. The amount of time people waste dwelling on failures rather than putting that energy into another project, always amazes me. … A setback is never a bad experience, just a learning curve.”

Mackay’s Moral: They say a word to the wise is sufficient, but I say a word from the wise is a gift!

Harvey Mackay is one of my favorite authors. You can check out Harvey Mackay’s Amazon page*. My favorite book of his is Dig Your Well Before You’re Thirsty: The Only Networking Book You’ll Ever Need*.

*Affliliate Link

Ten (More) Questions for Jason Kelly

Jason Kelly, author of The Neatest Little Guide to Stock Market Investing: 2013 Edition*, was kind enough to answer some questions via email for AFM readers. Here is that interview:

It’s been awhile since we last talked. Tell us what you have been up to the last year or so?

I was working on the 2013 edition of my stock book in the first half of last year, then focused on upgrading my weekly newsletter site to add in features that subscribers had been requesting. The site began as just a repository for past notes, but over time I added commenting and a podcast and a watch list, and so on, but everything had a tacked-on feel to it. So, my designer and I spent months figuring out what people valued most, how to arrange it so that the most popular uses of the site appeared immediately when subscribers logged in, and then making it all more attractive. Website design is a lot of work, and the irony is that when it’s done best it looks easy as pie, giving the impression that it was just whipped together in an afternoon. Anyway, I’m happy with the result and so are subscribers.

What did you think of the election results last November? Were you surprised?

I’m discouraged by how little difference any candidate makes. Strip away all speeches and make a spreadsheet of the practical results of any administration and we find little reason to be upset or happy regardless of who wins. More and more people are onto this, so apathy is an understandable problem.

As for the last election, I follow polls closely and know which ones have the best track records, and they all favored Obama at the end. Given how close it was, I can’t say I was confident that Obama would win, but I did think the odds favored him. I rolled my eyes when so many announced after the fact that they had known Obama would win and then began calling his victory a landslide. Nobody knew ahead of the fact and he did not win by a landslide. Besides, it’s awfully hard to separate lucky guesses from skill in coin flip contests, right?

To remove suspense from future elections, I recommend monitoring the odds at FiveThirtyEight, the Princeton Election Consortium, and Votamatic. All three are scientific, dispassionate, and very good.

What do you think the reelection of President Obama means for the U.S. economy and stock indexes for 2013? What about the rest of the world?

His reelection doesn’t mean a darned thing for the economy or stocks. They would do what they’ve been doing regardless of who won in November. Obama has neither hurt nor helped stocks, and no president ever does. The impact of the White House on markets is negligible.

As for the economy and stocks, I see the former improving gradually and organically as it has after every other credit-based recession of the past, and I think stocks will provide uninspiring returns until their next major setback, which will create the atmosphere of fear that’s best for buying ahead of a subsequent recovery. Despite media obsession with the horserace aspect of stock investing, long-term success is more about reversion to the mean and exploiting deviations from that mean.

With advancements in technology, is it still possible to be a value investor? How is the average person supposed to find an undervalued company with so much competition out there from mutual funds, hedge funds, and other investors?

Sure. In fact, the advent of technology has made it easier for disciplined investors to rise above the clamor because there’s more noise to distract beginners and the less disciplined. I love seeing a person glued to real-time updates because I know that’s one less person that will be hard to beat. Too much information is a killer in the stock business, at least to the long-term value approach that’s best for most individual investors.

It’s a fairly straightforward process to look at a company’s past financial performance, stock valuation trading range, current position, and future projections, then to determine a fair price to pay today that will offer reasonable odds of price appreciation in the future and, in some case, a predictable flow of dividend income. Then, just wait for the fair price to appear. Get enough of these on a watch list, and it doesn’t matter if 90% of them never get cheap enough to buy. The 10% that do will provide plenty of profit with little stress.

In your book, you don’t talk a lot about index funds. Are you not a fan of index funds?

I write about them as much as is needed, given their simplicity. Frankly, I think I’ve come up with the best way to use indexes, and it’s through the leverage and value-averaging techniques presented in Chapter 4: Permanent Portfolios. The plans are so simple, and indexing so straightforward, that it doesn’t take long to get somebody started on autopilot with these permanent portfolios. Thus, most of the book is dedicated to the more complicated art of finding value in individual stocks.

You raise a good issue, however, one that others have brought to my attention as well. The index-based plans are so simple that nobody takes them seriously. In my view, the 3% quarterly growth value-averaging plan is about all anybody needs for the long term, superior to individual stock-picking for almost all individual investors. To bring it to a wider audience in a way that makes people believe in it, I’m working on a book dedicated to a complete exploration of the plan, and variations on the core method.

In your experience, what do you think is the most common mistake investors make when it comes to managing their portfolios?

Believing that there’s something special about them that will overcome base rate results from investment history. This tendency leads to forecasting a future that’s rosier than is likely, which creates shortfalls that American society makes easy to overcome with debt, the killer of financial freedom. Always assume historical market returns and then invest in ways that provide a chance of upside surprise beyond them, which should be treated as a bonus, not necessary for survival.

In your book you talk about several styles of investing along with an overview of several different investment professionals. Which style do you use personally?

Value averaging** for the core of my portfolio, the 3% quarterly growth method mentioned above. When picking individual stocks, I’m a patient value investor, awaiting cheap prices that I project will provide a good chance of market-beating results in the future. For example, Apple’s recent stumble caught my attention. I’d been watching and waiting for it to settle back, and it finally did.

What’s one or two of your favorite books that you have read recently?

Revolutionary Road by Richard Yates, which illustrates the ease with which people who consider themselves extraordinary can become the very conformists they want to escape in society, and how lacking the guts to make bold life decisions is a sure path to mediocrity. I believe most people should reserve their boldness for exciting life choices rather than for the stock market, where it usually gets them into trouble.

Got any new books in the works?

Always! I’m focused on the one mentioned above, which will provide a full background on the 3% quarterly growth plan, explore variations on it, consider objections and common ways that people ruin the plan by trying to improve it, and so on. I hope it changes the way people manage their 401(k)s and other retirement accounts, putting them on effective autopilot so they can devote their energy to living and loving and seeing the world.

Finally, what are your plans for this year? Got any big travel plans in mind?

Yes! I just returned from a week in Nicaragua, where I researched small coffee farms with my sister and business partner, Emily, and other people in the industry. We jointly own a coffee shop in Longmont, CO called Red Frog Coffee. The Nicaragua trip was an eye-opening experience that made me want to travel among other coffee regions of the world. I like travel with a purpose much more than I like sightseeing, so this struck a chord in me. Emily and I would love to see coffee regions in Africa, especially Ethiopia and Uganda.

For fun, I’m going with my family to Newport Beach, CA this summer. We used to do this as kids, but stopped six years ago. We’re resurrecting the tradition in the same beach rental house we used in the past. Making new memories in a place filled with old memories adds depth to my life. All of us are looking forward to it.

Thank you for this enjoyable conversation!

Thanks for your time, Jason.

*Affiliate Link
**A future AFM topic

GIVEAWAY: A copy of “The Neatest Little Guide to Stock Market Investing”

I hope you took a chance to read my review of Jason Kelly’s book, The Neatest Little Guide to Stock Market Investing: 2013 Edition*. Now you have a chance to win a copy.

All you have to do is leave a comment below explaining one thing you think young people should know about investing. Please remember my two giveaway rules:

1. You must be a resident of the United States (I don’t ship internationally).


2. You can only enter one time.

I’ll announce the winner on Monday morning. GOOD LUCK!

PS – I have a whole week’s worth of giveaways planned for next week. Stay tuned…

A Review of “The Neatest Little Guide to Stock Market Investing”

Jason Kelly sent me an updated version of his book, The Neatest Little Guide to Stock Market Investing: 2013 Edition*, to read and review. I finished reading it yesterday. It’s a short read, which is good because I’m a notoriously slow reader.

Overall, I liked the book and would recommend it to anyone just starting out on the road to investing. Jason covers most of the basics from defining what stocks are, how to open a brokerage account, how to buy and sell, and he even spends a good portion of the book offering tips from some of the well-known investors like Warren Buffett and Bill Miller (along with a few others). I always like reading about what successful investors have done. The one problem I have, though, is that they all seem to contradict each other. So, I’ll read about one and think, “Wow! That’s pretty cool.” Then I’ll move to the next one and it will contradict what the last one said in some way. It’s a bit overwhelming.

He moved on from there to talk about strategies from James O’Shaughnessy’s “What Works on Wall Street.” They sound great when you read stuff like, “From January 1, 1964, to December 31, 2009, the 25-stock Trending Value portfolio returned 21.2 percent a year…” SIGN ME UP! Unfortunately, these strategies are academic in nature (no real money was put into these strategies) and are difficult to practice in real-life (O’Shaughnessy had access to databases that the rest of us probably cannot afford). O’Shaughnessy manages a couple of mutual funds. As you can see from the following graphic, his results have been less than impressive.

Kelly moves on from there to talk about value averaging followed with a section on conduction research via magazines, newspapers, newsletters, and online tools to aid in that endeavor.

Finally, he closes out the book by walking the reader through his investing process with information on how to set up a “Stocks to Watch” worksheet (it’s a detailed process).

If this book has a shortcoming, it’s in the fact that he didn’t really talk about indexing. Indexing is the reality or most people. It’s simple and will most likely perform well enough to meet any realistic goal. This book is more about investing for those who like to conduct research and like a challenge of finding the next Apple or Microsoft (back when it was in its prime).

Like I said at the beginning of this review, this is a good book. It will give the beginner access to a lot of information. I would recommend reading it along with The Coffeehouse Investor* and Larry Swedroe’s books* and then decide which approach is best.

*Affiliate link