A Review of “The Index Card” by Helaine Olen and Harold Pollack

The Index Card

I received a review copy of The Index Card: Why Personal Finance DoesnÂ’t Have to Be Complicated* by Helaine Olen and Harold Pollack a couple of weeks ago.

As you can probably imagine from the title, this is a little book. It’s a book that can be read in one setting, which is nice.

The book is composed of ten rules (the authors even include an index card with the 10 rules), which are:

The Index Card

As you can see, they are pretty basic rules. Most of us would agree with all of them.

One rule that I definitely agree with is no. 6: Make your financial advisor commit to the fiduciary standard. That is a must in my book. If they won’t do that, then find another advisor.

The two rules I don’t agree with are no. 4: Never buy or sell individual stocks. and no. 9: Do what you can to support the social safety net.

Although I think index funds should make up the bulk of a person’s investment portfolio, I would stop short of telling people to never buy individual stocks.

The chapter on rule no. 9 left a sour taste in my mouth. Here’s an excerpt:

“When someone decries Social Security as a Ponzi scheme, remind him or her that many elderly would lead much poorer lives without it. When you hear someone say the government should keep its mitts of Medicare, speak up and say it is a government program.

“But it’s more than that. We need to admit we are the 96%. Be honest about not just what you pay in taxes but what you receive in return. Almost all of us have been helped—or have friends or relatives who have been helped—by unemployment insurance, Medicaid, food stamps, Pell grants to attend college, or other government offerings. All too often, we take them for granted, but without them many of us would be in worse financial shape. Acting together, we can protect one another against financial and health risks that would crush anyone of us, were we forced to face them unassisted.

“We must take care of ourselves and our immediate families through better planning, saving, and investing. When we do that, we are in a better place. But we must take care of our fellow citizens too. That’s the best way to ensure that all the new changes we’ve adopted over the course of this book have the best chance for success.”

Sounds like a page right out of the Democrat talking points, doesn’t it? It’s not my intent to take this review down the political path. Let’s just say that I think the above excerpt from the book is absolute hogwash. The book could have easily been written without it.

Politics aside, this is a decent book. It’s a great primer for someone starting out.

Other reviews from around the web: Adam Chudy

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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.

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