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Step 1: Evaluate your needs before deciding on your investments. Starting out with trying to select the right investments is looking through the wrong end of the rifle. Step 2: Realize that it's your whole portfolio that matters. Modern Portfolio Theory was developed back in 1952: It's time to stop investing the way people did when "(How Much Is That) Doggie in the Window" topped the Hit Parade and kick your portfolio into the rock 'n' roll era. Step 3: Take on risk intelligently. Knowing your returns without understanding the risks you take to get them is like only knowing one team's score in a football game. Step 4: Diversity. Unless you deliberately practice extreme diversification, your portfolio will end up being blandly underdiversified, and you will pay for it by collecting subpar risk-adjusted returns. Step 5: Use a Monte Carlo simulator to test-drive your portfolio on the track before putting your money at risk in the real world. It can keep you from crashing and burning. Professionals do it, and you should, too. Step 6: Do a portfolio reality check. Don't put a penny in the gumball machine unless you can see the gumball inside the machine. Even the most brilliant analysis of your holdings won't help if you're otherwise making beginner investment bloopers.
|Publisher:||Hay House, Inc.|
|Sold by:||Barnes & Noble|
|File size:||5 MB|
About the Author
Ben Stein can be seen talking about finance on Fox TV news every week. He has written about finance for Barron’s and The Wall Street Journal for decades and contributes regularly to the AARP’s Modern Maturity (now AARP: The Magazine). He was one of the chief busters of the junk bond frauds of the 1980s, has been a long-time critic of corporate executives’ self-dealing, and has written several self-help books about personal finance.
Phil DeMuth is an investment psychologist with a longstanding interest in the stock market. He has written for The Wall Street Journal and Barron’s, as well as Human Behavior and Psychology Today. His opinions have been quoted on theStreet.com and Fortune Magazine. He is president of Conservative Wealth Management in Los Angeles.
Table of Contents
Step 1: Don't Skip Step 1 1
Step 2: It's Your Whole Portfolio That Matters 7
Step 3: Take on Risk Intelligently 15
Step 4: Diversify 33
Step 5: Use the Monte Carlo Simulator to Test-Drive Your Portfolio 61
Special Topics: A Farewell to Bonds? 93
Special Topics: Roll Your Own Hedge Fund 107
Special Topics: Investing for Income 117
Step 6: Do a Portfolio Reality Check 133
Berkshire Hathaway by Way of Monte Carlo 149
Coping with Concentrated Holdings 153
About the Authors
Both in Beverly Hills, CA