ANYONE CAN MAKE A MILLION...
Another little classic for personal finance/investing is Dr. Morton Shulman's "Anyone Can Make a Million." This dates from 1966 and is interesting both for the fact that it is a period piece, with analogues pertinent to today's financial scene, and for the fact that Dr. Shulman is Canadian, giving us his unique and different perspective on investment issues.
It is fascinating reading investment classics of bygone eras. One can see direct parallels to today; moreover, one can get an idea of the cyclical nature of the stock market and investment fads (and also ones that are archaic or no longer relevant) and for the underscoring of the fact that "there is nothing new under the sun."
Shulman is especially praiseworthy of convertible and convertible-preferred bonds. The idea of convertibles, of course, is that you get a set rate of interest paid on your capital with the potential added "kicker" of being able to convert your investment vehicle into shares of common stock beyond a certain price if it becomes advantageous for you to do so. I know of a couple of successful mutual fund families that offer funds which have put this plan to good effect over the years: Fidelity and Calamos. These companies have convertible funds that allow one to sleep more soundly at night. Especially in a sideways to down market, this type of vehicle might prove more rewarding. There is something to be said for collecting dependable dividends in a rotten market such as we have today.
Shulman predictably underscores the dangers of things like penny stock scams (bulletin board stocks are always to be avoided; most are frauds pitched by criminals), options (puts and calls), and whole life insurance. He does, however, pitch term life insurance (if bought intelligently) for young couples in need of income replacement (think paying off the mortgage) in the event of the untimely death of the principal breadwinner.
It is most interesting to get a non-American perspective on investing from someone who has done well in a prosperous country like Canada. He talks about things such as "free riding" (the ability to avoid putting up your own capital on short term trades) which I've never heard of here in the US (the "if, as, and when" market). I wonder if this is even yet done in Canada? (Surely this delightful loophole has been closed by now?) He highlights some advantages for American citizens to open up a brokerage account through a Canadian broker (easier to invest in Canadian shares, for one, which have doing great the past few years; Canada is booming).
What Americans don't realize is that there are plenty of areas in the world that are quite prosperous, as much or more so, than the US in the past 5-10-15 years: Hong Kong, Singapore, Australia, Canada, Ireland, and the UK, for starters (I've been to most all of these places and have seen it with own eyes). All of their real estate is just as expensive (or more so) than ours, and has appreciated quite smartly during the recent global bull market in property. Moreover, all of these places are wonderful places to live, with great infrastructures, booming economies, and an equal or better standard of living than the US. Therefore, getting a non-US perspective on the investment market is quite helpful, and can lead us to more opportunities.
I never tire of reading about the "Glamour Stocks" of the booming 1960s/'70s American stock market: Polaroid, Xerox, IBM, and the like. As I read his chapter on the wacky 60s/70s bull market (replete with stocks that sported ridiculously high PEs - just as absurd as 1999/2000) that collapsed with a mighty, disastrous "thud" in 1974 (remember the big OPEC shock of the time? War in the Middle East, Vietnam, Watergate, etc.), I am reminded of another master work that should be on everyone's reading list: Mackay's Extraordinary Popular Delusions and the Madness of Crowds. Read and heed... (And don't forget to cash out when your "glamour stocks" go vertical, as in 1999!)
Shulman closes his book with a few chapters on the collectibles market: art, antiques, antiquities, coins, and the like. It is fascinating that this book (and books such as Adam Smith's "Paper Money") mirror today's scene in an uncanny way. Collectibles have been in a monster bull market since 2001 here in the US (and globally). Over the centuries people have striven to preserve their wealth in tangible ways, especially when the economy is shaky and stock markets are particularly unrewarding (as today in the US). The long term market return of collectibles is very competitive with stocks.
Have you noticed how popular the PBS show "Antiques Roadshow" is? (They even have franchises of this program for the UK and other countries now.) My jaw drops when I see the market prices some pieces are fetching. Moreover, many of these show outstanding craftsmanship (especially the furniture and clocks) of unmatched quality. And they give the owners a certain joy of ownership - they are pleasant to look at and have aesthetic appeal. Now try comparing that with the heartburn you get by owning such awful stocks as MSFT, INTC, LU, NT, EBAY, or CSCO today!! No wonder the collectibles market is booming and is likely to continue in that direction (do the people at Sotheby's care about the Fed and Al-Qaeda?!).
Give this little book a close read if you can find it. At least it will remind you that all investment trends and fads are cyclical (and have been played before - by global Capitalists from time immemorial), that macroeconomic concerns have direct bearing on these cycles, that the "imminent demise" of the US dollar is a decades-old canard, that it pays to have historical perspective, and that there is plenty of money to be made outside the US. (If you believe the hype about the Albertan old sands, there will be plenty of petroleum for decades and Alberta will be filthy rich! Who needs Saudi Arabia?)
TTC
It is fascinating reading investment classics of bygone eras. One can see direct parallels to today; moreover, one can get an idea of the cyclical nature of the stock market and investment fads (and also ones that are archaic or no longer relevant) and for the underscoring of the fact that "there is nothing new under the sun."
Shulman is especially praiseworthy of convertible and convertible-preferred bonds. The idea of convertibles, of course, is that you get a set rate of interest paid on your capital with the potential added "kicker" of being able to convert your investment vehicle into shares of common stock beyond a certain price if it becomes advantageous for you to do so. I know of a couple of successful mutual fund families that offer funds which have put this plan to good effect over the years: Fidelity and Calamos. These companies have convertible funds that allow one to sleep more soundly at night. Especially in a sideways to down market, this type of vehicle might prove more rewarding. There is something to be said for collecting dependable dividends in a rotten market such as we have today.
Shulman predictably underscores the dangers of things like penny stock scams (bulletin board stocks are always to be avoided; most are frauds pitched by criminals), options (puts and calls), and whole life insurance. He does, however, pitch term life insurance (if bought intelligently) for young couples in need of income replacement (think paying off the mortgage) in the event of the untimely death of the principal breadwinner.
It is most interesting to get a non-American perspective on investing from someone who has done well in a prosperous country like Canada. He talks about things such as "free riding" (the ability to avoid putting up your own capital on short term trades) which I've never heard of here in the US (the "if, as, and when" market). I wonder if this is even yet done in Canada? (Surely this delightful loophole has been closed by now?) He highlights some advantages for American citizens to open up a brokerage account through a Canadian broker (easier to invest in Canadian shares, for one, which have doing great the past few years; Canada is booming).
What Americans don't realize is that there are plenty of areas in the world that are quite prosperous, as much or more so, than the US in the past 5-10-15 years: Hong Kong, Singapore, Australia, Canada, Ireland, and the UK, for starters (I've been to most all of these places and have seen it with own eyes). All of their real estate is just as expensive (or more so) than ours, and has appreciated quite smartly during the recent global bull market in property. Moreover, all of these places are wonderful places to live, with great infrastructures, booming economies, and an equal or better standard of living than the US. Therefore, getting a non-US perspective on the investment market is quite helpful, and can lead us to more opportunities.
I never tire of reading about the "Glamour Stocks" of the booming 1960s/'70s American stock market: Polaroid, Xerox, IBM, and the like. As I read his chapter on the wacky 60s/70s bull market (replete with stocks that sported ridiculously high PEs - just as absurd as 1999/2000) that collapsed with a mighty, disastrous "thud" in 1974 (remember the big OPEC shock of the time? War in the Middle East, Vietnam, Watergate, etc.), I am reminded of another master work that should be on everyone's reading list: Mackay's Extraordinary Popular Delusions and the Madness of Crowds. Read and heed... (And don't forget to cash out when your "glamour stocks" go vertical, as in 1999!)
Shulman closes his book with a few chapters on the collectibles market: art, antiques, antiquities, coins, and the like. It is fascinating that this book (and books such as Adam Smith's "Paper Money") mirror today's scene in an uncanny way. Collectibles have been in a monster bull market since 2001 here in the US (and globally). Over the centuries people have striven to preserve their wealth in tangible ways, especially when the economy is shaky and stock markets are particularly unrewarding (as today in the US). The long term market return of collectibles is very competitive with stocks.
Have you noticed how popular the PBS show "Antiques Roadshow" is? (They even have franchises of this program for the UK and other countries now.) My jaw drops when I see the market prices some pieces are fetching. Moreover, many of these show outstanding craftsmanship (especially the furniture and clocks) of unmatched quality. And they give the owners a certain joy of ownership - they are pleasant to look at and have aesthetic appeal. Now try comparing that with the heartburn you get by owning such awful stocks as MSFT, INTC, LU, NT, EBAY, or CSCO today!! No wonder the collectibles market is booming and is likely to continue in that direction (do the people at Sotheby's care about the Fed and Al-Qaeda?!).
Give this little book a close read if you can find it. At least it will remind you that all investment trends and fads are cyclical (and have been played before - by global Capitalists from time immemorial), that macroeconomic concerns have direct bearing on these cycles, that the "imminent demise" of the US dollar is a decades-old canard, that it pays to have historical perspective, and that there is plenty of money to be made outside the US. (If you believe the hype about the Albertan old sands, there will be plenty of petroleum for decades and Alberta will be filthy rich! Who needs Saudi Arabia?)
TTC
posted by thoughtful conservative at 7:23 PM
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