Books 01 (May 08 - Oct 08)

[kennynah]

MW : thanks for your inputs.

Fair enough, that FA comprises Art and Science. I wish to learn from this forum, perhaps you, on the scientific part of FA. If you have the time, i will be grateful, if perhaps, we can use Citibank, as the exercise candidate....seeing that some of us were having some discussion on this company and were wondering at what price would C be considered a "value" buy....using FA as the "valuation" tool, will help me better acquaint with this approach...

But i understand this will require time and effort, so please dont feel obliged to give consent so readily.

thanks.

[la papillion]

The Black Swan

I've finished Nassim Nicolas Taleb's The Black Swan. This is the 2nd part of my long book review. There is a 1st part floating somewhere in the forum, but I think it's more appropriate to be put here. For those who wish to read the first part, check this out:

http://bullythebear.blogspot.com/2008/0 ... taleb.html

--------------------------------------------------------------
The review is split into two parts because the books is exceedingly thick and I had to write down my thoughts halfway before it gets diluted and lost in transition.

This had to be the most the most relevant book I’ve read in my life. It’s like I’ve been born blind, then after a corrective surgery, I see the world as it is now but had been elusive to me before. I can never look at the world again because the book had permanently changed me. Don’t go out and grab the book because I said so…my experiences lead me to different perspectives when I read the book, which will be vastly different from another reader.

The second half of the books talks about more technical stuff. I confess I do not really understand the whole of it in the first reading. Perhaps, like Intelligent investor, the true gist of it will only be realized after subsequent readings. The author highlights the fallacy of treating everyday occurrences to fit the bell-curve (the Standard normal or Gaussian distribution). This fallacy is so rampant that it permeates most of the ‘scientific’ methods regarding a range of socio-economic disciplines like economics, sociology and finance. I’ve never believed in the Modern Portfolio Theory (MPT) and efficient market hypothesis (EMT), so this didn’t struck me hard enough to feel defensive about his ideas.

I guess the author wants us to follow a bottom-up approach rather than a top-down approach in everything. A bottom-up approach means using real, empirical data to look at the world. A top-down approach means learning ‘scientific’ theories and principles, then fitting data that follows them and ignoring or downplaying data that do not.

A simple example would be a stereotypical Western trained doctor who abhor using traditional chinese methods like acupuncture or herbs, judging it unscientific (though it’s very empirically based) because of top-down approach.

Am I also blinded by my own theoretical framework?

The author suggests a few ways to deal with the uncertain world:

1. Make a distinction between positive black swans and negative black swans. Black swans events can benefit or cripple. Once identified, expose yourself maximally from positive black swans, and limit exposure to negative ones

2. Invest in preparedness, not in prediction

3. Seize any opportunity, even those that looks like opportunity. This is the same as exposing one to positive black swans. Work hard, not in grunt work, but in maximizing one’s exposure to opportunities.

4. When caught between unknown probabilities of choices presented to you, focus on the (known) consequences of each choice and not on the probabilities. It’s also known as Pascal’s Wager.

I started this book being blind, and I finished this book knowing that I will never view the world the same again.

[millionairemind]

Just finished reading the book The Dip by Seth Godin. The book is available from the library.

It talks about the effort it takes to be the best and also discusses and helps you assess to see if your situation is hopeless and you should get out as quickly as possible - A Cul-De-Sac job or marriage or career etc.. (DEAD END)

Here is something I got from the internet if you are interested.... It is a simple book to read and digest. Just started on Simple.ology by Mark Joyner.

Every new project (or job, or hobby, or company) starts out exciting and fun. Then it gets harder and less fun, until it hits a low point-really hard, and not much fun at all.

And then you find yourself asking if the goal is even worth the hassle. Maybe you're in a Dip-a temporary setback that will get better if you keep pushing. But maybe it's really a Cul-de-Sac, which will never get better, no matter how hard you try.

What really sets superstars apart from everyone else is the ability to escape dead ends quickly, while staying focused and motivated when it really counts.

Winners quit fast, quit often, and quit without guilt-until they commit to beating the right Dip for the right reasons. In fact, winners seek out the Dip. They realize that the bigger the barrier, the bigger the reward for getting past it. If you can become number one in your niche, you'll get more than your fair share of profits, glory, and long-term security.

Losers, on the other hand, fall into two basic traps. Either they fail to stick out the Dip-they get to the moment of truth and then give up-or they never even find the right Dip to conquer.

[winston]

Dear All,

Many years ago, I read the following book:-
"Yes" or "No": The Guide to Better Decisions by Spencer Johnson

It teaches one how to make decisions with just 6 simple steps:-

1) What are your objectives ? What do you really want ? List it down
2) Think and list out your options
3) For every option, think through it thoroughly. What are the consequences if you choose that option?

Thereafter, sit on things for a while. Let your subconscious digest things.

After a while, out of your options, choose a tentative decision. Then check on your tentative decision using the following:-

4) Do you trust yourself ? Do you have all the facts ?
5) Do you trust your intuition ? Does the decision feel right ?
6) Is your decision for something better ? Does your decision meet all of your objectives in #1 ?

If your tentative decision does not meet steps 4 to 6, then go to your next option or go back to step#1 to think about things. Do not proceed with a decision until 4 to 6 has been satisfied.

I would recommend anyone who is starting out in life to read this book. I have used it many times before I change careers, move to a new country etc.

Take care all,
Winston

[iam802]

Winston's Note: The Richest Man in Babylon is a very good book and I would recommend it to any novice invesor

I managed to get hold of the book, 'The Richest Man in Babylon'.

It is very easy to read. Speed reading would easily get you through within a day.

Instead, I choose to take it slow and reflect on the stories told.

The book focus on simple money management habits. And I think, everyone can benefit from it.

Techniques discuss are hardly new. The book is old...and the wisdom can withstand the forces of time.

The teachings can be find in many other books.

I like it becaue the teachings has withstand time, and is easy to read. Even the habits can be acquired easily.

Sometimes, we get lost with complex approach to getting rich.

I think the teachings here provide the right fundamentals or guidelines without making it sounds complex.

[millionairemind]

Just finished up an easy to read book called The Laws of Lifetime Growth by Dan Sullivan. It is only about 100pages thick and you can probably finish it in 2hrs. ss

A pretty easy read where each law has a story attached to it. Here is a summary of the 10 laws.

Trying to finish up Simple-Ology (interesting) and start on The Economic Naturalist - In Search of explanations for every day enigmas

LAW ONE:
Always make your future bigger than your past.

A bigger future is essential for lifetime growth. The past is useful because it is rich with experiences that are worth thinking about in new ways – and all of these valuable experiences can become raw material for creating an even bigger future. Approach your past with this attitude, and you will have an insatiable desire for even better, more enjoyable experiences. Use your past to continually create a bigger future, and you will separate yourself from situations, relationships, and activities that can trap you in the past.

LAW TWO:
Always make your learning greater than your experience.

Continual learning is essential for lifetime growth. You can have a great deal of experience and be no smarter for all of the things you’ve done, seen, and heard. Experience alone is no guarantee of lifetime growth. But if you regularly transform your experiences into new lessons, you will make each day of your life a source of growth. The smartest people are those who can transform even the smallest events or situations into breakthroughs in thinking and action. Look at all of life as a school, and every experience as a lesson, and your learning will always be greater than your experience.

LAW THREE:
Always make your contribution bigger than your reward.

Increased contribution to others is essential for lifetime growth. As you become more successful, numerous rewards will come your way: increased income, praise, recognition, reputation, status, capabilities, resources, and opportunities. These are all desirable things, but they can be growth stoppers. They may tempt you to become fixated on just the rewards, rather than focus on making still greater contributions. The one way to guarantee that rewards will continually increase is to not think too much about them. Instead, continue making an even more significant contribution – by helping others to eliminate their dangers, capture their opportunities, and maximize their strengths. Greater rewards will automatically result from this, and your future will continue to be filled with increasingly rewarding ways to contribute. Always focus on creating new kinds of value for larger numbers of people, and you will ensure that your contribution is always greater than your reward.

LAW FOUR:
Always make your performance greater than your applause.

Increased performance is essential for lifetime growth. If you become more skillful and useful, you will receive greater applause from an expanding audience. This can be intoxicating, and the temptation will be to start organizing your life around other people’s recognition and praise to keep repeating what got you the applause in the first place – rather than moving on to something new, better, and different. When this happens, the danger is that the applause will become more important to you than your improved performance. The greatest performers in all fields are those who always strive to get better. No matter how much acclaim they receive, they keep working to improve their performance. Continually work to surpass everything you’ve done so far, and your performance will always be greater than your applause.

LAW FIVE:
Always make your gratitude greater than your success.

Increased gratitude is essential for lifetime growth. Only a small percentage of people are continually successful over the long run. These outstanding few recognize that every success comes through the assistance of many other people – and they are continually grateful for this support. Conversely, many people whose success stops at some point are in that position because they have cut themselves off from everyone who has helped them. They view themselves as the sole source of their achievements. As they become more self-centered and isolated, they lose their creativity and ability to succeed. Continually acknowledge others’ contributions, and you will automatically create room in your mind and in the world for much greater success. You will be motivated to achieve even more for those who have helped you. Focus on appreciating and thanking others, and the conditions will always grow to support your increasing success.

LAW SIX:
Always make your enjoyment greater than your effort.

Enjoyment is essential for lifetime growth. Some people believe that success has to be hard earned to be real. They are highly suspicious of any gains that come as a result of enjoyment. If they earn rewards this way inadvertently, they feel guilty. If others appear to be profiting from enjoyment, they question those people's morality, certain that such gains can only be ill-gotten. Meanwhile, they continue to toil away at things that give them no pleasure, suppressing any hints of enjoyment that may creep through, lest these be interpreted as signs that they’re not “serious” or “professional” and deserving of success. In the process, they cut themselves off from a major source of energy, creativity, and motivation. Finding ways to get more and more enjoyment from your activities is one way to ensure continued growth. Creativity in all fields of activity is intimately linked to playfulness – the constant desire to do new things just for the fun of it. Approach everything you do with this sense of play, and you will ensure that, even though you still get as good or better results, your enjoyment is always greater than your effort.

LAW SEVEN:
Always make your cooperation greater than your status.

Cooperation is essential for lifetime growth. When people come together around a common purpose, they can achieve results that no individual could accomplish alone. Working with others and creating opportunities for increased cooperation makes greater things possible in our lives and in the world. Yet some people mistakenly assume that if they work with others or treat them as equally valuable contributors, people will somehow think less of them, or it will diminish or obscure the value of their own contribution. These people’s attachment to their status keeps them from cooperating with others and puts a ceiling on their growth. Always make your cooperation greater than your status, and you will find unlimited possibilities and synergies in combining your talents and opportunities with those of others.

LAW EIGHT:
Always make your confidence greater than your comfort.

Increased confidence is crucial for lifetime growth. Many successful people start off life as dreamers and risk takers, but the moment they become successful, they begin to seek greater security and comfort over everything else. This attitude puts them to sleep motivationally, and they lose the confidence that made them so successful. Security and comfort are desirable by-products of goal achievement, but when they become the goal itself, they quickly stop lifetime growth. Treat any increase of comfort in your life as only a temporary stage for establishing bigger goals. Continually strive for higher goals and achievement, and your confidence will always be greater than your comfort.

LAW NINE:
Always make your purpose greater than your money.

Greater purpose is essential for lifetime growth. Many people start off their careers thinking that money is the goal. Money can be a useful measure of success or progress in certain circumstances, and it’s a resource we can use to realize greater possibilities, but at some point money without purpose loses its meaning. Money as an end becomes a growth stopper. Having a purpose that is greater than yourself will give you a constant impetus to strive. Purpose gives life meaning and helps us to direct and focus our talents and efforts. It also attracts the talents and energies of others whose purposes align with our own. Think of money only as a means of achieving a greater purpose, and you’ll attract all the resources and rewards that make up a rich life, not just money.

LAW TEN:
Always make your questions bigger than your answers.

Questions are essential for lifetime growth. As children, when we’re all growing at a rapid rate, we ask lots of questions. As we get older, we gradually begin to think we have a lot of the answers. For some people, their entire sense of security and self-image depends on having all the answers – on never being wrong. As a result, these people try to understand everything in terms of what they know. But all growth lies in the territory of the unknown. What we already know is in the past. What we have yet to discover is the future. Always make your questions bigger than your answers, and you’ll keep drawing yourself into a bigger future with new possibilities.

[LenaHuat]

Juz a trivia on Law 1:

LAW ONE:
Always make your future bigger than your past.

In my study room, I have a row of fotos (10inches by 8 inches) of myself, each taken when I was around 1, 10, 20, 30, 40 and now 50 (going to the foto studio b4 year-end). Each day when I work at my desk, I look at them to see if my present is bigger than my past. To see if I have grown horns. To see if I've got the face I deserve at 50.

Maybe a little vanity here ...........but it works.

[millionairemind]

Lena,

I guess you must be the kind of lady who does not age.... Looks 30 even when going on 50

I must start trying your method A couple of white hairs coming out of nowhere liao

Cheers,
mm

[helios]

>>> thank you, dear Jest for lend'g me your books (NB: let's wait for Jest to come on board this Forum).
>>> appreciate Winston for his recommendatn on Sunday.

Stock Market Wizards: Interviews with America's Top Stock Traders Jack D. Schwager

here's e start'g abstract:

In June 1999, at e peak of his career, after 8 years establishing one of e most extraordinary stock trading records of e 1990's, and w $150Mil under management, Stuart Walton returned all money to his investors & walked aways from trading completely. The emotional repercussions of a marital breakup were interfering w his ability to focus on trading, & he didn't feel it was right to manage money until he could once again devote 100% energy & enthusiasm to e task ...

[iam802]

Since there is a mention of Jack Schwager...

let me just addon this little interview article of Linda Rasche

https://lbrgroup.com/images///raschke0204.pdf

She was also highligted as the 'New Market Wizard'

I'm still reading it...