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9780814406762

The Informed Investor

by
  • ISBN13:

    9780814406762

  • ISBN10:

    0814406769

  • Format: Hardcover
  • Copyright: 2002-03-01
  • Publisher: Amacom Books
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Summary

Guides readers through the basics of investing with a reassuring tone and a relatively conservative long-term strategy. Armstrong advises average investors to take responsibility for educating themselves, even when they use the help of stockbrokers.

Table of Contents

Acknowledgements xii
Introduction
1(6)
Dumping the Performance Fairy
2(2)
Drowning in Data
4(3)
Gathering Intelligence
7(10)
Rates of Return
8(1)
Definitions
9(2)
A Look at the Long- Term Data
11(3)
The Range of Reasonableness
14(1)
Savings vs. Investment
15(2)
Assessing the Risk
17(24)
A World without Risk
18(1)
Risk Offers the Chance for Higher Returns
19(1)
The Investor's Dilemma
19(1)
Reexamining Risk
20(1)
Investing Is Not Gambling
21(3)
Decision Making in an Atmosphere of Uncertainty
24(1)
The Professional's View
24(3)
Sources of Risk
27(2)
Risk Part of the Investment Process
29(1)
Factors That Multiply Risk
29(1)
An Investor's View of Risk
30(1)
Visualizing Risk
30(3)
Market Risk Is Short- Term Risk
33(1)
Risk Falls Over Time
33(2)
How Often Can You Expect Losses?
35(1)
How Bad/Good Can It Get?
36(1)
How Often Will You Beat Inflation?
37(1)
The Risk-Reward Line
37(2)
Risky Business
39(2)
Taming the Best
41(12)
Business Risk
42(2)
Market Risk
44(1)
Interest Rate Risk
45(3)
Currency Risk
48(2)
Political Risk
50(1)
A Bite out of the Old Free Lunch
51(2)
A Nibble From the Free Lunch
53(8)
The Beginning of Modern Portfolio Theory
54(1)
What Is Modern Portfolio Theory?
54(4)
The Efficient Frontier
58(3)
Travels on the Efficient Frontier
61(8)
Improving an All-Bond Portfolio
62(2)
International Investing and Modern Portfolio Theory
64(1)
Modern Portfolio Theory as a Risk Management Tool
65(4)
The Asset Allocation Decision
69(6)
A Groundbreaking Study
71(2)
Wall Street Calls Foul
73(1)
Asset Allocation: The Lessons for Investors
74(1)
The Efficient Market Debate
75(10)
The Information Age
76(1)
Market Fundamentals
76(1)
In a Perfect World
77(1)
Prices in an Efficient Market
77(1)
Pricing Models
77(1)
Degrees of Efficiency
78(2)
Types of Research
80(1)
Conflicts of Interest
81(1)
An Alternative Point of View
82(3)
Can Managers Add Value?
85(14)
A Quick Test
86(1)
What About the Winners?
87(1)
If It Was Good Yesterday, Will It Be Great Tomorrow?
88(1)
Where Are They Now?
89(5)
Some Recent Dissenting Voices
94(1)
Toward Better Benchmarks
95(1)
Taking Big Bets against the Benchmark
96(1)
Can Managers Add Value? Don't Bet on It!
97(1)
More on Style Investing
98(1)
Doing It With Style
99(8)
A Modest Proposal
100(1)
Dividing the Market by Size and BTM Ratio
101(1)
Each New Study Creates New Problems
102(1)
Economic Justification for the Three-Factor Model
103(1)
A Bag Full of Sick Puppies
104(1)
Fun with Numbers
105(2)
More Fun with Numbers
107(12)
First Things First
108(1)
Put Time on Your Side
108(2)
Lesson One: Start Early
110(1)
Lesson Two: Plan for a Reasonable Rate of Return
110(1)
Lesson Three: Control Costs
111(1)
Lesson Four: Control Taxes
111(2)
Building a Tax Model
113(2)
Beating the Tax Man
115(1)
Dollar Cost Averaging
116(1)
Forcing Yourself to Save
117(2)
May Day and Better Mousetraps
119(8)
How Deregulation Opened Up Wall Street
119(1)
Viva La Revolution!
120(1)
The Dutch Make a Purchase
120(1)
Enter the Pigs
121(1)
May Day
121(3)
The Price of Change
124(1)
Monopoly and Regulated Industries
124(3)
It's a Jungle out Three!
127(10)
Horror Stories
128(2)
The Role of Commissions
130(4)
The Flawed System of Large Brokerages
134(2)
Alternatives
136(1)
Setting Your Goals
137(8)
Setting Monetary Goals
138(1)
How Software Can Aid the Planning Process
138(3)
Time Horizon
141(1)
Dealing With Risk, the Four- Letter Word
142(3)
Building Your Portfolio
145(12)
In the Real World
145(1)
A Quick Review of Some Basic Principles
146(1)
Methodology
147(7)
Conclusions
154(3)
Portfolio Tactics
157(10)
Old-School Investing
157(1)
Turning Your Goals Into a Strategy
158(1)
Let's Get Risky
159(1)
Balancing Risk With Return
160(2)
Expecting Periodic Declines
162(1)
No More Second- Guessing
162(1)
Adjusting the Portfolio for Individual Preferences
163(1)
The Proof Is in the Performance
164(1)
Happiness Through Asset Allocation
165(1)
Reality Rears Its Nasty Head
165(1)
A Strategy for Everyone
166(1)
Education
167(8)
Education in the Good Old Days
167(2)
Annuities for College Funding? Not!
169(1)
Help From the Government?
169(2)
Other Options for Education
171(4)
A Comprehensive Approach to Investing During Retirement
175(14)
A Different Game Plan
176(1)
Sustainable Withdrawal Rates
177(4)
Constructing the Investment Policy
181(3)
Transition Planning
184(1)
Midcourse Corrections and Inflation Adjustments
185(1)
Alternative Withdrawal Plans
185(1)
Additional Considerations
186(1)
Note
187(2)
The Joys of Fund Selection
189(12)
The Mutual Fund Industry
190(1)
Fund Basics
190(1)
Cost: The Natural Enemy of the Investor
190(4)
Targeting Your Market Segment
194(1)
Style Drift: The Natural Enemy of Asset Allocation
195(1)
Traditional Labels and Fund Objectives That Obscure Rather Than Enlighten
196(2)
Active vs. Passive
198(1)
An Action Checklist
198(1)
Limited Budget
199(1)
Just do It!
199(2)
The Good, the Bad, and the Ugly
201(14)
Advice from Mom
202(1)
A short History Lesson
202(1)
NASD: The Name Says It All
203(1)
Cost Creep
203(1)
The Mutual Funds Marketplaces
204(2)
A Strategy to Have Your Cake and Eat It Too
206(1)
The Role of Independent Directors
206(1)
Deals Cut in the Dark
207(1)
Soft Dollars
208(1)
Paying for Order Flow
209(1)
Directed Trades and Fee Sharing
210(1)
Preference Bidding
211(1)
Economic and Moral Implications
211(1)
Regulatory Reform
212(1)
Vote With Your Feet
212(1)
Sunlight: The Best Disinfectant
213(1)
Plating the Hand We Are Dealt
213(2)
Fund Alternatives
215(10)
Closed-End Funds
215(2)
Unit Investment Trusts
217(1)
Real Estate Investment Trusts
218(1)
Wrap Fee Accounts
219(2)
Variable Annuities
221(1)
Exchange Traded Funds
221(1)
Index Fund Features
222(1)
ETF Features
222(1)
The Bottom Line
222(1)
Conclusion
223(2)
Tending Your Garden
225(8)
Finding the Right Home for Your Assets
225(1)
Keeping It Simple
226(1)
Get a Grip
227(1)
Take a Break
227(2)
Build Your Own Benchmark
229(1)
Avoid Endless Tinkering
229(1)
The Big Picture
230(1)
Less Is More
231(2)
Investor, Heal Thyself!
233(12)
What's Going On Here?
234(1)
Investors Do the Strangest Things
235(2)
What Have Investors Learned?
237(1)
Know Thyself
237(1)
Know Thy Market
238(1)
The Tuna Fish Factor
238(1)
Zen and the Market Experience
239(1)
Relative Pain
240(1)
The Cocktail Party Factor
240(1)
The Analytic Investor
240(1)
More Advice From Mom
241(1)
Your Investments Are Your Future
242(1)
Run a Fire Drill
242(3)
The Cultivation, Care, and Feeding of Investment Advisors
245(16)
Investors as Frogs
246(1)
A Riddle Wrapped up in an Enigma
247(1)
The Fee-Only Alternative Business as Usual on Wall Street
247(1)
Recent Industry Trends
248(2)
The Revolution Bears Fruit
250(1)
Finding an Advisor
250(1)
A Commonsense Checklist
251(8)
The Bottom Line
259(2)
Pulling It All Together: A Summary
261(10)
Good News, Bad News
262(1)
There Is Good News
262(1)
Action on Several Fronts
263(1)
Return on Investment
263(1)
Risk
264(1)
Correlation
264(1)
Time Horizon
265(1)
Efficient Markets
265(2)
Harness the Power of Asset Class Investing
267(1)
Deregulation: The Beginning of Revolution
267(1)
Wall Street's Rear-Guard Action
268(1)
A New Breed of Financial Advisor
269(1)
Just Do It!
270(1)
Marx Had It Wrong
270(1)
Appendix 1: The Joneses' Retirement Income Portfolio: Year-by-Year Results Compared to the S&P 500 and One-months CDs 271(2)
Appendix 2: The Joneses' Income and Portfolio Values: Income From CDs: 1975-2000 273(4)
Appendix 3: Adjusting the Portfolio for Individual Preferences: Annual Returns and Summary Data: 1975-2000 277(2)
Appendix 4: Sample Investment Policy Statement 279(12)
Recommended Book List 291(2)
Index 293

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