Reject Status  -  Embrace Wealth

Adam Smith is largely credited as the father of modern Economics. Smith’s work, published in 1776, provides the novice economist with a strong grounding in the basic precepts of political economy. Most compelling for the newcomer to personal financial matters and anyone who might employ the tenets of capitalism on a mini-scale, Books I and II should be studied with particular attention. Smith’s description of money, purchasing-power, the problem of over-spending, and the question of how a person “grows capital” is addressed within a framework that greatly appealed to the U.S. founding fathers.

 

 

This book is a must read for anyone interested in knowing how Warren Buffett took $100 of his own money and $105,000 of his partners’ money to build a business empire that has grow to a level well above one hundred billion dollars. Buffett looks at the same numbers and evaluates the same companies as the typical Wall Street Money Manager or Main Street stock-broker; however, the riveting and indispensable lesson that you can take from this book is how Buffett treats investments. He learned pivotal lessons from Professor Benjamin Graham (see Security Analysis in the advanced section) that ultimately lead Mr Buffett to treat publicly-traded companies (stocks) the very same as he would any privately held company… simply as a business. This insight, seemingly insignificant to Wall Street, gave Warren Buffett the keys to the American financial kingdom. He was overwhelmingly declared the Greatest Investor of the 20th Century in 1999.

This book is a very quick and easy read. Value investing is an investment philosophy most closely associated with Benjamin Graham and his greatest pupil, Warren Buffett. However, Graham actually spawned an entire class of successful value investors. Among them, Christopher Browne explores such aspects of value as buying $1 worth of stock for 66 cents (a Graham theme), but in a more everyday literary style. He leads the reader through the very basic formulas of what good companies’ balance sheets and income statements look like and then gives the reader examples of what is a reasonable price. He also examines companies that may be purchased in the international arena using the same Value Investing principles as for domestic purchases.

 

If you think that stock markets don’t run in cycles, then you should certainly read this captivating, but comparatively short book. Galbraith, a renowned economist, summed up the central theme of his book with the statement on page 108, “The singular feature of the great crash of 1929 was that the worst continued to worsen.” If for no other reason, any person who plans to purchase stocks or mutual funds should read this book to learn how manias and panics affect stock markets. Armed with such knowledge, you might take a different course of action when, inevitably, one or the other affects the market in which you find yourself.

Mr Klein introduces the reader to many of the leading personalities who participated in or were witness to the tremendous growth in stock values in the late 1920s. He then makes a compelling read by recounting in a gripping manner how the U.S. dealt with the Great Crash. For the budding purchaser of stock, this book brings home a sobering reality: many people were swept off their feet with burgeoning optimism in the late 1920s. And if you think it cannot happen to this generation, the reader need only make a serious comparative study of Mr Klein's story and stock prices of 1999 to see that the years may change, but that people are foiled by the same inclinations.

Lowenstein's biography of America's leading capitalist is as captivating as it is educational. The reader is treated to learning how Warren Buffett came to acquire the exceptional skills that he has demonstrated for more than 50 years. Even better, readers get a fascinating glimpse into the mechanics of Buffett's thinking, from his "toll bridge" analogy (companies that have a virtual monopoly because their brand is that strong among consumers) to his views on finance generally and what is being taught in university finance classes, specifically. Possibly one of the best ways to see Buffett is through the eyes of so many friends, family, and acquaintances who Lowenstein interviewed for the book. This is a must read if you have any interest in Warren Buffett.

Fisher was a contemporary of Benjamin Graham; however, Fisher took a notably different approach to stocks than Graham. Whereas Graham sought companies at fire-sale discount prices, Fisher looked to companies that had both outstanding management (which was reflected in the stock price) and outstanding growth prospects. Companies like IBM in the 1950s reflected this archetype. What many readers may not know is that Warren Buffett has exquisitely blended the basic tenets of Graham's philosophy with the forward-leaning outlook that Fisher presents. The combination has made Buffett the richest person on earth.

If you rent out residential real estate, or plan to in the near future, this book is critical to understanding all the deductions that are available to landlords. Mr. Fishman not only explains what deductions are available, but also the nuances of how the IRS determines what deductions are allowable—and to what extent. Probably the greatest contribution to understanding your individual taxes as a landlord is Mr. Fishman's explanation of the Passive Activity Loss Limitations rules.