Another week has gone by, and around here lately, that means it’s time for another book that I’ve been asked to review. I have to say, of the perks that come with being a semi-famous personal finance blogger, one of my favorite ones is getting the opportunity to read and write about so many different books. (And if there are any other authors, publishers, or others who’d like me to read and review their works, feel free to drop me a line; I’m always happy to read through another personal finance book.) This week, I’m going to review How to Make a Fortune (From the Biggest Market Opportunities in U.S. History), by Ron Insana. Are there opportunities hidden amongst the pain of the the recent market downturn? Let’s read further and find out!
How to Make a Fortune opens with an Introduction pointing out that now, when the markets seem horrible and all the news is bad, is the best time to acquire investments and other assets. Insana points out that when other people are panicking and selling assets, it’s one of the best times to build up your own portfolio (particularly with all the efforts the government is putting into keeping the economy afloat). Chapter one is a short one, providing a brief history of the financial meltdown, just in case you’ve managed to avoid all other financial media for the past few years. Chapter two takes a longer view, looking at several other downturns through history, noting how they usually aren’t the end of the world (and are usually good times to get into the market).
Chapter three covers some of the individuals who are taking advantage of the current market downturn in order to shore up their investments, from Warren Buffett to Bill Gross (of Pimco fame). It also provides numerous resources to would-be investors to help them get more information about the investments they are considering (and some of the potential threats throughout the world that could derail a potential recovery. Chapter four paints the picture for stocks, sharing the case for stocks to begin rising again. It shares some of the stocks should do especially well in the recovery, particularly those that were exceptionally hard hit during the downturn, like bank stocks, home builders, and REITs.
Chapter five covers more on the housing market, noting that with the recent downturn, homes in many places are at the same prices they were in the sixties. It shares many resources, particularly government websites and resources designed to help the individual homeowner. Chapter six covers debt, that is, bonds, cautioning investors off of Treasuries at their current yields but suggesting TIPS, muni bonds, and corporate bonds, both investment grade and junk bonds.
Chapter seven is a short one, noting that with all the government programs designed to shore up the economy, some opportunities have opened for investors, particularly with the TALF and PIPP programs. The book ends with an Afterword reminding us that busts happen, recoveries come, and if you invest when things look their worst, you can end up making an out-sized profit when things get back to normal.
How to Make a Fortune is very optimistic (at a time when many financial writers seem to be rather pessimistic). It does provide some interesting perspectives on the possibilities for investors and useful resources to find out more. Many of the opportunities presented are still available for investors.
The book does seem a bit dated; with the stock market setting post-downturn records on a daily basis, it seems like we must be getting near fair value for most stocks (especially financial firms, some of which have been reporting record profits). It’s not really a book for when you just get started, given the focus on restoring confidence to investors who have lost their nerve. There’s also a larger emphasis on individual stock investing than is probably appropriate for most investors.
How to Make a Fortune is an interesting read. If you’ve been investing regularly, though, as well as reading blogs like this, you probably don’t need the encouragement to keep at it. If you need some help getting a friend or relative to step back into the investing arena, though, it would make a decent encouragement gift.
Once again, I have the privilege of offering a copy of this book to one of my readers. The publisher has been generous enough to allow me to give away a copy of How to Make a Fortune to one lucky reader of The Amateur Financier. All you need to do is leave a comment answering one simple question: Do you think there are still opportunities to make outsize profits in our recovering market? If so, where do you think they are? (Alright, that’s two questions; so sue me.)
Are stocks still undervalued? Are real estate markets still undervalued? Do bonds have lots of room to grow? Let me know what you think, by February 13th, and you could win a copy of How to Make a Fortune. Thanks for reading, and good luck!