Publishing details
HARRIMAN HOUSE LTD
3A Penns Road
Petersfield
Hampshire
GU32 2EW
GREAT BRITAIN
Tel: +44 (0)1730 233870
Fax: +44 (0)1730 233880
email: [email protected]
web site: www.harriman-house.com
First published in Great Britain in 2001
Reprinted 2006
This eBook edition 2011.
Copyright Harriman House Ltd
The right of the contributors to be identified as authors has been asserted by them in accordance with the Copyright, Design and Patents Act 1988.
978-0-85719-113-7
British Library Cataloguing in Publication Data
A CIP catalogue record for this book can be obtained from the British Library.
All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior written consent of the Publisher.
No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher, by the Authors, or by the employers of the Authors.
The ‘rules’ provided by the Authors are not offered as, nor should they be inferred to be, advice or recommendation to readers, since the financial circumstances of readers will vary greatly and investment behaviour which may be appropriate for one reader is unlikely to be appropriate for others.
Authors have contribued their ‘rules’ in an individual capacity and, even where the name of their employer is referred to in the text, the ‘rules’ should not be attributed to the employer or any other named body, nor to the author as an employee or representative of that employer or other body.
Acknowledgements
The people we invited to contribute to this book are, without exception, busy professionals whose expertise is in strong demand. When asked to give up their time for no compensation, they might easily have declined for any number of reasons. They didn’t. Instead, they contributed freely and enthusiastically. We are grateful to them, and hope that they think the effort was worthwhile.
We also thank them for producing such thought-provoking rules. One of our worries when we started was that the book would end up with 150 versions of ‘Cut losses and run profits’! As it turned out, the material was far more interesting and diverse than that. In all cases the personality of the contributor comes through strongly, confirming that investing is more than the dry science it is sometimes assumed to be.
Thank you, too, to everybody at Harriman House who helped on the book, especially to Myles Hunt and Claire Wright, and to the other individuals who covered for us while we buried ourselves in the project - in particular Suzanne Anderson, Ansobe Smal, and Alec Harkness.
Philip Jenks, Stephen Eckett
Introduction
Investors who want to improve their understanding of financial markets do not have to look far for advice. The financial jungle is richly stocked with books on market lore and tactics, each confidently promising a fast track to profits.
The problem for investors is not one of scarcity but of selection. Like Buridan’s Ass, which starved to death because it was unable to choose between two plump bales of hay, it is easy to be overwhelmed by choice.
How do you choose between hundreds of different books on stock picking?
If you only need a grounding in technical analysis, do you have to read a 700-page tome on the subject?
Does it matter if an investing book is more than three years old?
And so on.
This book is an antidote to oversupply. It compacts 150 investing themes into one book, and the latest knowledge on those themes into 10 ‘rules’. In one go, you can learn what the leading experts in each field consider to be the key determinants of success.
As far as we know, this format is unique. Certainly no other book has put together a roster of such high calibre contributors. If our instincts are right, it will appeal strongly to investors. Nevertheless, we should point out that:
1 The book does not aim to be the ultimate word on the subjects it addresses. For that you’ll need to read the contributors’ own books, or visit their web sites – details of which are included in the text.
2 It is a reference book to be dipped into, not a narrative to be read from cover to cover. You don’t have to start at ‘A’.
3 It does not try to be all things to all people. If you find 30% of the rules useful, you should be pleased. It probably means you’ve sharpened your technique. If you find 100% of them useful, you should worry. It probably means your technique is muddled.
4 It aims to illustrate the diversity and conflicting nature of investing, not to proselytize a faith. Many of the rules conflict with each other. That’s the point.
5 It will not make you a millionaire overnight! It will however provide you with the foundations for accumulating wealth and protecting it.
6 It is a work in progress, not a finished product. New rules are added regularly on the book’s web site at www.global-investor.com/rules.
The main aim of the book is to enable you to identify the rules which suit you, and which will improve your investment performance. For each reader, these will be different. You should also gain an understanding of the ‘big questions’ of investing:
Do stocks go up in the long term?
Should you diversify your stock portfolio?
How should you measure risk?
Is investing long-term really better than trading short-term?
Should you invest internationally?
Many of the rules in this book touch on these questions, and the answers are not always obvious. If you think you already know them, read what our contributors have to say - you may be surprised!
A practical point: The book is organised alphabetically by contributor name, but there is also a detailed subject index at the back that may provide quicker access to specific information for some readers.
We hope you enjoy reading The Book of Investing Rules as much as we enjoyed compiling it.
Philip Jenks, Stephen Eckett
Robert Z. Aliber
Robert Z. Aliber is Professor of International Economics and Finance at the Graduate School of Business, University of Chicago.
His research activities include: the international financial system; exchange rate issues; international money, capital markets and capital flows; the multinational firm; international banking; public policy issues.
Books
The New International Money Game, Palgrave, 2001