Read Terror on Wall Street, a Financial Metafiction Novel Online
Authors: Kenneth Eade,Gordon L. Eade
APPENDIX FIFTEEN
EQUITY/FIXED INCOME ALLOCATION
Your ability to withstand the ups and downs of the market without getting nervous and making changes to your asset allocation is a big challenge. Selling in the face of a decline is about the worst thing you can do. Here is a table offered by author Larry Swedroe, based on the 1970s bear market, showing the amount of decline for various stock/bond allocations:
Max. Equity – Exposure Max. loss
20%...............5%
30%..............10%
40%..............15%
50%..............20%
60%..............25%
70%..............30%
80%..............35%
90%..............40%
100%.............50%
There are other ways to determine an asset allocation, including several rules of thumb:
• Your age in bonds. So, if you are 40 years old, then use a 60/40 (equity/bond) allocation.
• 110 minus your age = equities (110-40 yrs old=70/30 asset allocation)
• 120 minus your age = equities (120-40 yrs old = 80/20 asset allocation)
BIBLIOGRAPHY
Finding a good book to read about investing is a harder task than trying to make money by speculating in stocks. So here is a selection of very good books to read.
The Loser’s Game
. This is the book that I found and it started me on using index funds. I didn’t buy the book – it was a gift from Charles Ellis when he attended a talk I was giving on our company, which had just floated a secondary offering. I was giving the traditional pep talk a company makes to the broker who will sell the stock in the offering. Charley asked for my card and I received his book shortly later in the mail. Charley is on the staff of the executive branch of our government in Washington, the last I heard.
The Bogleheads’ Guide to Investing
by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
Common Sense on Mutual Funds
by John C.
Bogle
All About Asset Allocation
by Richard A, Ferri
All About Index Funds
by Richard A. Ferri
Protecting Your Wealth in Good Times and Bad
by Richard A. Ferri
The Intelligent Asset Allocator
by William Bernstein
Index Mutual Funds
by W.Scott Simon
Rational Investing in Irrational Times
by Larry
E. Swedroe
Winning the Loser’s Game
by Charles D. Ellis
The Exchange Traded Funds Manual
by Gary I. Gastineau
The Informed Investor
by Frank Armstrong III
A Random Walk Down Wall Street
by Burton G. Malkiel
Winning Investment Strategy
by Larry E. Swedroe
Exchange Traded Funds
by Jim Wiandt & Will McClatchy
The Four Pillars of Investing
by William Bernstein
Rational Investing in Irrational Times
by Larry
E. Swedroe. (I have all of Larry’s books in my library. He has read the book you are reading and has verified the accuracy of its facts. Larry’s books are easy to read and crystal clear. His latest book is a winner.)
The Bogleheads’ Guide to Investing
by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
(Three authors for the price of one.)
Be sure and go to the Boglehead’s Web site for the latest information on investing and any other financial subject .
We all are indebted to Mr. Bogle for founding Vanguard.
I am sure that the 19,000,000 shareholders of Vanguard funds will agree with the following statement: “Thank you, Mr. Bogle, for creating this wonderful company that the shareholders of Vanguard funds own.”
Mr. Bogle likes to be called Jack. He is my age (now 84) but says he is 36 because several years ago he had a new heart put in and the donor was 36 years old. Jack has written several books, and I suspect he has help from someone on the staff of Vanguard.
Common Sense on Mutual Funds
by John C.
Bogle
If you need someone to help with your investments, I highly recommend Rick Ferri. His books are among the best and for those of you who need an advisor, I recommend Rick Ferri. When I pass away and go to the happy hunting ground, my account goes to Rick to manage. His fees are the lowest in the industry at only one half of 1%. Here are some of Rick’s books:
All About Asset Allocation
by Richard A, Ferri
All About Index Funds
by Richard A. Ferri
Protecting Your Wealth in Good Times and Bad
by Richard A. Ferri
All ABOUT Asset Allocation
by Richard Ferri
The EFT Book All You Need to About Exchange Traded Funds
by Richard A. Ferri
Rick’s latest books are:
The Power of Passive Investing:
More Wealth with Less Work
and
The Power of Passive Investing: More Wealth with Less Work
by
Richard A. Ferri
(Hardcover - Dec 7, 2010)
The following author is a genius and a regular warehouse of information. This book is a little advanced for beginners, but you will eventually buy the book. I did.
The Intelligent Asset Allocator
by William Bernstein
Now, the next book by Bernstein is a lesson in the history of investing, going way back - thousands of years. You will learn about risk from simple and direct examples.
Bill’s next book which I recommend is very readable,. interesting, and useful. The title is
The Birth of Plenty: How the Prosperity of the Modern World was Created.
If you have never taken a course in Economic history (as I have), here is your opportunity to have a master of the English language spoon-feed you economics. The book is a joy to read. The book is brilliantly written: a fast-moving journey through the history of investing money throughout the world. I am sending my copy to my Senator to read to influence his vote on the floor of the Senate.
Now, if you (or your company or your employees) have been taken for several million dollars, here is the guy to hire. Simon is a securities lawyer whose practice revolves around getting justice in court on security issues. His book reads like a lawyer's brief and clearly discloses risks and rewards. The book includes a bibliography that he uses in some of the lawsuits used in his practice. My son is a securities lawyer, and knows of his practice.
Index Mutual Funds
by W. Scott Simon
Value Averaging
by Michael E. Edleson
The Informed Investor
by Frank Armstrong III
A Random Walk Down Wall Street
by Burton G. Malkiel
Here are all of Larry Swedroe’s books which I use regularly. All of them are good:
Rational Investing in Irrational Times
The Only Guide to a Winning Investment Strategy You’ll Need: The Way Smart Money Invests Today
Winning Investment Strategy
by Larry E. Swedroe
What Wall Street doesn’t Want You to Know:
Protecting Your Wealth in Good Times and Bad
By Richard A. Ferri
The Four Pillars of Investing
by William Bernstein
The Investor’s Manifesto Preparing For Prosperity, Armageddon, And Everything In Between
by William J. Bernstein
Your Money and Your Brain: How the New Science of Neuroeconomics Can Help you Become Rich
by Jason Zweig
Jason is a financial writer originally with Money Magazine, a periodical that you can trust. Just last year Jason moved to the Wall Street Journal: a career promotion. We hope he takes with him his scholarship, honesty and concern for the small investor and improves the material printed by the Journal.
Jason shows you how your mind is tricked by what you read and what you see on financial TV and he gives you a short course on the new science of neuroeconomics.
The Death of Money (The Coming Collapse of the International Monetary System)
by James Rickards
WEB REFERENCE & RESEARCH SITES
On this website, you will find conversations among investors who follow the strategies I recommend. Go to the box titled 'Discuss' and click on 'Diehards'. There are about 375,000 postings in these conversations.
On this website, you will find a wealth of information from portfolio theory to sophisticated computer simulations you can use to discover (within limits) how long your retirement savings will last.
This is the official website for the Vanguard Group. Here you can find detailed descriptions and up to date data on every Vanguard Index Fund as well as their actively managed Mutual Funds.
http://www.altruistfa.com/readingroomarticles.htm
This website holds hundreds of articles on finance and investments that are of interest to those who wish to fine-tune their portfolios and keep abreast of developments.
www.Lostsprings.com/diehards/chapters
On this web site you will find the location and schedule of a group of investors who follow passive investing techniques using Vanguard low cost index funds. These investors meet periodically at local chapters throughout the country. At these meetings you will meet other investors eager to help you with your investment program, who will supply you with support during those uncomfortable periods when the market crashes for no reason at all (which it will surely do a couple times during your accumulation phase).
CNN Students News:
www.cnnfyi.com
Contains U.S. and world news multimedia tailored to the needs of students.
Conversion Tables:
www.convert-me.com
Convert length, area, speed, temperature, etc., into different units and systems.
eLibrary Research:
www.elibrary
.com
Search any topic using a data base of current newspapers, magazines, books and more.
Encyclopedia Britannica :
www.briticannica.com
Online version of one of the world’s most trusted sources of information on every topic imaginable.
Fact Monster:
www.factmonster.com
Designed for kids of all ages, this site offers an amazing array of facts and figures in addition to homework help, an almanac, a dictionary, and much more.
Gallup Organization:
www.gallop.com
Search thousands of poll results, special reports, societal trends and social audits.
Hoovers Business Research:
www.hoovers.com
Comprehensive index of over 45,000 leading U.S. private and public companies.
Information Please Almanac:
www.infoplease.com
Online almanac offering millions of interesting and useful facts on a wide variety of subjects.
Internet Public Library:
www.ipl.org
An exhausting collection of over 20,000 titles
.
iTools Research:
www.itools.com
Collection of online research tools including dictionaries, translations, quotations and more.
Library of Congress:
www.loc.gov
Easy to use reference catalog for accessing the collections of the Library of Congress
.
National Archives:
www.archives.gov
National Archives online directory of U.S. Federal records
.
Smithsonian Institution:
www.si.edu
User-friendly site from the world’s largest museum complex and research organization
.
U.S. Census Bureau:
www.census.gov
A wealth of basic information about the U.S. .broken down on a national, state and local level.
U.S. Federal Government:
www.fedstats.gov
Statistical information from over 100 federal agencies,
U.S. Department of Labor:
http://bls.gov
Bureau of Labor statistics site containing labor statistics and links to hundreds of state and federal agencies.