One of this book’s fresh approaches is its insistence on telling both sides of the story. Even in instances where I hold strong opinions, I include the opposite viewpoint. It’s a format well suited for a debate but not for an investment book. Investors want clear direction, not confusion....

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The Worst You Can Do (Pages 141 - 142)

The worst thing that can happen to a long-term investor is to be instantly and totally informed about his stocks. Somewhere along the way the information onslaught causes emotional decisions, one or more of which are likely to be wrong. Your adviser, your broker, and your favorite TV reporter all mean well by wanting to keep you informed....

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The Burying of Ego (Page 203)

In my 40 years in Wall Street I cannot remember recommending a stock; I’m too aware of the other side of the story and that I can be wrong. I’ve been humbled by the accumulation of countless experiences where the market did exactly the opposite of what I and everybody else thought was a gimme. I am more than willing to bury my ego and resist the pleasure of pontificating in exchange for not having to feel guilty for giving bad advice. Over the years it has become easy for me to do this as I grow increasingly aware of the market’s randomness and my own fallibility.

Giving Advice to Relatives — Tread Lightly (Pages 205 - 206)

There are few things that give us more pleasure than helping those who mean the most to us. There may be times when you are so convinced that the stock or fund you are buying or own is a surefire winner, that you have an uncontrollable urge to let your loved ones in on it. It’s an act of genuine caring that will make them money and, in the process, make you look good. Everyone benefits.

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Finding the Right Broker (Pages 216 - 217)

Soliciting referrals from savvy investor friends (who may or may not be totally objective) is a logical place to start. Or you can call the broker’s office and ask the operator or any sales assistant for the name of the broker who’s been in the business the longest (minimum requirement for me would be 10 years; 20 years would be better). Then I'd ask that broker what’s a good time to call back so I can ask some questions preparatory to opening a new account....

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Studying Tobias or Inventory Turnover—It’s a No-Brainer
(Pages 431 - 432)

If my premise is correct that most of us are unable to understand and analyze financial data, much less predict how the market will react to it, then I suggest a different homework assignment. Read the great investment books. The choice between devoting the three hours or so it takes to read Andrew Tobias’s The Only Investment Guide You’ll Ever Need (Harcourt, Inc., rev. 2005) or using the same time to study stock-specific reports is a no-brainer....

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The Disconnect Between Good News and a Bad Market (Page 451)

When the market sells off sharply, it is frustrating to hear analysts/brokers list all the bullish fundamentals, including a healthy economy, and conclude the market is overreacting. While stocks are plummeting, you’re told why they shouldn’t be. It is a glaring example of the disconnect between the rational thinking of the analyst, the irrational behavior of the market, and the emotional response of the investor. With most steep declines, the market is reacting to excessive evaluation and an uninterrupted rise. The bloodbath will stop when the market decides it has corrected the excesses sufficiently. The news cited as the trigger is usually irrelevant. There is always news to blame—as, for example, the big drop in the Chinese stock market that proceeded the 416-point drop in the Dow on February 27, 2007. If not China, it would have been something else. Why the market chose that day to sell off, no one knows. Attempts by reporters to logically explain the sudden slide reflect a lack of understanding of what they’re dealing with.

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