The Wall Street Journal Complete Money & Investing Guidebook

By Dave Kansas

Published by Three Rivers Press (December 2005); ISBN 0307236994; 224 pages; $14.95 (softcover)

Reviewed by Robert H. Yunich

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SEPTEMBER 2006 - Participating in employer-sponsored retirement plans such as 401(k)s has turned more Americans than ever into investors. Many have limited experience and are overwhelmed by the daunting task of conserving and growing their capital. This guidebook focuses on “providing the keys to unlocking the mysteries of money and investing” rather than following the approach of other investment books, which often concentrate on describing the underlying theory that justifies the latest strategy and how to implement it.

The first two chapters address stocks and the stock market, touching upon everything from the history of the New York Stock Exchange to initial public offerings to the rudiments of evaluating stocks. The coverage of investing strategies considers only “fundamental” investing (a value-versus-growth discipline) and technical or chart-based investing, without mentioning the basis for evaluating any strategy, namely, modern portfolio theory.

The chapter on bonds describes the different types of financial instruments available. A brief narrative on implementing a laddering strategy is predicated on duration (a measure of the price sensitivity of changes in interest rates); however, the book doesn’t define the term and doesn’t discuss the concept of the yield curve.

The chapter titled “Wall Street” briefly describes the inner workings of Wall Street, such as the types of securities firms, securities research practices and analysts’ ratings, investment banking, and securities regulation.

The long chapter on “Economics and Money” touches upon business cycles, inflation, fiscal policy, and the Federal Reserve, then turns to U.S. currency, bank accounts, and trading money.

The chapter on mutual funds enumerates the different types of funds that comprise this investment universe, then briefly explains how to invest in funds generally and how to evaluate specific funds. Although the author emphasizes the importance of diversification, his recommended “smart fund strategy” is “mixing bond funds and stock funds as well as domestic and overseas exposure.” Building on the narrative about different fund types or asset classes, the author could have provided additional commentary on the theory of asset allocation to better inform the reader about the need for drilling down on the selection of individual stock or bond funds. Other than noting that “rebalancing” is another component of a “smart strategy,” the author does not delve into the need to monitor portfolio performance.

The first part of the chapter on retirement investing describes the investment vehicles that are available. The author alludes to the notion of “risk tolerance” but only from the standpoint of the split between stocks and bonds relative to the investor’s age. This is the time-horizon aspect of risk tolerance, and the author glosses over the
potential volatility component of risk tolerance.

The final chapters cover hedge funds, options and futures, and nontraditional investments such as collectibles and real estate investing, including real estate investment trusts. Two very good features of the book are a listing, at the end of each chapter, of online resources and additional suggested reading, and an extensive glossary of financial terms.

By the author’s own admission, this book is designed to enable the reader to make intelligent cocktail- or dinner-party conversation about money and investing matters. He wisely encourages the reader to consult with a financial planner about specific individual investment strategies. The book is a compendium that provides ample substance and fact and generally achieves its stated objective. It is similar to a cookbook that lists all available ingredients without giving any real recipes. Perhaps, in subsequent editions, the author might consider some revisions for the sake of greater focus and completeness to enable a deeper dive rather than emulating the honeybee buzzing from flower to flower.


Robert H. Yunich, CPA/PFS, CLTC, is a financial planner in New York City with New England Wealth Strategies, a general agency of New England Financial (an affiliate of MetLife). The views expressed are not necessarily those of MetLife or any of its affiliated companies. For further information on Robert H. Yunich, visit ryunichltc.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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