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Introduction

You’ve seen the headlines in the financial press. You’ve heard the rumors about mythical investment funds that make money no matter what happens in the market. And you want a part of that action.

I have to be upfront: Hedge funds aren’t newfangled mutual funds, and they aren’t for everyone. They’re private partnerships that pursue high finance. If you don’t mind a little risk, you can net some high returns for your portfolio. However, you have to meet strict limits put in place by the Securities and Exchange Commission – namely that you have a net worth of at least $1 million or an annual income of $200,000 ($300,000 with a spouse). Most hedge-fund investors are institutions, like pensions, foundations, and endowments; if you work for an institution, you definitely need to know about hedge funds. I also have to let you in on a little secret: Not all hedge fund mangers are performing financial alchemy. Many of the techniques they use are available to any investor who wants to increase return relative to the amount of risk taken.

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Chapter 1 Does Warren Buffett Trade?

My favorite holding period is forever. – Warren Buffett

First, I have to apologize in advance. This book barely mentions Coca-Cola or the Washington Post. I also don’t really talk about the many fine companies that Berkshire Hathaway has bought over the past three decades (See’s Candies, the Pampered Chef, Dairy Queen, National Furniture Mart, and others). There are many excellent books that cover these topics. And while Warren Buffett has made billions of dollars from these investments, I don’t think I can add to the already great dialogue that has taken place on these topics.

Nor is this book really about value investing. There are many definitions of value investing and many treatises on value versus growth. But even Buffett has stated that on the whole, the distinctions between value and growth are nonsense. This book is about the various ways that Buffett has applied the concept of “margin of safety” outside of his buy-and-hold strategies. He has had a longer and more diverse investment career than just about anybody. There are several people in the world (fewer than ten, actually) who have had more years’ experience than Buffett at picking stocks, but I can think of no one who has traded and invested with a more diverse group of strategies over the past fifty years. It is these strategies that I write about. Many of them are normally thought of as “trading” strategies instead of the buy-and-hold investing for which Buffett is famous.

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I see a lot of similarities between investing and traffic. Like our highways, the stock market constantly ebbs and flows. Sometimes it’s smooth sailing, other times it’s gridlock — for reasons you may or may not be able to immediately perceive.

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Personal Finance Info

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When the stock market is rising, understanding exactly how you’re making money doesn’t seem very important.

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Personal Finance Info

Tags: investing

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The corpus has to be invested properly for steady and good returns. The best way to create a good amount for retirement is by investing at an early age. However, once you actually retire, it becomes even more important to choose the right instruments to park the accumulated funds. This is important because the returns from the corpus would actually decide the kind of life style you can afford. Retirement is generally associated with safety.

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Tags: investing, retirement, life+insurance

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