The enclosed PDF provides an overview of the book’s content, some selected extracts, the testimonials along with background on the author, Rory Gillen.
Book Introduction (2.43 MB)Many believe that the stock markets are just for gamblers. It is certainly true that the stock markets can fulfil the gambling instincts in human nature, but the stock markets are first and foremost an investment forum. As an owner of shares (directly or through funds), you are a part-owner of businesses and, if they prosper, so too should you. In other words, returns accrue naturally to the owners of assets, but not so easily to the traders of assets.
“Many people are convinced that you have to predict which companies are the best to own, in order to make a success out of stock market investing. Nothing could be further from the truth.
Over the years, the question that I have consistently tried to answer is: how can the ordinary private investor succeed with limited time, little understanding of company accounts and no access to management? For that is the true test as to whether stock market investing is for everybody or just the knowledgeable few. Always bear in mind that it is the companies that produce the returns that the stock markets deliver, not the professional fund managers, not the speculators, not the media or individuals with inside information. It is the companies that generate the returns, and those returns reflect the growth in their profits, cash flows and dividends over time. You simply have to own a diversified list of them, either directly or through funds, to obtain those returns. Many private investors fail to do just that.
Stock markets can be a rollercoaster. Downturns bring volatility and uncertainty, which can impact on your confidence, judgement and desire to invest in a certain asset class. Bull markets do the opposite and bring over-confidence, tricking you into overlooking fundamental information. To maintain and grow your assets consistently, you need an approach that controls risk, reduces emotion, can be managed in a busy life and takes account of the significant volatility that is part and parcel of stock market investing.
There is no silver bullet for investment success and you can treat anyone who suggests otherwise with a healthy degree of scepticism. To achieve the average returns that the markets offer is easier than you may think; to achieve above-average returns is far more difficult than many appreciate.
…an understanding of why the markets tend to be so volatile, and an appreciation that volatility is not the same thing as risk. There is a major difference between temporary declines in prices and the risk of a permanent loss. Diversification, through funds or otherwise, an avoidance of leverage and a focus on value should allow you to ride out bear markets (down markets) and ensure that you recover with the markets, and hopefully more.
Like fundamental analysis, technical analysis demands study, patience and respect. However, if you take the time to understand the language of the market, you will free yourself from having to react to every move the market makes, or from being dependent on outside commentators interpretations of what is going on. What few understand is that it is not opinions in printed form that matter – the market is the opinion-former.
