Description:
Investing is a lot like driving down the highway with the windshield blacked out and only the rearview mirror to guide you. It is a wise investor indeed who studies the past and carefully considers the advice of the best minds that have come before. The challenge in equity investing is to find reliable, disciplined ways to exploit the stock market while controlling risk. In Investing Secrets of the Masters, Charles Babin and William J. Donovan draw from the knowledge and experience of some of history's greatest investment minds to present a simple, easy-to-follow strategy for building a portfolio that historically has provided a total return that outperformed the broader market. At its core, the strategy is focused on the 15 stocks in the Dow Jones Industrial Average that have the best record of providing investors with generous, ever-growing dividend payouts. The authors argue that as equity prices have risen in recent years, dividends have been all but forgotten by investors myopically focused on capital appreciation. In contrast to the enormous resources committed to revenue and earnings projections, dividend policy is far easier to evaluate and far less volatile. Dividend growth says a lot about management's assessment of a company's underlying business prospects, and the record indicates that generous dividend payers outperform over time. The book is liberally peppered with tables and graphs to explain modern portfolio theory, the efficient frontier, tactical and strategic asset allocation, and an easy method for evaluating companies based on their dividend policies. Quoted throughout are such 20th-century investing legends as Irving Fisher, Benjamin Graham, David Dodd, and John Burr Williams. Most investing is characterized by long periods of boredom punctuated with occasional moments of terror. A well-conceived, disciplined investment plan such as that detailed here can make the journey lot less traumatic. --Scott Harrison
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