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This link has been bookmarked by 1 people . It was first bookmarked on 13 Jul 2009, by Matt Kramer.

  • 13 Jul 09
    mattkramer
    Matt Kramer

    A Good Time to Remember the Fundamentals

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    By PAUL B. BROWN
    Published: July 11, 2009

    THE Green Bay Packers had just suffered a devastating loss and, as the story goes, Vince Lombardi, then the head coach, decided that it was time to remind his team of the fundamentals.
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    “Gentlemen,” he began, “this is a football.”

    The story comes to mind as investors try to come to grips with a stock market that may finally be starting to sort itself out after its devastating drop in 2008, in which the Dow fell by more than a third and the Nasdaq — off more than 40 percent — fared even worse.

    So it is not a bad time, as Coach Lombardi suggested, to get back to basics, and that’s where “The New Coffee House Investor” (Portfolio, $22.95) fits in.

    Its author, Bill Schultheis, a financial planner in Washington State, makes clear with his subtitle exactly what his objective is in this relatively short book — fewer than 200 pages, with lots of white space. He wants to explain how you can “build wealth, ignore Wall Street, and get on with your life.”

    To do all that, he says, requires investors to master only three simple rules:

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    “Don’t put all your eggs in one basket. The key to building a successful portfolio is to diversify your assets so that you maximize your chances of reaching your goals with a minimum amount of risk.” More specifically, through your investment choices, you want to “eliminate the risk you can control and reduce the risk you can’t,” the book says. That means having a mix of stocks, bonds and cash, so that you are not beholden to one asset class. And within the categories of stocks and bonds you also want to be well diversified.

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    Don’t become greedy. A majority of actively managed mutual funds that charge y

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