Yellowstone Financial, Inc.

In Dire Financial Times, Play by the Book

In volatile financial times such as these, our natural tendency is to track the ups and down in the stock market. The financial media in its quest for eyeballs favors titillation over analysis. The more rewarding financial concepts can be gleaned by reading books rather than watching false prophets mouthing backward looking commentary.

A collaboration of an investment manager and a 25-year Wall Street institutional veteran, “The Investment Answer” by Goldie and Murray is a bantam-weight at only 85 pages and an amenable read for distracted investors. It covers the most important financial decisions: do you manage your own money, how do you decide the asset classes to be used, how do you diversify, do you follow an active or passive investment approach, and how do you go about rebalancing.

This short tome even touches upon the more obscure strategies of hedge funds, private equity and commodities. Your time will not be wasted in the evening required to read this book.

Larry Swedroe’s “The Only Guide You’ll Need for the Right Financial Plan” covers many of the same investment decisions including asset classes in his mind that are better avoided. He delves into comprehensive planning with brief looks at educational and retirement savings, insurance, Social Security and safe withdrawal rates for retirement portfolios.

Those looking for the extensive detail behind his assertions may be left wanting. The scope of his book is vast and so we only get a half page on why gold is not recommended. Throughout the investment portion of his book, he pulls snippets of information from his other books. His conclusions are largely on target.

Kaye Thomas, well regarded for his authoritative and digestible book on stock options, takes on a wider topic with “That Thing Rich People Do.” What that Thing is, you may already know.

Spend less than you earn over a lifetime. Determine an appropriate level of bonds and stocks. Diversify within those categories. Be mindful of investment expenses and tax costs. This Cliff Notes of investing does not stray into the unconventional and can be trusted.

The anonymously written “Diary of a Very Bad Year” is the result of a series of interviews with an anonymous hedge fund manager during the latest financial crisis. It’s an entertaining read for the insight of the fund manager while the events of 2008 were unfolding, while giving us a view on the inner workings of these often inscrutable institutions.

“The Art of Non-Conformity” by Chris Guillebeau calls into question your deepest goals and for that it deserves praise. This book is more likely to push you to quit your job and start a business than lecture you on asset allocation.

Much of this inspiration is driven by the author’s personal journey as a childless 30-something, which may reduce its resonance with those with more complicated home lives.

Martin Weiss and his eponymous bond rating service have long been an early warning signal leading up to financial crises. When S&P and Moody’s were sanguine about the debt of certain companies such as Lehman Brothers, Weiss lowered their ratings well before trouble was pounding at the door.

“The Ultimate Money Guide for Bubbles, Busts, Recession, and Depression” will not help you sleep at night as it calls into question the incentives of the companies that rate the creditworthiness of insurance companies, corporations and government entities.

It’s a useful primer on how to take care of your “safe money.” His investment advice strays into advanced techniques such as double-inverse ETFs and foreign currency plays and is less valuable to the individual investor.