by Winston Chua
SAN MARINO – A crowd of a few dozen in San Marino has the privilege in early November of listening to author Tom Jacobs speak the investing risk-management strategy in his new book, What’s Behind the Numbers? A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio. (McGraw-Hill, 2012, with John Del Vecchio).
“What this event did in my mind was reiterate the do’s and don’ts of investing in the stock market,” said Beverly Hills resident Eddie Ong. “Merely buying and holding is really not going to get you anywhere.”
San Marino High Alum Anthony Lee said, “I think I’ll say that Tom’s talk adds a new and possibly realistic perspective to my understanding of stock investing. My interest in stock investing has definitely increased. Maybe I had this idea that stock investing was just a game. I think I know that stock investing requires people to have goals when they invest and not just think about how much money they can use or gain. People need to be patient in waiting to see gains.”
Jacobs, a Cornell and University of Chicago alum, former high school teacher, lawyer, entrepreneur and now for many years an investment analyst and manager, spoke to a crowd of 25 about the importance of value investing, a pertinent topic at this time of year, given the sub-optimal status of the global economy and looming national fiscal cliff.
Jacobs also cautioned that every investor should keep some cash or hedge to take advantage of opportunities when the market throws out a stock emotionally. One such event happened when investors fearfully sold off the stocks of all the drilling rig companies after the Gulf Oil Spill, when only one, Transocean, was involved. Jacobs emphasized, “That was a fantastic time to get safe and excellent companies at great value.”
Stocks are a fantastic place to grow money, as many well know, but Jacobs tempered bullish enthusiasm with a healthy reality check midway through his presentation, telling the audience that a mere 6% of stocks over a 15-year period achieved the hefty, significant gains a lucrative investor was looking for during that time span.
Because the majority of stocks wind up losing money, so the key, and one of the themes behind is book, is “developing a long-short portfolio with less volatility and greater returns, while avoiding landmine stocks that will blow a hole in your financial security.”
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