Title: "The Little Book of Bulletproof Investing: Do’s and Don’ts to Protect Your Financial Life"
Authors: Ben Stein and Phil DeMuth
Publisher: Wiley, 2010; 205 pages; $19.95
Most people who have a general interest in money matters know who Ben Stein is. How you know him, though, is a true sign of the generation to which you belong.
Boomers might recall him as an outspoken critic of corporate fraud during the junk bond scandals of the 1980s, while most of the early Gen Xers born in the ’60s know by heart Stein’s monotone econ lecture from the classic film "Ferris Bueller’s Day Off."
Later Gen Xers like myself can’t think of the name "Ben Stein" without remembering his smart trivia Comedy Central game show from the late-’90s: "Win Ben Stein’s Money." And even younger folk know him from his recent credit report service commercials — that monotone, again.
Stein’s vocal delivery might be monotone, but he and co-author, investment psychologist Phil DeMuth, certainly hit some educational and comic high notes in their recently released, "The Little Book of Bulletproof Investing: Do’s and Don’ts to Protect Your Financial Life."
In fact, I originally flipped through this book out of sequence and was a little concerned to see some bizarre do’s, like "Do Subscribe to Market Newsletters," with the elaboration that it "makes total sense that anyone who had uncovered the market would sell it to you for $199 per year."
This advice quickly snapped back into the narrow realm of things both funny and uber-sensible when I noticed the chapter header at the top of the page: How Not to Invest. I could almost see Stein delivering these "what-not-to-do’s" in his sarcasm-dripping deadpan — especially the recommendation to get a "brilliant, prestigious financial adviser like Bernard Madoff …"
While the book is filled with humorous bits, it is certainly not all fun and games. Like its "Little Book" series brethren, this book is a super-quick, super-useful read that doesn’t follow the formula of trying to give you a step-by-step action plan. Rather, it is successful at its aim of distilling a very complex and vast subject matter into the rough and dirty, bullet-point need-to-knows.
The book tackles the entire realm of financial life, including topics ranging from portfolio allocation, to adviser selection, to real estate decision-making, and retirement planning — and actually does a better job in 200 half pages of offering meaty, wise and sometimes novel advice than many books devoted to any one of these specific subjects.
Stein and DeMuth start out sketching out the dismal picture of the average American’s approach to personal finance, which they describe as "opting for the Hindu ideal, where old people forsake all worldly possessions, pick up a begging bowl, and wander the streets. Except in our case, it won’t be voluntary."
They then move into investor psychology, DeMuth’s professional wheelhouse, which includes a fascinatingly hilarious (and frighteningly accurate) diagram of a Tootsie Pop as the brain of a human investor, as well as the first of many amazingly brief and insightful sets of do’s and don’ts that appear throughout the book.
These psychological insights are rendered usable in the next chapter, Wall Street Therapy, after which comes the completely entertaining and error-revealing chapter I flipped the book open to: How NOT to Invest.
Funny enough or, actually, seriously enough, the lengthy list of investment traps to avoid is followed by a chapter with a much shorter list of five core bullets on How To Invest, including some good debunking of get-rich mythology.
Then, there’s a half-educational, half-sales-pitch chapter explicating a portfolio fund they have reverse-engineered from the investor psychological reality that many people sell when they lose money, so minimizing risk would help people hold onto their investments long enough to realize the long-term gains from compounding interest that it will take for most of us to retire.
It’s not a total sales pitch, though. The authors do offer a full chapter of guidelines on Bulletproofing Your Investments and Pulling the Trigger, for those who would like to replicate their risk-minimizing fund, DIY-style.
Stein and DeMuth then turn their attention to offering advice on maximizing the real-world value of your education and your Human Capital (best line: "children today are luxury goods"); savings strategies; very wise, very simple advice for avoiding your real estate purchases to turn into "Houses of Blues"; and retirement and estate planning advice.
This book is a strong recommend. It’s highly readable, offers oodles of strong guiding philosophies and life/money advice, and offers just enough of the psychological primer to help readers grow up and take control of their own financial lives. Oh, and it’s pretty funny, too.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
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