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Challenge Your Thinking With This Essential Reality CheckOnce discovered this text will become an investment classic. For the average investor it will challenge your thinking, present some very valuable insights that otherwise might be ignored, and reinforce some sound principles of investing.
Following an introductory examination of the long-term performance among various asset classes and the risks to investors posed by inflation, Bruce Temkin then delves into the impact of taxes upon real investment rates of return. He then aids the investor in understanding market volatility and various types of risks. Additional insights follow in his frank discussion of personal risk factors, investment time horizons, the role of (and limits of) diversification, and the role emotions can play in making investment decisions. Charts and graphs throughout the 258 pages help explain and reinforce the concepts presented.
Throughout this book Bruce Temkin challenges us to carefully consider the steady diet we have been fed of misleading historical charts, the illusion of "average" rates of return, and longevity statistics. Mr. Temkin effectively explains why both "conservative" and "aggressive" investment portfolios can be far riskier than many investors think, and why investment portfolios should be (and must be) rebalanced periodically.
The author scatters various insights throughout the easy to follow text - precious nuggets to absorb, contemplate, and apply to your individual situation. For example, he summarizes the benefits and limitations of financial software programs, including those employing Monte Carlo simulations. Also, he effectively conveys to the reader in several places the central theme that there are no guarantees in investing.
Think you know it all, or most of it? This book is clearly for you. To quote the author, "When it comes to investing, feeling invincible can be dangerous. It can lead investors to overlook the principles that significantly contributed to their success in the first place."
This is perhaps not the first book the beginning individual investor should read. But this is the one book on investing that should not be overlooked by investors and their advisors. This book will challenge your thinking, whatever level of experience you may possess. This is one book that deserves to be read carefully not only a first time, but every several months again, lest the individual investor think he or she has explored all there is to consider in investment and financial planning decision-making.
Candid and insightful, this text is a must read for those seriously interested in investing and financial planning.


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