Cover image for The rules for growing rich : making money in the new information economy
Title:
The rules for growing rich : making money in the new information economy
Author:
Lereah, David.
Personal Author:
Edition:
First edition.
Publication Information:
New York : Crown Business, [2000]

©2000
Physical Description:
x, 307 pages : illustrations ; 24 cm
General Note:
Includes index.
Language:
English
ISBN:
9780812930566
Format :
Book

Available:*

Library
Call Number
Material Type
Home Location
Status
Central Library HG4910 .L456 2000 Adult Non-Fiction Non-Fiction Area
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Summary

Summary

Today's new information economy has generated unprecedented opportunities for investors. But taking advantage of them requires discipline and a knowledge of econimic trends. There will be recessions and bear markets. There will be recovery periods from recessions. And there will be future bull markets. How does one make sense of these changing economic conditions and make the right investment decisions? Dr. David Lereah shows how the experts do it, and how you can, too. With the advent of the Internet, ordinary investors now have access to the kind of information traditionally available only to investing professionals. Dr. Lereah levels the playing field by providing investors with the analytical tools they need to really take advantage of that raw information. This accessible format makes the ideas easy to understand and provides bite-sized, practical steps to take based on which way the market is going. Dr. Lereah's practical guide helps investors navigate the peaks and valleys by using the Internet to easily monitor a wide range of economic and investment data -- from inflation and interest rates to price/earnings ratios-- and then managing your portfolio accordingly. In part one of The Rules for Growing Rich, Dr. Lereah shows how to be a smart consumer of economic and financial information, including: -- How to identify business cycles -- The eight most influential economic reports that you should monitor on a regular basis -- How the Federal Reserve, market psychology, changing demographics, and other factors influence the investing climate Then Dr. Lereah shows how to put all of this information together in 168 rules for maximizing your portfolio. -- 63 rules for investing in stocks -- 37 rules for investing in bonds -- 23 rules for investing in real estate -- 10 rules for investing in options and futures -- 17 rules for international investing -- 18 rules for retirement investing With these rules, investors gain a much clearer understanding of the financial markets and can make profitable investments by more accurately anticipating whether the economy is headed for recession, recovery, or expansion. This is not a book for those who want to make a killing in a day but for those who want to develop a serious, ongoing investment strategy using the clues available about the direction the economy will take in the future.


Reviews 2

Booklist Review

Lereah is chief economist at the Mortgage Banker's Association and a financial talk show commentator. He notes that the information economy has affected investing in three ways. Investors now have access to an overwhelming abundance of financial information and economic data. Stock prices have soared dramatically for companies that have positioned themselves to take advantage of the information economy. And investors can now use the Internet for trading. Lereah shows how to make use of the wide range of information now available, explaining economic indicators such as orders for durable goods, consumer confidence, and capacity utilization. He identifies who issues the indicators and tells how often they are released and where they are reported. He then examines what the information means to investors, showing how to apply it to set strategies for such various investment options as stocks, bonds, or real estate. In the process, he distills 201 specific rules for making decisions and taking action. Lereah concludes with advice on using the Internet to track one's portfolio and identify potential investments. --David Rouse


Publisher's Weekly Review

The current booming economy has led many investors to mistakenly believe that making a million requires only plowing money into Internet-related stocks. In fact, argues Lereah, chief economist at the Mortgage Bankers Association, when the boom ends and the stock market falls precipitously, investors will need a firm grasp of economic trends, government policy, interest rates and other financial principles to maintain adequate returns on their investments. His book helps readers prepare for the future by offering "a structure for organizing and interpreting" the boundless financial information available online. Designed particularly for those who want to learn to use the Internet in managing their investments, this volume carefully explains the principles of stocks, bonds, real estate and other profit strategies. The accessible overview of economic trends and financial reporting is interspersed with occasionally obvious investment rules (e.g., Lereah advises investing in health-related stocks because baby boomers are aging and will be spending more on health care). Overall, this book is a good primer, best for readers with little experience in investing who need help sorting through all the professional data now available to amateurs online. Agent, Alice Martell. (July) (c) Copyright PWxyz, LLC. All rights reserved


Excerpts

Excerpts

Part One The Road to Growing Rich Becoming a New Millennium Investor The 1990s have become known as the "information decade," a time when personal computers went mainstream and the Internet became a way of life. Almost overnight, everyday households had direct access to a full array of financial investment information, ranging from timely U.S. Government economic releases to stock price movements on companies traded on the European and Asian exchanges. Savvy investors -- those who learned how to collect and use this new information -- grew rich throughout the decade. Not surprisingly, besides generating financial gains for a lot of people, the 1990s' economic boom created even larger wealth for those individuals who understood how to play the PC/Internet revolution. Today's new information economy is a residual from a technological revolution that strikingly reminds us of the "industrial revolution" that shaped the world during the late 1800s. In fact, the reach of today's technological innovation may eventually dwarf the advances made during the industrial revolution, and the implications are enormous for the world of investments. As technological changes have produced a transformation of communications and commerce from the physical world to the virtual (electronic) world, they have generated unprecedented investment opportunities for equities and bonds as well as real estate, international, and retirement investments. As we enter the twenty-first century, you -- the individual investor -- stand at a crossroad. You can continue as an everyday investor stuck in the twentieth century, or you can take control of your investment life by diving head-first into the information age. More than ever before, nonprofessional investors have the opportunity to emulate professional investors with very little effort and very little cost. Today, for only the cost of an initial Internet connect charge, investors have instant access to up-to-the-minute economic, financial, and investment information, as well as analysis and commentary from market and industry analysts. This wide array of market information enables everyday investors to base their investment decisions on information that was thought to be unattainable by nonprofessionals just two or three years ago. A cursory glance at the contents (as of this writing) of www.Bloomberg.com (a nationally known financial information provider) demonstrates the breadth of information available to investors on the Internet at no additional cost: Bloomberg.com News:Top Financial News Top World News Stock Market Update Technology Update U.S. Economy Columns (market commentary from nationally known analysts) Special Report Stocks:Technology Stocks Chart Builder (provides user with ability to chart virtually any investment) World Indices Movers by Exchange (identifies stock market movers in each major exchange) Stocks in the Dow (Dow Jones Industrial Average Index) S&P 500 Index Snapshot Industry Movers (identifies market movers by industry) Most Active Options (identifies most active stock options) IPO center (initial public offerings) Regional Indices (tracks selected regional stock indices) Rates and Bonds:Key Rates (provides yield curve information) U.S. Treasuries International Bonds (e.g., Japanese and French bonds) Municipal Bond Yields Currencies:Currency Rates Cross Currency Rates Currency Calculator (permits investors to calculate any exchange rate) EMU Update (European Monetary Union update) Commodities:Most Active Futures (volume on commodity futures contracts, such as soybeans) Commodity Movers (tracks movements in commodities) Energy Money:Mutual Funds Portfolio Loan Center Mortgage Calculator Investing (provides daily investment strategies) Retirement [provides retirement strategies in retirement accounts such as 401(k)s] Each item listed above generates its own contents for that particular area. Suffice it to say that the information available on the Internet is more than ample for information-starved investors. Bloomberg.com is just one of literally thousands of market information providers available to individuals. The Federal and local governments, Wall Street investment banking companies, brokerage houses, commercial banks, mutual funds, insurance companies, retirement associations, and countless other organizations offer a wide array of financial and economic information that is useful in developing well-informed investment strategies. As of this writing, some of the more popular investment sites offered on the Internet are: TheStreet.com; PowerStreet (Fidelity); DLJDirect; Datek Online; Ameritrade; Dreyfus; E*Trade; Charles Schwab; Suretrade; and Investor Network. Perhaps the primary motivation for using the Internet for investing is the fact that the information is so well organized that most individual investors can do one-stop shopping. For example, investors who use Bloomberg.com would probably need to go no further. Almost everything required for the development of intelligent investment strategies is there. The ease of access and the efficient organization of the information at the site make it increasingly common for novice and intermediate investors to get "hooked." But it is important to note that investors could misuse the financial information that is handed to them. Giving them too much investment data could lead them down troubled roads. The core value of this book is that it provides investors with a structure for organizing and interpreting all of this information. It creates a better understanding of how to gather, sort, and simplify all of the information available on the Internet so that intelligent investment decisions can be made. Furthermore, because most Web sites that disseminate financial information offer direct links to the primary electronic trading companies, executing most stock and bond transactions is simplified. Companies such as Ameritrade, DLJDirect, E*Trade, and Waterhouse are usually associated with most of the financial information Web sites. In addition, companies such as Merrill Lynch, Fidelity Investments, and so many others, now offer electronic trading within their own Web sites. Of course, investors can continue to trade through an individual broker and seek his or her advice on what has been learned from the Internet sites. Looking to the future, most individual investors will need only this one-stop investment shopping list: 1.Go to one or more Internet investment sites. 2.View your investment and retirement portfolios' performance. 3.Gather pertinent market information on the economic and investment environments. 4.Develop an investment strategy (sometimes with help from market commentary or from the analysts hosting particular Web sites, and/or your stockbroker). 5.Click your mouse and execute a buy or sell transaction via one of the electronic trading Internet companies. (A more complete list of information resources is provided in Part Three.) The great boom of the 1990s created a lot of money for a lot of people, but what will happen when the U.S. economy slips and the long bull market stops roaring? Can today's investors continue to earn double-digit returns with their eyes closed, ignoring the stream of investment information crossing their computer screens daily? The simple answer is: No. Investors need to learn how to use this information to take advantage of market and investment opportunities. If history repeats itself in the twenty-first century, uninformed investors will struggle to maintain adequate returns when the good times turn bad. Today's Internet-driven world of information gives you, the individual investor, opportunities to keep pace with professional investors. But it is up to you to learn how to use timely market information wisely and avoid the mistakes of the past.         To grow your money and experience financial success, you need a good map of how the economy works. Just as a hiker needs a good topographic map of the terrain selected for a journey, so does an investor need an equivalent map of the economy. The countryside is full of peaks and valleys, but if you know how to read the map, you can navigate successfully and get to your destination. The economy will always have expansions (peaks) and recessions (valleys), but you can make money in both situations, provided you know what you are doing.         Although the U.S. economy is complicated and can change in unpredictable ways, if you spend some time getting to know it (it won't bite) and follow a few general rules on how to anticipate and respond to these changes, financial rewards will come your way. For example, in the final stages of an economic expansion, housing construction usually turns down, indicating that a recession, a slumping stock market, and falling interest rates are on the horizon. Some investors take this as a signal to reduce their equity holdings and invest in bonds. Others believe, based on the past 70 years of investment experience, that a portfolio of equity investments will almost always outperform other investments (e.g., bonds), if the investment horizon is 20 years or longer. Thus, as a rule, long-term investment portfolios are dominated by equity investments.         The keys to successful investing are: Utilize your knowledge of the economy via Internet-driven investment information, and understand historical economic relationships. A better understanding of how changes in the economy (i.e., business cycles and economic indicators) impact the value of investments is one of the goals of this book. The economy can certainly be intimidating, and the financial markets, with all their computer screens, financial instruments, and financial wizardry, can be mesmerizing. However, the Internet provides average investors with great investment opportunities that did not exist before. The contents of this book will provide you with the guidance necessary to utilize and simplify all of the information offered on the Internet, placing you firmly on the road to growing your money. Excerpted from The Rules for Growing Rich: Making Money in the New Information Economy by David Lereah All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.

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