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Jason Zweig's Little Book of Safe Money

There are very few in the financial media whose material I would consider recommended reading. Wall Street Journal columnist Jason Zweig is one of them, and his new book The Little Book of Safe Money is one you should consider.

His latest work adds to his reputation for books that not only provide important insights into the winning investment strategy, but are also good reads. This little book is filled with sage counsel from which even sophisticated investors can benefit. Among the pearls of wisdom are three commandments Zweig put in biblical language to emphasize their importance.

  • Thou shalt take no risk that thou needst not take.
  • Thou shalt take no risk that is not most certain to rewarded thee for taking.
  • Thou shalt put no money at risk that though canst afford to lose.
Zweig shows you how to achieve your financial goals while avoiding the pitfalls most investors fall prey to. His advice includes:
  • Avoid putting your human capital and your financial capital in the same basket, meaning don't hold large positions in your employer's stock.
  • Own TIPS to fend off inflation.
  • Avoid "newfangled" securities that promise "higher yield at low risk," "safety with more income" or "returns better than cash with no risk."
  • Don't stretch for yield with bonds.
  • Quoting Shelby Cullom Davis: "You make most of your money in a bear market; you just don't know it at the time."
  • Avoid leveraged and inverse ETFs. (More on this Friday.)
His book also provides advice on how to avoid many of the behavioral mistakes investors keep repeating. As William Bernstein, who wrote the forward, put it: "Jason Zweig knows your financial demons, where they live, why they're making your poor, and how you can beat them."
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