The New Coffeehouse Investor: Book Review and Contest

I was reading another personal finance book this weekend, The Coffeehouse Investor, and it was a pretty good find. The Coffeehouse Investor has been a popular book for a few years. Schultheis shared his expertise as a stock broker and wrote a guide to help people invest wisely. Now Mr. Schultheis has updated his book and added four new chapters to his guide.

Check out the The New Coffeehouse Investor.
Check out the The New Coffeehouse Investor.

If you are looking at investing and want a book to get your started and give you advice with a winning track record, then you should add this to your list. I’m going to review just some of the chapters to give you an idea on the book’s content and style. It’s not a thick book and the author mixes life stories along with data to keep it interesting.

Introduction

In the preface, Schultheis start off  with sharing his 3 fundamental principles of investing:

  1. Don’t put all your eggs in one basket.
  2. There is no such thing as a free lunch.
  3. Save for a rainy day.

As you go through the book, you’ll see the numbers and data behind his principles.

The Coffeehouse Investor

Schultheis presents examples of how the transaction obsessed many brokers are Wall street are and how people can hurt themselves by following it.

An interesting fact I found was less than 10% of millionaires think of themselves as active traders, and a whopping 42% of millionaires in America makes less than 1 transaction per year for their portfolios.

This Thing Called Risk

Making a case for investing in the stock market, Schultheis provides data on returns from 1926-2008. Looking at one-year, five-year, and ten-year returns, the author shows how long term investing is not as risky as some imagine. The problem becomes when people think in more short term time frames.

Approximating the Stock Market Average

Schultheis lays some hard numbers out on how investing in individual stocks and actively managed mutual doesn’t lead to wealth as advertised. Did you know that only 36% of all managed funds beat the stock market’s average within the last 3 year period? Ramit Sethi also remarked how ineffective many mutual fund managers have been with their returns.

My Thoughts

If you’re just getting started with investing or need a guide to point you in the right direction, this a solid book. You’re going to find some useful information like:

  • Finding an asset allocation for your retirement portfolio
  • Indexing the Stock Market
  • Figuring out how much to set aside for saving

The New Coffeehouse Investor Contest

I have an extra copy of  The New Coffeehouse Investor

to give away to a reader. Just leave one comment on this blog post about why you’d like to win this book. I’ll pick the winner this Thursday evening around 6pm EST.

Rules

  • You can only enter once.
  • You must be a resident of the U.S. or Canada

7 Responses to The New Coffeehouse Investor: Book Review and Contest

  1. I haven’t had an opportunity to read the updated version yet, but the original was an excellent read several years ago, so it’s no surprise to hear that the version is great as well.

    Bill’s also a generally helpful guy all around. He does a weekly BlogTalkRadio show with Carl from Behavior Gap, and he’s a regular on the Bogleheads’ forum.

  2. I’d love to win this. I just started a new job, and I’m planning on opening a Roth IRA in a few months. This would be a great book to start plotting my investment strategy.

  3. I’d love to win this book. Like many of the others I’m just starting out with my investments and I definitely need help with my asset allocation!

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