Ron Insana is an analyst and author for CNBC. This book is a guide to the 7 best deals from Main Street to Wall Street. This book was written in 2009 and some of these offerings may have changed. Still, the lessons outlined in this book are good for the individual investor.
Why is this important to me?
This is important because we can learn from the best and understand that when there is blood in the water, it is time to buy!
Investing in real estate, stocks or any other vehicle should be like shopping. Think about it. Most people clip coupons and buy things on sale when they shop. They do it week after week. Smart investors like Warren Buffett know that you make money on the purchase.
The reality of the situation is that 90% of individual investors are mother sheep slaughtered by wolves on Wall Street. Why do people sell when stocks go down and buy when they go up? Understanding the irrational brain and crowd psychology is the answer or, in layman’s terms, you need to control your emotions.
Ron highlights various types of investing you can invest in, as well as some great tips. For reasons of time, I will highlight three things.
1. Follow the professionals: This tip is worth the price of the book. Ron talks about Bill Gross (PIMCO), George Soros and Warren Buffett. All these men know that when people go out, it’s time to buy. It’s hard to buy something when it’s going down. The primitive brain goes into protection mode. The Great Depression produced some of the greatest wealth in history. Smart investors know the difference between price and value.
2. Payback Time – When you buy things that are falling in price and have NO value, then you are locking in a big profit for the future. Think about this. You invest in a stock that is trading at $25 per share and has a value of $50. Good investors know how to do this. Now the market is panicking and buying instead of selling. Look at this illustration:
Buy 1000 shares at $25
Buy 1000 shares at $18
Buy 1000 shares at $10
Assuming the fundamentals of the stock have not changed, if you sold at a profit of 20% of your maximum price of $25, then you would sell at $30 per share. This may take 1 year or more, but if you do, your profit will be $37,000 on a $53,000 investment. That’s 70% profit. 3. Ron outlines various resources for him to earn a lot of money. RealityTrac is a foreclosure website. If you want to generate cash flow rental income or fix and switch then this site is for you. If you simply want to emulate the greats of the stock market, you can search for 13F and learn what Warren Buffett, Bill Gross and other value investors are buying.
The best way to make a fortune is to emulate the people who have already done so. Ron’s book is specific to the 2009 market, but the lessons are stronger than that. I am writing this in August 2011 and I can tell you that there is blood in the water again. Debts around the world are staggering and there will be great investment opportunities. Keep your eyes open and emulate the best.
I hope you have found this brief summary useful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in as little as 21 days. One thing you can take away from this book is to emulate the best. Following the best in any field is a sure path to success. The good news is that you can do this with the Internet and you don’t even need to know the people you’re emulating.