new version of pkcrafter's online investing basics book

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
Alex Frakt
Founder
Posts: 10853
Joined: Fri Feb 23, 2007 1:06 pm
Location: Chicago
Contact:

new version of pkcrafter's online investing basics book

Post by Alex Frakt » Sat Oct 09, 2010 10:01 am

Paul King's (pkcrafter) has updated his free online book. I included the original version on the Sites of Interest page because it's a reasonably sized all-in-one resource to the bogleheads' style of investing. The new version has been reworked, including adding a chapter on behavioral mistakes, and turned into a pdf so you can read it offline. Here's a direct link to the 342k pdf: Road Map for Investing Success

And here's the table of contents:
Section One – Introduction and Overall Strategy
Chapter 1 – The Road Map

Section Two – Nuts and Bolts – How it Works
Chapter 2 – Understanding Risk and Asset Allocation
Chapter 3 – How Diversification Works
Chapter 4 – Diversifying a Portfolio with Asset Classes
Chapter 5 – Costs ARE a BIG DEAL
Chapter 6 – Building Your Portfolio – A Look at Fund Options
Chapter 7 – Rebalancing

Section 3 – Discipline and Control
Chapter 8 - Formalize Your Plan with an Investment Policy Statement
Chapter 9 – Behavioral Mistakes
Chapter 10 – On Your Own or Hire an Advisor

Chapter 11 – Final Thoughts, References and Glossary

User avatar
bob90245
Posts: 6511
Joined: Mon Feb 19, 2007 8:51 pm

Post by bob90245 » Sat Oct 09, 2010 10:43 am

Thanks for the pointer to Paul's new book. Just skimmed the whole pdf. I see the link at the end is to my previous (now defunct) website:

For Information on Retirement Withdrawals
http://bobsfiles.home.att.net/retireCH.html

Here is the current page:

http://www.bobsfinancialwebsite.com/retireCH.html
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.

pkcrafter
Posts: 13241
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Post by pkcrafter » Sat Oct 09, 2010 10:55 am

Bob, I went through and checked every link and I thought I had updated yours but obviously I missed it. I'll correct it.

Thanks.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

nimo956
Posts: 743
Joined: Mon Feb 15, 2010 6:07 pm

Post by nimo956 » Sat Oct 09, 2010 11:46 am

This book is excellent. Even though I've already read the Boglehead's Guide to Investing and All About Asset Allocation, I always love to get a refresher. I found that your discussion of risk in the beginning to be particularly illuminating. I'm only part way through now, but I can tell it's going to be a great read. Thank you for doing this and making it freely available to everyone. I'll be sure to forward copies to many of my friends who may not know as much about investing.

retiredjg
Posts: 35424
Joined: Thu Jan 10, 2008 12:56 pm

Post by retiredjg » Sat Oct 09, 2010 11:56 am

Just skimmed it over - I'll have to actually read it later. Looks good, Paul!

pkcrafter
Posts: 13241
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Post by pkcrafter » Sat Oct 09, 2010 12:18 pm

nimo956 wrote:This book is excellent. Even though I've already read the Boglehead's Guide to Investing and All About Asset Allocation, I always love to get a refresher. I found that your discussion of risk in the beginning to be particularly illuminating. I'm only part way through now, but I can tell it's going to be a great read. Thank you for doing this and making it freely available to everyone. I'll be sure to forward copies to many of my friends who may not know as much about investing.
Thanks Nimo. The chapter on risk and asset allocation has been completely redone and expanded from the original version. We see so many new investors get their AA wrong, I really tried to present the problem in different ways. Investors are risk averse, but they cannot connect that natural tendency with investing risk. In fact they may not even be aware of the tendency. Another difference between this version and the old one is an added chapter on behavior. Behavior, of course, is part of the AA problem.

Thanks JG. I just got the book online and I'm sure there will be some errors found, like Bob's link. So, I'll collect them and then try to correct.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

User avatar
Adrian Nenu
Posts: 5228
Joined: Thu Apr 12, 2007 6:27 pm

Post by Adrian Nenu » Sat Oct 09, 2010 1:29 pm

Just wanted to set the record stright: I am the one who pestered Swedroe into adding risk of loss based on bear markets into his book and he came up with a chart while I later came up with the rule of thumb formula. I mentioned bear maket risk of loss basically since I started posting on the Morningstar Diehards' forum. Prior to the 2000-2003 bear market, I advised investors should take into account a 1973-1974 bear market and check how such an event would affect their portfolios. Two bear markets in one decade later, the concept of risk of loss based asset allocation has been strongly validated again. I don't have copyrights on bear markets but prior to my posts about bear market based risk of loss, nobody talked about that possibility and consequences. Just wanted to set the record straight.

Adrian
anenu@tampabay.rr.com

dbr
Posts: 28305
Joined: Sun Mar 04, 2007 9:50 am

Post by dbr » Sat Oct 09, 2010 2:50 pm

Retirement ruin studies are the place where the issue of what it actually means to have losses in a portfolio is attacked head-on, at least for the case of people in retirement. The type discussion John Norstad presents in his discussion of risk and time also answers this issue but only with an illustration and not a complete development. The absence of a discussion of this analysis leaves the discussion of risk incomplete.

The essence of the problem is that one needs a much more penetrating understanding of what the term "loss" means when one knowingly accepts the property that asset values are inherently variable.

User avatar
Taylor Larimore
Advisory Board
Posts: 27940
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Road Map for Investing Success--updated

Post by Taylor Larimore » Sat Oct 09, 2010 3:31 pm

Hi Alex:
Paul King's (pkcrafter) has updated his free online book.
It is difficult to believe Paul's wonderful online book can be improved. Nevertheless, I am going to read the updated version as a refresher and to learn something new.

Thank you, Paul, for this valuable contribution to the Bogleheads Forum.
"Simplicity is the master key to financial success." -- Jack Bogle

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Post by Rodc » Sat Oct 09, 2010 4:04 pm

Adrian Nenu wrote:Just wanted to set the record stright: I am the one who pestered Swedroe into adding risk of loss based on bear markets into his book and he came up with a chart while I later came up with the rule of thumb formula. I mentioned bear maket risk of loss basically since I started posting on the Morningstar Diehards' forum. Prior to the 2000-2003 bear market, I advised investors should take into account a 1973-1974 bear market and check how such an event would affect their portfolios. Two bear markets in one decade later, the concept of risk of loss based asset allocation has been strongly validated again. I don't have copyrights on bear markets but prior to my posts about bear market based risk of loss, nobody talked about that possibility and consequences. Just wanted to set the record straight.

Adrian
anenu@tampabay.rr.com
Good thing too. No one before had ever bothered to look at the historical record. No one alive lived through the 1970s so that knowledge was lost until you came along. Not to mention the great depression. So no one knew it was possible for market to really drop.

So thanks!
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Post by Rodc » Sat Oct 09, 2010 4:06 pm

I look forward to reading the new version.

I think the old one was one of the finest introductions to the topic. Covered what needed to be covered, written to be understandable to most anyone, compact but did not skip important topic.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

chaz
Posts: 13604
Joined: Tue Feb 27, 2007 2:44 pm

Post by chaz » Sun Oct 10, 2010 12:59 pm

I am reading the new version. Thanks for the link.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

User avatar
LHerr
Posts: 289
Joined: Sat May 17, 2008 7:47 am
Location: Portland, OR

Post by LHerr » Tue Oct 12, 2010 6:00 am

I found the investing road map to be extremely useful and I am recommending it to friends. The one thing I would add is that investors find a software tool to monitor and maintain their portfolio. This should include an asset allocation tracking system, portfolio return vs. an appropriate benchmark, and a way to measure portfolio risk.

LHerr

jimkinny
Posts: 1278
Joined: Sun Mar 14, 2010 1:51 pm

Post by jimkinny » Tue Oct 12, 2010 6:34 am

Thanks for the link,

Jim

Post Reply