Yes, You Can Supercharge Your Portfolio!: Six Steps for Investing Success in the 21st Century

by Phil DeMuth and Ben Stein

Book Overview

Most investors spend their time worrying about selecting individual stocks and mutual funds: big mistake Modern Portfolio Theory--developed in 1952 by economics Nobel Prize winner Harry... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 1401917631
• ISBN13: 9781401917630
• Release Date: January 2008
• Publisher: Hay House
• Length: 178 Pages
• Weight: 1.00 lbs.
• Dimensions: 0.8" x 6.6" x 9.3"

Customer Reviews

A Deceptively Important Book for Your Portfolios

I will not review ground related to the book that has already been so ably covered here. Instead I want to relate my own experiences as to the improvement of portfolio composition that can be achieved both with this book and especially with the Quantext software they use throughout. Most people will likely arrive at the Quantext software by reading this book. I came at it from the opposite direction. Full disclosure; I have been investing since 1999 an have been an avid student of the markets, different approaches to the markets (including many variations of fundamental and technical analysis), and market history ever since. I have no affiliation or interest in Quantext other than the value I find in its use. The star of this exploration is the Quantext software but "Yes, You Can Supercharge Your Portfolio!" brings the sophisticated concepts of risk/reward balancing into an easily understandable format with excellent examples as a point of departure. The only other Stein/DeMuth book I've read is "Yes, You Can Time The Market!," which I bought a couple of years ago and reread recently after appreciating the content of this recent book. They are different books entirely but both really useful in taking sophisticated market studies and making them easily accessible. Now to the meat. The basic concept of modern portfolio theory (MPT) is that there is a relationship between the risks you take on and the reward you should expect for taking that risk, but that there is a way to optimize that risk/reward balance. Reward is measured by returns and risk is measured by standard deviation. The engine behind the benefits of MPT is proper diversification, but this is a subject that many investors really don't understand. Dividing your assets between domestic large caps, mid caps and small caps offers almost no diversification at all as these asset classes are highly correlated to each other; meaning that when one class goes down they all tend to go down, and vice-versa. A properly allocated portfolio should have a handful or two of non-correlated asset classes so that when some things are going down others are going up or staying stable. Other asset classes might include real estate, commodities, developed and emerging foreign markets, or riding different sectors. With the broad array of ETFs available these days finding diverse vehicles to invest in has never been easier. The point is to make your overall portfolio as limited in volatility as possible without giving up the potential for good returns. Intuitively the advantages of this don't make much sense to some people but a simple example should illuminate the concept. Suppose you had the following performances over a four year period. Which would you prefer? A) 10% 10% 10% 10% B) 5% 32% -15% 18% C) 18% -15% 32% 5% D) 8% 13% 11% 8% They all average 10% a year but because of the volatility of returns they compound differently. If you invested $10,000 this is what y

Superchage Book and Software Breakthrough for the Individual Investor

Yes, You Can Supercharge Your Portfolio and the accompanying software are a significant contribution to the individual investor. Following in the lineage of their popular investment book series, Ben Stein and Phil DeMuth have again charted new territory by demonstrating the principles and concepts of portfolio theory through portfolio examples and the use of a special software. Portfolio theory shows that it is more important to focus on how our securities interact as a whole. By way of examples they show how the ordinary investor embarks on the path of investing. Unknowingly this path is very risky and subject to possible failure. The book progresses from risky investment strategies to less risky with high yielding results and portrays the development of "typical" and "optimal" strategies spanning the ordinary investor's lifetime. By example the book shows what to avoid and what to emulate and the reader is given a choice as which path they may wish to follow. The center piece of the book is the concept of the Core Portfolio which is "supercharged" by the addition of hand picked securities. Over a lifetime of investing such supercharging could by way of compounding make for significantly greater yields, possibly cutting off years of having to work or having to work much longer than anticipated prior to retirement for not following this simple but effective piece of advice. Also, an all stock portfolio is demonstrated for the more sophisticated, mature investor. The Supercharge book is a start point in one's effort at understanding and investing using the principles and concepts of portfolio theory investing. The software, Quantext Portfolio Planner (QPP) which was developed by Geoff Considine of Quantext, Inc. (www.quantext.com) really puts the investor in the driver's seat creating a viable portfolio by contrasting and comparing portfolio alternatives. Once one has devoured the Supercharge book the reader will certainly want to give QPP a test run (30 day free download) and access the multitude of white papers Considine has written on the subject of portfolio theory investing and Monte Carlo forecasting which is available at his web site. Geoff Considine deserves the highest level of praise for creating QPP for the individual investor. Here-to-for only large investment houses have had access to the computing power of this type of software. Who is this book for? The book and accompanying software is for any individual investor or investment advisor wishing to test out a portfolio before investing any money in the market. Additionally, the book and software are ideally suited for investor education courses such as an introductory college course, adult education (high school and community college) or in a high school investment literacy course.

For anyone who wants to understand their investments as a whole (a portfolio)

Ben Stein and Phil DeMuth are very good friends for the those of us working to get our finances ready to meet the obligations of the mature life. In their several books explaining various facets of our finances, they urge decisions and behaviors that are sound, practical, and in our long-term best interest. Most of us know full well that we aren't the next Warren Buffett and understand that active trading is for the professionals and costly to our future prospects. This wonderful book explains how you can build a great portfolio that provides best for what you need. That is, some folks want returns and can bear more risk, some are closer to retirement and need to lower their risk, others want income more than capital gains, and so forth. The book opens with a TV show where Ben Stein and one of Jimmy Kimmel's friends picked investments. Stein and DeMuth use these portfolios and how they performed to tease out the basic principles of this book. Of course, Stein's did well and the other guy's did not. But it is WHY one performed well and the other did not that is the point of this book. It wasn't luck; it was statistics. Let me hasten to add that you do NOT need to be a statistician or even schooled in statistics to use the method Stein and DeMuth present or to read and enjoy the book. The few concepts they use are clearly and simply explained to the level required. Let me also point out that this book will be very helpful to you even if you don't want to create and manage your own portfolio because it will help you become informed about what your financial adviser is suggesting, what to look out for, and what to ask about. The book presents six steps and adds in a couple of special topics, two appendices, a glossary, an index, some info about the authors, and also points you to a few free websites that will be immensely helpful to you including the one run by the authors. Step 1: Evaluate your needs. That is, pursuing maximum returns is not enough. You have to decide what you are after and develop the right portfolio to deliver that. Where you are in life, your present financial circumstances, and your goals will all influence the course of action that is BEST FOR YOU, not some financial planner or stockbroker. Step 2: It's your whole portfolio that matters. Your investments will vary in their performance and it is the way they behave when taken as a whole that matters. If all your stocks go up or down at the same time you are in for a wild ride. However, if you can build a portfolio that delivers more consistent returns because some zig while others zag, well, now you are on to something. The authors show you how to do this in simple and pretty safe ways. Step 3: Take on risk intelligently. The authors do a great job in explaining how to combine investments with a clear understanding of their individual and, what is more important, their combined risk versus return. If two portfolios have the same expected return, you

Two books in one

This is like two books in one. Depending on how you approach the financial markets, it's very likely at least one of them will help you a great deal. Maybe because I retired at 56 after a perfectly ordinary job with a negligible pension, people ask me about investing. A week ago, I was asked by someone with more money than I what percentage of his portfolio he should invest in international stocks. My answer was that he should read the first 60 pages of this book (what I call "Book 1" out of 2). He wasn't asking the right question(s). It is apparent that very few people know how to diversify their portfolios properly. ("Properly" to me means getting the return you require for the least volatility and risk.) The first 60 pages explain this in easy to understand language and provide lots of useful examples. In fact, I expect many people will latch onto one of the example portfolios and live more happily ever after. For people who really want detail, this isn't the right book - I suggest Roger Gibson's Asset Allocation (a new edition is just out, but be warned that if it's like the third edition, it is much more difficult reading than Supercharge). "Book 2", the other two-thirds of Supercharge Your Portfolio, discusses how to construct a proper portfolio that meets the reader's individual needs (vs. the generic portfolios of "Book 1"). This is more complicated, as you'd expect, and requires a tool. The book uses the quantext tool, QPP, for its examples. Armed with the book and the tool (I did the free trial and now have it on order - I used to rely on a weaker tool on Fidelity's web site), I expect to be able to take my current portfolio, use my investing preferences, and improve my portfolio to perform at least a little better with less volatility. Remember, I depend on my portfolio for retirement. Two more notes, sorry for the long review. This book does not address how to determine what your individual needs are - my current favorite here is Lucia's Ready, Set . . . Retire! However, Supercharge DOES encourage you to combine mutual funds and ETFs with individual stocks, which may help those who find mutual funds too boring to become both more successful while being adequately entertained. The content is good overall and the content of "Book 1" is excellent. That said, this book seems less tightly written than the authors' earlier books and many of the analogies are downright awful. I will continue to recommend Supercharge to my friends, anyway.

Stuff that every investor should know

First, let me acknowledge that I am not an unbiased reviewer. I am the author of the portfolio management software used for the examples in this book (more information at www.quantext.com). That said... It is hard to believe but it has been about two years or so since I first sent Phil DeMuth a review copy of Quantext Portfolio Planner (QPP). Since then, he has become an avid user and I have had the pleasure to get to know Phil. We have spent quite a few hours discussing the key issues that investors and advisors need to understand, as well as how modern tools like forward-looking Monte Carlo analysis can dramatically improve how the vast majority of investors operate. We both believe passionately that investors are missing the most important piece of knowledge to effectively manage their money: taking a portfolio-focused approach to money management rather than trying to pick the next hot fund or stock. I was thrilled when Ben Stein and Phil decided to write a book about this topic---and especially because Quantext Portfolio Planner is used heavily in the book. If you want a clear and well-written approach to how to use modern methods to manage a portfolio, read this book! This book will be valuable to those who already use QPP as well as to the interested investor who simply wants to understand the best methods for managing his or her portfolio. The key issues revolve around using standard financial metrics to see if your portfolio is well-diversified and whether you are getting as much return as possible for the risk that you take on. Many investors think that they are diversified because they buy lot's of different funds. Not so! Rather than just buying a 'pie chart' allocation, this book explain how investors and advisors can rationally construct their best portfolios. Note: I have written a much more detailed review that is published on SeekingAlpha: http://seekingalpha.com/article/59991-book-review-stein-and-demuth-s-supercharge-your-portfolio