My Required Reading List

One of the most important things I learned from the book "Rich Dad, Poor Dad", is that our traditional education system is severely lacking in the area of financial education. As a result, even people highly educated in the traditional sense often lack basic financial literacy. That thought has caused me to start a reading rampage on the topic of money, wealth, and of course investing and the stock market. Included below are the three best books that I have read on the subject.

Rich Dad, Poor Dad
Robert Kiyosaki and Sharon L. Lechter, ISBN: 0316857750

Jim Cramer's Real Money: Sane Investing in an Insane World
James J. Cramer, ISBN: 0743224892

The Millionaire Next Door : The Surprising Secrets of America's Wealthy
Thomas J. Stanley and William D. Danko, ISBN: 1563523302

I would consider these the foundation of my financial education and mindset. In addition, I highly recommend other books in the Rich Dad series. While I've only read "Retire Young, Retire Rich" and "Prophecy" so far, the manner in which they are written is consistent with the philosophy of the original, and I expect the other books in the series to be as well.

Some other interesting books that I've read on the subject of money and investing are "The Little Book that Beats the Market", "Stock Market Miracles", and William O'Neil's classic "How to Make Money in Stocks." I also read Jim Cramer's autobiography, "Confessions of a Street Addict" just because I find him interesting. The point is, the more that I read, the more that I learn. Take "Stock Market Miracles", for instance. It reads like it was written by an illiterate moron. But if you can get past the poor English and awful grammar, there are actually some good ideas in there. It just goes to show you that having good investment ideas does not mean that you are able to write well about them. So at times even poorly written books are still good books, if they generate ideas that can make you money.

I recently relocated and cannot stress enough the value of a good library. If you don't live near a quality library, it's worth the drive to one. My old local library has a handful of books on the subjects of investment and wealth, and most had copyrights from the Sixties. My new library has thousand of books on the subjects, and seems to get more every time I go. I've been reading twice as many books as I used to since I'm no longer shelling out twenty bucks every time a new one comes along.

New Feature Added to Sidebar

Starting today, I'm going to keep a running total of my percentage gain for options on the right hand side of this page, under my profile. I'll only show realized gain, since you shouldn't count your gain before you actually sell to lock it in. I'll also list the number of transactions I've made so that "He got lucky (or unlucky) once" theory will hopefully be dismissed. Gain is shown with commissions considered, but not taxes. I'm not posting it to brag, but rather to give you a reference point about what I have been able to accomplish using options. I'm not recommending that you try it, but do hope the information is useful.

Working When You're Not

I've been out of the world of the stock market for a few days, since I went away for the Fourth of July Holiday. That didn't stop my account from working for me while I was gone. Before I left, I set a few Good till Cancelled limit orders. When I returned I had email alerts telling me that some of my orders were executed and a new chunk of cash was in my account. As a reminder, when you place a limit order, the duration is either for "Today", or "Good till Cancelled". If you set it for today, and it doesn't get executed by the time the market closes, your order will expire and the money you had allocated for the purchase will be returned to your account. Good till Cancelled orders will tie up your allocated cash and be queued for execution until you manually cancel the order. Another option I often choose is "All or None." That means that if I place a limit order for a certain number of shares or contracts, the order won't be filled unless it can get all of them at that price. Without that, you might get fewer than you ordered at that price. The problem there is that if the duration of your order is for the current day, the rest of the order will expire. That's a problem if you were estimating that commissions were only a small part of the purchase price because they may become a large portion as a result. For example, let's say I place a limit order for 10 contracts at $1.00. With Scottrade, that would cost me $7 plus $1.25*10= $19.50 in commissions and $1000 for the options. So the commission is less than two percent of the cost. But, if I haven't selected "All or None" and the order expires before the whole thing gets filled, I'll be paying a higher percentage commission. Let's say only 1 contract gets bought at that price. I'd pay $7 plus $1.25 = $8.25 in commissions and $100 for the options. Now the commission is more than 8%!
So what I do is either select All or None, or make the order Good till Cancelled. The second method works, because if the order is filled at multiple times, you only pay the commission once.