The Big Gamble
The Big Gamble: A Friendly Financial Guide
The Big Gamble by Jose Roncal and Jose Abbo was endorsed by Donald Trump, a man who needs no introduction. Trump was an appropriate choice for an endorser because he inspires inexperienced investors to think big, but also think smart. That’s been a constant theme throughout all of the seasons of The Apprentice and his numerous business advice books.
This book reads very much like the Donald’s books too, minus the Donald’s anecdotes. It is an excellent tutorial in personal financial management and wealth-building for a non-financial person. It does not overwhelm you with economic theories or statistical tables. It is an excellent guide to help you ask the right questions when you speak with a broker or certified financial planner, and you want that person to do the quant work for you so that you can build the right portfolio.
The Big Gamble is not a guide to picking stocks or bonds. It is more elementary, it explains the differences between a speculator and an investor. A speculator, in a basic sense, takes larger risks and looks for short-term gains, and bites harder in bad times than an investor, whose financial strategy is more long term. The authors also point out that some investments once thought to be long term holds are now considered to be speculative, because fund managers turn over their portfolios more frequently, and their desire for a quicker exit drives the market.
The authors also take a unique position: that some investments that were once thought to be safe, such as blue-chip stocks or U.S. Treasury bonds, are not. Blue chip companies—and they cite General Motors as one example—and often in cyclical industries, and they can always decide not to pay dividends in hard times. Government bonds are secure, but they do not provide adequate cash flow to be more than a buffer in bad times. They do not offer enough of a return to ensure a financially secure retirement.
Roncal and Abbo also drop a hint: that all investors must become more speculative, as long as they are prepared to take calculated risks. They start by using the analogy of the professional gambler who knows the math of his games, versus the high-stakes fool who believes he is a high roller, but has no clue about what he is doing. Then they talk about entrepreneurs such as The Donald and Richard Branson who have taken very daring, but calculated risks that have paid big. But they also add that these entrepreneurs have put themselves on the hook for major debts. Not every investor or speculator is equally confident.
They also talk about the economic signals that show “the next big thing” and when potential bubbles are about to begin. I have read several stories about the collapse of Bear Stearns and other financial institutions in recent months, and I have to say that Roncal and Abbo make the clearest and simplest explanation as to why the collapse happened. I wish that I had read this book before these stories appeared in the business press. For more visit their Squidoo lens at http://www.squidoo.com/thebiggamble.
Contact Stuart Nachbar at http://www.EducatedQuest.com , a blog on education politics, policy and technology or read about his first book, The Sex Ed Chronicle, a novel on education and politics in 1980 New Jersey, at http://www.SexEdChronicles.com .