Online Investing Hacks: A Handy Primer

The always-interesting and constantly-expanding Hacks library of books from O'Reilly now features a nifty primer to online investing, and financial planning in general, with the book Online Investing Hacks.

As is par for the series, the book is designed to be dipped into at random. The topics covered include screening investments, collecting financial data, hacking Excel for financial analysis (I'm really excited about the web query features), fundamental and technical analysis; and then goes into executing trades, mutual funds and portfolio management, before wrapping up with the basics of financial planning.

A variety of convenient and easy-to-follow examples illustrate the scenarios described. The book covers ways to get the best data for free, and for a fee. It covers most common terms, ratios and formulae, and even stretches the envelope in a few cases by "hacking the hack." For example, it illustrates how to consider price/tangible book value instead of price/book value when analyzing stocks. Real-world examples like a close look at Enron's financial statements help in creating a sense of caution, while still providing the tools to mitigate risk.

The Mutual Funds section is also quite detailed, although I did not focus much on this since I manage my own portfolio somewhat actively. One hack from this section states, "Beware the closet index fund," and warns against investing in funds, big or small, that merely mirror standard index funds, adding on their own expense costs and taxation hassles. The author notes wryly,

Some investors collect funds like other people collect antiques. When you collect four or more funds in the same investment style, you're setting yourself up for index-like returns. In fact you're turning your own portfolio into a closet index fund and paying additional fund expenses to do so. Only buy a new fund if it is substantially different from the funds you already own.

I particularly liked the section on portfolio management, which used sports metaphors to illustrate the dynamics of effective portfolio management through proactively playing defense to protect your portfolio from harm, as well as playing offense to enhance your portfolio's performance.

Article Author: Aaman Lamba

Aaman Lamba is a Blogcritics editor, as well as the Publisher of Desicritics.org, a Blogcritics network site covering media, politics, culture, sports and more with a global South Asian focus

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