Market Overview

The 5 Worst Books On Investing Ever Written

Investing is a tricky mistress, let alone sharing tips and strategies with others. But that doesn't excuse the painstakingly terrible advice found on the pages of the titles below. Here's Benzinga's list of the worst books on investing ever written, in no particular order:

1. Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them, by David Lereah

Its annoying long title notwithstanding, Are You Missing? takes the cake as the most outrageously bullish casualty of pre-housing crash hysteria. The 2005 book by the chief economist for the National Association of Realtors, David Lereah, refuses to stammer at the thought of a housing bubble. Instead, he assures that real estate "will continue to outpace other investments" and guarantees home owners "dramatic increases" in their overall wealth. We don't have to connect the dots for you to figure out how this strategy played out. In the process, Lereah likely duped thousands of readers. Out of the 62 ratings on Amazon, 41 users gave the book one star.

From the readers:
For me, this was more comic relief than any scholarly analysis. The author has a vested interest in the bubble not bursting, and he's selling his soul with this book to prove it. He spins webs of demographics and interest rates, but he never ever addresses the core issues that determine housing values. -- NewYorkBuck (4/19/2005)
 

2. Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market, by James K. Glassman & Kevin A. Hassett

The Dow Jones Industrial average opened at mere 10,528.25 the day Dow 36,000 hit the bookshelves in 2000, but that didn't stop Glassman and Hassett from picking a completely arbitrary number to push their belief that stocks had been undervalued for decades and were soon going to skyrocket. The dose of Clinton-era naivety was matched in its simplicity by the one track mind of the authors, who justified their every move with the standard case that over long periods, stocks always outperform alternative investments.

Publishers Weekly ripped the book upon its release, assuring that "experienced investors will wince at its simplication and overstatement." Hassett, a former Federal Reserve economist, continues to invoke wrath for the book. Paul Krugman, refuting the Hassett co-authored Romney tax plan in an Aug. 10, 2012 column, asserts that, "the co-author of Dow 36,000 doesn't exactly have a reputation to destroy."

From the readers:
Dow 36,000 elicits plenty of laughs. It would have taken a couple of academics to produce such a relentlessly wrongheaded book...[the authors] think they are smarter than the market. They feel that right at that moment (mid-1999) the Dow should have been three hundred percent higher than it was at the time and that the proper PE ratio was 100. Nevermind that market history refuted that position, and nevermind that we have seen such claims before and they proved false....[but] the most ludicrous advice in the book is that investors SHOULD fall in love with their stocks -- which is the most fundamental error of all, and one that has victimized countless investors. -- Kenneth Umbach (7/28/2002)
 

3. The Coming Collapse of China, by Gordon G. Chang

Being bullish on China was totally en vogue in 2001, but beneath the overhyped veneer, one man thought he knew better. And he wasn't just any average Joe. He was a "China specialist" who was actually Chinese in origin. How could he be wrong?

Chang's book predicted institutional chaos in the few years after 2001 beginning with China's admission to the World Trade Organization. Lifting trade barriers would leave China open to foreign competition that it simply couldn't handle, insisted Chang. With economic instability, the communist regime would be toppled by millions of resentful peasants, and by 2006, there would be complete governmental collapse. Reviewers trashed the book, questioning Chang's knowledge of his home country in the process.

From the readers:
Chang's book is littered with odd inaccuracies and unfairly negative interpretations that left me questioning the merits of his bigger arguments. On the lesser side, for example, he incorrectly identifies pop singer A Mei as "Ah Mei" and describes internationally renowned architect I.M. Pei as born in Guangzhou. Pei himself says (in a June 2004 interview in Architectural Record) that he was born in Suzhou. Chang twice describes the White Swan Hotel in Guangzhou as "aging" and once as "dingy" -- it is no such there (I was there in 2002, 2003, and 2004). He claims the Chinese government Westerners stay if they are adopting Chinese babies from Guangzhou -- wrong on both counts. The babies come from all over China, and the adoptive parents stay at the White Swan because it is a five minute walk from the American Consulate where they will pick up their infants' American travel visas. More disturbing, he disparages Western companies' first mover advantage as nonexistent while ignoring the experiences of KFC, Coke, Pepsi, Nike, Polo, Budweiser, P&G's Crest and Pampers brands, Nestle, and VW. Chang inappropriately equates China's 40% national savings rate as a vote of no confidence in the government, ignoring the lessons of decades, if not centuries of historical experience and upheavals as well as cultural tradition. He also manages to describe Internet usage in China as "hobbled" even as it grew from October 1997 to December 2003 at a compound rate of 100% per year! -- Steve Koss (7/28/2005)
 

4. Dow 100,000: Fact or Fiction, by Charles Kadlec

Before Dow 36,000, there was Dow 100,000. The 1999 title almost makes Glassman and Hassett appear prophetic. Inside, Kadlec declares that the world is entering a new era -- "an historic moment, the beginning of a Great Prosperity -- a decade or more of above average economic growth."

The author asserts that the Dow (which has never surpassed 15,000) would reach 30,000 points by 2010 and 100,000 by 2020!! Never one to toot his own horn, Kadlec reveals that his predictions even surprised himself. Unlike Glassman and Hassett, Kadlec doesn't rely so much on the belief that stocks are undervalued, as much as he believes that the U.S. is going through its greatest period ever. The Cold War is over, technology is booming, and the aging population are all recipes for the chips in Kadlec's bull basket.

From the readers:
The correct title for Kadlec's supply-side nonsense is "Dow 100,000: Fiction." The introduction to this book also contains the wild prediction made by Acampora that the Dow would reach 18,500 by 2006, as well as the unsupported claim by Ibbotson that the Dow would reach 120,000 by 2025. Many copies of this book of fiction now sell for a penny. Even at a penny it is overpriced. -- Michael Emmett Brady (9/6/2005)
 

5. Dow 30,000 by 2008: Why It's Different This Time, by Bob Zucarro

To be perfectly honest, the background on Dow 30,000 by 2008: Why It's Different This Time is a little shady. The author, Bob Zucarro, was once a respected analyst whose Grand Prix mutual fund achieved triple-digit returns in 1998 and 1999. Then it seems, it all went downhill. Today, his first fund -- Target Investments -- is out of business. Grand Prix delivered a mere 6.18% return in 2012 and performed below the Morningstar Moderate Target Risk.

Like Glassman, Hassett, and Kadlec, Zucarro was once rabidly optimistic about the stock market, predicting that the Dow Jones Industrial Average would surpass 30,000 when in reality, it was at its weakest point in modern history. Out of its 20 ratings on Amazon, 15 users gave it one star.

From the readers:
Other works from this author:
"Ringo Starr Will Be the Best Solo Beatle" - 1970
"Your New Flying Car" - 1971
"A Man on Mars - Why it Will Happen Soon" - 1972
"Personal Computers - An Impossible Pipedream" - 1974
"The Metric System - The System We Will Have to Adopt" - 1976
-- Julian Jaynes (10/24/2008)

 

Follow Alex Biles on Twitter @disorderorder

Posted-In: Trading Ideas General Best of Benzinga

 

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