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Review: The New Coffee House Investor

Book written by: Bill Schultheis

Enjoyable to read and very good content.  The New Coffee House Investor is easy to read and at 180 pages it goes pretty fast.  The content is similar to The Little Book on Common Sense Investing, but written in a less technical style that is easier to apply. 

The tagline for this book is “How to Build Wealth, Ignore Wall Street, and Get on With Your Life”, which is well said, but harder in practice.  Some of the best advice in the book is along the lines of “Ignore Wall Street”.  The author started his career as a stock analyst or as he calls it a “stock picker”.  He does a nice job of outlining how the fees and commissions work in many “financial products”.  He explains, this is why these funds and “products” get all the hype and attention, and why index funds seem boring.  Simply, Wall Street makes it’s money on “financial products” the attention and marketing budgets flow there.  Hence, his advice is to generally ignore marketing on Wall Street as most of it is marketing noise.    

This book is loaded with good information on how to think about investing and choose investments.  I don’t want to spoil it, but yes, the author is a proponent of low-cost index investing.  Additionally, he recommends long-term investing.  In his words it takes out some of the risk and is “less like betting”. 

I appreciate the example the author uses to illustrate how investing for the long-term (over 5-10 years) reduces risk.  Simply, when investing for a longer period of time stock market volatility becomes less of an issue.  He illustrates this by showing a three-month view of the S&P 500.  The chart looks like a ragged mountain range with its daily ups and downs.  Contrarily, he shows a 75-year chart, the ragged mountains are now a rolling upward chart from left to right that any investor would appreciate.  His point is volatility isn’t as much of an issue in the long-term.  In my newsletter, I like to look at the 5-year data for the market sectors to take out some of the volatility by looking longer term. 

I would recommend this book for the new investor as well as the experienced investor who feels the urge to find the next hot stock or mutual fund versus investing in index funds for the long-term.  Investing in a regular “boring” portfolio may be just what you need to “…Build Wealth, Ignore Wall Street, and Get on With Your Life”.