Contents -- Preface -- An Explanation of the Book Title -- Acknowledgments -- Chapter 1. Three Basic Rules -- Three Basic Rules -- Three Real Life Stories -- What are Our Objectives? -- Some Basic Assumptions -- A Fable -- Summary -- Questions -- Part I: DIVERSIFY -- Chapter 2. The Expected Return -- Risk -- Why Use Debt? -- Returns and Taxes -- Summary -- Appendix 1 Compoud Interest -- Questions -- Chapter 3. Securities are a Fair Gamble -- Means and Variances -- Managing Risk: Using Multiple Baskets -- The Ultimate Tool of Analysis: The Covariance -- Summary -- Appendix 1 Computation of the Variance -- Appendix 2 -- Appendix 3 -- Appendix 4 Calculation of Covariance for Sunshine - Rain Example -- Questions -- Chapter 4. Types of Financial Securities -- Corporate Bonds -- Preferred Stock -- Common Stock -- Convertibles -- Investment Alternatives: Other -- Exchange-Traded Funds (ETFs) -- Quant Funds -- Annuity -- Fund of Funds of Hedge Funds -- Risk -- Summary -- Questions -- Chapter 5. Investment Tips versus an Efficient Random Walk -- Flawed Investment Strategies -- The Greater Fool Theory -- Stop Orders -- Buying a Put Option -- Buying and Selling Options -- Converting a Stock into a Bond -- Dollar Averaging -- Use of Leverage -- An Investment Strategy -- A Contrary Investing Strategy -- Tips -- A Trip to Las Vegas -- A Get Rich Strategy -- An Efficient Random Walk -- The Beta Factor (The Capital Asset Pricing Model) -- Summary -- Questions -- Chapter 6. Analysis for Buying a Stock -- Financial Analysis -- The Balance Sheet -- Assets -- Sources of Assets -- The Income Statement -- The Change in Financial Position -- Consolidated Statements -- Adjustments to Financial Statements -- Adjustment of Assets -- Adjustment of Income Statements -- Ratio Analysis -- Measures of Liquidity - Quick and Current Ratios -- Long-Term Financial Liquidity.

Earnings of the Stockholder -- Computation of Earnings per Share -- Reporting for a Conglomerate -- Buying Common Stock -- What do Real World Investors Consider? -- Current Price/Earnings Ratio -- Current Price/EBITDA -- Dividend Yield -- Current Stock Price -- Price Volatility -- The Beta -- Balance Sheet Ratios -- Footnotes to the Financial Statements -- The Story of the Company -- Earnings Trends -- Special Information -- What Other Investments are Currently Held? -- Putting it Together -- The Efficient Market -- Summary Remarks on Financial Analysis -- Investments: Analysis of Common Stock -- The Allocation -- Questions -- Part II: TAX CONSIDERATIONS -- Chapter 7. Stocks versus Bonds -- The Bond "P/E" -- The P/E for Stock -- Tax Considerations -- The Indifference Rate for Debt -- Dividend -- Retention of 100 and then Capital Gain -- Summary -- Questions -- Chapter 8. Taxed and Tax Deferral Accounts -- Factors Leading to Retention in Tax Deferred Account -- Factors Leading to Transfer to Taxed Account -- Is Using a Tax Deferral Account Desirable? -- Stock Placed in Taxed or Taxed Deferral Accounts -- A Traditional IRA -- Withdrawals -- Roth 401 (K) -- A Tax Deferral Account (401 (K)) -- Roth 401 (K) -- Tax Efficient Funds -- What are the Facts? -- Stocks or Bonds -- Mutual Funds -- Summary -- Appendix 1 Is a Transfer from a Tax Deferral Account Desirable? A Numerical Example -- Appendix 2 -- Questions -- Chapter 9. Dividends versus Share Repurchase -- The Option to Retain -- Equal Tax Rates -- Advantages of Share Repurchase -- Stock Price Effect -- Summary -- Questions -- Part III: MARKET TIMING -- Chapter 10. The Stock Market Level -- The P/E Ratio -- Interest Rates and Dividend Yields -- Margin Loans -- Cash-Stock Asset Allocation of Investors -- International Comparisons -- Cash Flow Multiplier -- Stock Index Measures -- Book Value -- Q Ratio.

Return on Investment and Return on Equity -- Macro Measures -- Almost Any Market Level Can Be Rationalized -- Consequences of an Inflated Market -- The Investor in the Overpriced Market -- The Return Through Time -- Net Consumers and Net Investors -- The Investment Split -- Life-Cycle Funds -- The "Number" -- Forecasting -- Summary -- Questions -- Chapter 11. The Stock Market is Too High or Is It? -- Common Stock Equity -- Forecasting the Peaks -- The Level of the Market: 1929 -- Definition of Too High -- Were Stocks Obviously Overpriced in October 1929? -- Economic Indicators were Strong -- Thursday, October 24, 1929 -- Tuesday, October 29, 1929 -- An Interpretive Overview of Events and Issues -- The Public Utility Sector -- Straws That Broke the Camel's Back? -- Edison Electric of Boston -- Conclusions and Lessons -- Answer to Question -- References -- Questions -- Chapter 12. Ten Subordinate Rules and Other Suggestions -- Rule 1: "Your Investment in Common Stock Should Reflect the Sum of Bank Deposits Plus Bonds Plus Insurance Plus Vested Pension Assets That You Own." -- Rule 2: "Invest in Different Industries." -- Rule 3: "Rarely Buy Shares in the Company or the Industry for Which You Work (the Rule Does not Apply to Stock Options and Discount Purchases of Stock if There is no Restriction on the Sale of the Stock)." -- Rule 4: "Your Tax Bracket and Status Should Influence the Mix of Investments. Use Simple Obvious Tax Shelters, but Beware of Sophisticated Devious Tax Shelters." Tax Exempt State and Local Bonds are an Example of an Obvious Tax Shelter for a High Tax Rates Individual. -- Rule 5: "The Old Adage, 'Buy Low, Sell High,' is Wrong. Rarely Sell a Stock Voluntarily Unless You Need Cash, a Tax Loss, or Your Tax Situation has Changed." The Old Adage Should Read, "Buy Low and Hope the Stock Price Increases.".

Rule 6: "Never Act on Advice (Tips) That Leads to Buying Without Your Checking on the Facts. If You are Adverse to Risk, You Might Listen to a Sell Tip, but Again the Recommendation is That You Check the Facts." -- Rule 7: "Do Some Basic Financial Analysis Before Buying or Selling Individual Stocks." -- Rule 8: "Preferred Stock Yielding Less than an Equally Risk Rated Bond is not a Good Investment for a High Tax Investor or a Low Tax Investor." -- Rule 9: "Consider the Tax Consequences and the Fees Associated with Your Investment Strategy." -- Rule 10: "Follow the Spirit of the First Nine Rules, not the Letter." -- Modifications for a Non-Average Investor -- Investment Decisions -- Very Short-Term Investments -- Tax Considerations -- Uncertainty -- Transaction Costs -- Expertise Required -- Increasing the Risk -- Strategies That Can Lead to Maximum Returns (and Maximum Losses) -- Inflation Protection -- TIPS -- Corporate Inflation Bond -- Long-Term Financial Planning and Setting Goals -- Financial Planning -- Setting Goals -- Investing Strategies -- First Line of Defense -- Before Investing in Securities -- Multiple Choice -- Lifestyle Fund -- A Brief History of the Dow Jones Industrial Average -- My Favorite Book on Investments -- Summary -- Questions -- Solutions to End of Chapter Questions -- Solutions: Chapter 1 -- Solutions: Chapter 2 -- Solutions: Chapter 3 -- Solutions: Chapter 4 -- Solutions: Chapter 5 -- Solutions: Chapter 6 -- Solutions: Chapter 7 -- Solutions: Chapter 8 -- Solutions: Chapter 9 -- Solutions: Chapter 10 -- Solutions: Chapter 11 -- Solutions: Chapter 12 -- Glossary.