Amazon's Best Investment Book Reviews: Have You Been Brainwashed?

Most popular investment books are published for the already rich and famous, by an industry that has become just too good at the business of selling books. Rarely will a publisher take a chance with the work of an unknown author. Certainly, it's a no brainer to sell a Jim Cramer, Peter Lynch, Robert Kiyosaki, or Maria Bartiromo effort while a uniquely new approach to solving the puzzles of Wall Street, presented by an unknown writer or commentator, requires some major financial risk.

Big publishers want to sell already big names; discovering new ones is not in their wheelhouse. Are they responsible for the problems in the financial markets? Of course not, but they do have a perverse, if indirect, impact. By constantly publishing the same Wall Street friendly message, they contribute to the brainwashing.

Without a wider distribution of new ideas based on old wisdom, Wall Street as usual remains Wall Street as usual and the average investor remains uninformed and ill advised about the dangers of the financial markets. The biggest investment mistake generators are cleverly ignored by most of the books I've read about investing--- even compounded.

The new generation focus on calendar year instead of market cycle performance; the worship of portfolio market value alone, for all securities, even those purchased solely for income production; the use of gimmicks and products instead of securities for portfolio development; the acceptance of speculations as acceptable, "alternative" investments.

Appreciating the differences between investing and speculating, and learning what to expect from your securities in cyclical markets are things that investors must learn about. Have you been brainwashed? These 15 Amazon members are learning to think outside the Wall Street box, without any help (or investment) from publishers:

1) Super Investing Book: I've read a bunch of books on investing and money management, and this is the best, BY FAR!!!!! It's so good, and refreshing, that I've read it twice. (R. Q. A., Bryan, Texas)

2) Back to Basics: This is an eye-opening and intelligent book, which at once offers an analysis of the investment industry and a practical guide for non-professional investors--- a clear set of economic principles mixed with clear commonsensical advice. The author--- describes how to benefit from the ups and downs. Great book. (Professor P. W., Jerusalem, Israel)

3) The Best Investment Book I Have Ever Read: For skittish investors such as me, [the] unique Working Capital Model reduces the emotional factor by taking the emphasis off market value and focusing on growth of working capital. I implemented and followed the trading strategy myself. You would do well to buy this book and read it two or three times. It will save you [from] a lifetime of mistakes that come from following conventional wisdom. (D. J. F., Peoria, IL)

4) Easy to Understand, Even for Non-Investors: This book seems to be much easier to understand than the stock market trading systems advertised on TV. (P. L., Manchester, CT)

5) Happy User: You can take this system to heart--- and to the bank. It works for me. (L. J., Phoenix, AZ)

6) Unique Advice that Stands Out From the Crowd: This is one of two [books] that stand out. Besides being written in an entertaining and irreverent style, it has immensely practical advice. Focus on making money on the market's inherent volatility vs. trying to guess what's next. Saves a lot of time and appears to work. (C. M. Rakes, Annandale, VA)

7) An Enlightened Self-Managed Investor: Not only did I identify many many mistakes that I had made thru the years, but the logical approach outlined [in the book] has to make sense to anybody who has tried to get meaningful portfolio guidelines for future investments tailored to individual needs. Great Book! (A. C., West Palm Beach, FL)

8) Right on the Money: I didn't want to put the book down until I was through. [The] trading strategy is refreshing information that should make a lot of people a lot of money with less risk. (D. M., SC)

9) Investing Made Successful: I heard [the Author] on a talk-radio program and was intrigued by the premise of the book. After reading it, I'm convinced. I'm migrating from mutual funds to individual, high quality equities. [The book] was a slap in the face to make me stop my destructive investing habits. (G. P., Colorado Springs, CO)

10) What a Great Read: This is really an incredible book--- [it] has incorporated very creative insight with some highly original thinking to produce one of the best "investing manuals" ever written. I wholeheartedly endorse this book! ("Jointhefreedom", NM)

11) Courage To Go Against the Pack: The [book] is written in an exciting, enthusiastic, fast moving, style that reads like a novel. Should I ever venture into the stock market, it will be with this book. (S. M., Virginia Beach, VA)

12) L-O-N-G Overdue Investment Strategy Advice: I've long been skeptical of the generic advice handed down to me by advisors over the past--- I don't know any wealthy people who do this. Well now I have a frame of reference for my doubts about the system and a simple plan to take control of my investments. (B. S., Vancouver, BC, Canada)

13) A Must Read To Save Your Money From the Sharks: Written in a conversational style with plenty of humor, this book gives you the questions and answers you need to keep and increase monies that are being put away for retirement. I have purchased three books already and am purchasing five more to give to friends and relatives--- (R. M., San Jose, CA)

14) Brainwashing of the American Investor: Finally the truth! What an eye-opener to see how the markets, and the people behind the markets, have manipulated the average investor over the years. I highly recommend [this] book for your next financial read. (A. J. L., Ft. Pierce, FL)

15) Profit Like a Trader; Sleep Like an Investor: The technique or strategy presented is almost a "why didn't I think of that?" The idea is to run your portfolio the same way you would run a business---not a get-rich-quick kind of plan. You just focus on the essential measures of quality. The key is to maintain your plan during the slow times and reign in your greed during the boom times. (P. G., Moon Township, PA)

Today's publishing industry has a no-risk attitude, and those that are brave enough to deal with new authors are intimidated by the full-return guarantee demands of the bookstores. Stuck in the middle with no choice, most new authors must turn to self-publishing.

The reviews above describe a book that Wall Street wants to keep in the closet, an educational and strategic breakthrough that would have allowed most investors to avoid the bubbles and derivatives that caused our current financial woes. There are probably others--- below the 200-level in all Amazon's best categories.

Bank of America posts 1Q profit but stocks fall

Bank of America Corp. warned of worsening loan default problems Monday even as it posted a first-quarter profit of $2.81 billion. Investors concerned about the banking industry's health sent financial stocks and the overall market sharply lower.

Although Bank of America said higher revenue from the purchase of Merrill Lynch & Co. helped offset a surge in credit costs, it took a $13.4 billion provision for credit losses during the first three months of the year. The amount of its problem loans more than tripled to $25.7 billion and CEO Ken Lewis said he couldn't predict when the bank's credit morass would end.

The bank's stock fell $2.58, or 24.3 percent, to $8.02 as the overall stock market plunged. Last week Wall Street was happy with better-than-expected results from JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc., but investors have been rethinking that initial upbeat response. Banking companies generally benefited during the quarter from unusually strong bond trading, a trend not expected to continue, while recession-driven loan problems persist and are expected to worsen this year.

Also weighing on investors is uncertainty about the government's "stress tests," analyses of bank finances to determine if they'll need more bailout funds if the economy worsens.

Over the weekend there were statements from administration officials that banks may need more government capital," and "the markets are reacting," said Gary Townsend, chief executive officer of Hill-Townsend Capital LLC.

Stress test results are due in the coming weeks.

"The economy hasn't hit bottom, the credit cycle hasn't run its course," said banking industry consultant Bert Ely. "We have a few more quarters of touch and go on profitability because of all the credit losses that are being taken."

Charlotte, N.C.-based Bank of America earned $2.81 billion after paying preferred dividends, or 44 cents per share, compared with a profit of $1.02 billion, 23 cents per share, in the year ago period. Analysts surveyed by Thomson Reuters expected profit of 4 cents per share.

Bank of America, as other banks have done, attributed its profit to trading activities on markets including bonds.

"Like it or not, capital markets is now a core business for Bank of America, and that has more volatile returns than other businesses," said Celent banking analyst Bart Narter. "Bank of America is no longer exclusively a retail bank and there can be more fluctuations."

But troubled loans, also known as nonperforming assets, increased to $25.7 billion from $7.8 billion a year ago. The bank also lost $1.8 billion on credit card services, after posting a profit a year ago.

"Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve," Lewis said during a conference call with analysts. "Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess."

Lewis has been under intense pressure this year over the Merrill purchase, which closed Jan. 1. Shareholders approved the deal before learning of big losses at the New York-based investment bank and reports surfaced that Merrill paid billions of dollars in bonuses to employees before the deal was completed, even as Bank of America was begging the government for aid to complete the acquisition.

With the company's acquisition last year of mortgage lender Countrywide Financial Corp. and its expansion into credit cards after buying MBNA Corp. in 2005, Bank of America is mired in two businesses that are suffering. Consumers are spending less and defaulting more often as they worry over declining home values and rising unemployment.

"Bank of America is more exposed than their competitors in these areas, and it hurts them on the consumer side of the business," Narter said.

Bank of America recorded a $13.4 billion provision for credit losses in the first quarter and set aside $6.4 billion as additional reserves to cover future losses.

The first-quarter results include revenue from the company's acquisitions of Merrill and Countrywide. Revenue more than doubled to $35.76 billion, mainly from the addition of Merrill. It was also helped by a $1.9 billion pre-tax gain from selling shares Bank of America owned in China Construction Bank. Bank of America continues to own about 17 percent of the common shares of the Chinese bank, it said. Analysts expected revenue of $27.13 billion.

Bank of America has received $45 billion in government funds as part of the Treasury Department's $700 billion financial rescue package. Lewis has made remarks of his intentions to repay the government as soon as possible.

Townsend said he isn't certain that Bank of America is able to come up with the money, unlike Goldman Sachs, which has already raised capital.

"Bank of America is not yet positioned to repay the TARP (Troubled Asset Relief Program) and move itself away from the rather uncomfortable embrace of the United States government," he said.

In the investor conference call, Lewis said his bank won't need more capital from the government, reiterating a theme he's touched on often in recent weeks. Asked about the government converting its preferred shares in the bank into common, Lewis replied, "We think we're fine but it's out of our hands ... This is in the hands of the regulators at the moment."

An analyst at Standard & Poor's equity research division, however, said Monday that "a capital raise can't be ruled out."

While Bank of America benefited from stronger-than-expected trading and refinancing revenue, "we don't think revenue is sustainable," wrote Stuart Plesser in a research note. Plesser maintained a "hold" rating on Bank of America's shares.

Microsoft feels more recession fallout, sales drop

Microsoft Corp. said Thursday its quarterly revenue fell from the previous year for the first time in its 23-year history as a public company, while its profit dived 32 percent.

The shortfall illustrated the toll the recession has taken on the world's largest software maker, even though Microsoft remains one of the richest and most profitable companies. In January, Microsoft said it needed to resort to its first mass layoffs, cutting 5,000 jobs, and on Thursday it announced it would do away with merit pay increases for employees in the next fiscal year.

Microsoft did not issue earnings guidance for the rest of the year, and it offered no hope for a rebound in the current quarter.

"I didn't see any improvement at the end of the quarter that gives me encouragement that we're at the bottom and coming out of it," said Chris Liddell, Microsoft's chief financial officer.

Even so, Microsoft shares gained 2.6 percent in extended trading after the earnings report, having closed earlier at $18.92, up 14 cents.

Redmond-based Microsoft said that in its fiscal third-quarter, which ended March 31, profit was $2.98 billion, or 33 cents per share. In the same quarter of 2008, Microsoft earned $4.39 billion, or 47 cents per share.

Microsoft's profit included a $290 million charge for severance from some of the layoffs announced in January. The software maker also wrote down $420 million related to investments that lost value.

Excluding such items, Microsoft said it would have earned 39 cents per share, matching the estimate of analysts surveyed by Thomson Reuters.

Microsoft avoided a steeper drop in profit by slashing costs in several areas, such as sales and marketing, which it cut by 9 percent to $3 billion.

Revenue in the last quarter slipped 6 percent to $13.6 billion, missing analysts' expectations for $14.1 billion.

"I think it was a good quarter in a tough environment," said Taunya Sell, an analyst for Ragen MacKenzie, a division of Wells Fargo. They did "the two things you can do in a tough environment �� try to keep costs down, and make sure customers still want to buy your products."

Microsoft makes most of its profit selling the Windows operating system and business software such as Office, and those divisions have been hammered over the last six months as consumers and businesses sharply cut their technology spending. The holiday quarter, which ended in December, was the PC industry's worst in six years, according to research groups IDC and Gartner Inc. In the following quarter, computer shipments sank about 7 percent.

Even the brightest spot in the PC market �� tiny, recession-friendly laptops known as netbooks �� had a downside for Microsoft because those inexpensive computers run a cheaper version of Windows XP, Microsoft's last-generation operating system.

The Windows division's profit fell 19 percent to $2.5 billion, and its sales sank 16 percent to $3.4 billion in the last quarter.

The division that makes Office saw its profit drop 8 percent to $2.9 billion on revenue that declined 5 percent to $4.5 billion.

Both divisions were cushioned to some extent by businesses that renewed bulk software licenses at about the same pace as usual.

Microsoft's online advertising business widened its quarterly loss, and its entertainment and devices division, which makes the Xbox 360 game console and the Zune media player, swung to a loss from the prior year.

Microsoft said the current quarter would probably still be weak in the markets for PCs and computer servers. Other technology companies have offered mixed assessments about whether a recovery is in sight.

Last week, Intel Corp. Chief Executive Paul Otellini raised some hopes when he said the PC market had bottomed out in the first quarter.

And on Thursday, EMC Corp. CEO Joe Tucci predicted that spending on information technology "has reached or is very near the bottom" and should rebound in the second half of this year. He made those comments even as EMC reported that its first-quarter profit dropped 23 percent and the company planned more cost cuts.

Other executives have been more cautious.

"I don't know how someone could say we've hit bottom in the current economic climate," Dirk Meyer, the CEO of Intel's main rival, Advanced Micro Devices Inc., said Tuesday.

Even as Microsoft and EMC reported profit and revenue declines Thursday, two e-commerce companies fared better.

Leading online retailer Amazon.com Inc. said profit rose 24 percent and revenue jumped 18 percent. And Netflix Inc. posted a 68 percent leap in profit, as more people turned to its DVD-by-mail service as an affordable entertainment option during the recession.

Ford shows it may be able to avoid federal bailout

Better-than-expected earnings from Ford raised hopes Friday that the automaker's restructuring and new products may be enough to spare it from a federal bailout, while General Motors received more government help and Chrysler raced to avoid bankruptcy.

Ford still lost $1.4 billion from January through March, but that was less than expected, and executives said the outlook for future sales was good enough to increase production of its most popular vehicles.

Ford Motor Co. has taken steps over the last few years to avoid government intervention: cutting costs, focusing on its core brands, and introducing new vehicles and advanced features.

"Ford is building the best stuff it's ever made in terms of quality rankings and critical reviews," said Aaron Bragman, an auto analyst at IHS Global Insight. "The vehicles are sufficiently improved and people are starting to realize that."

While Ford tries to go it alone, federal officials are questioning every penny spent by General Motors Corp. and Chrysler LLC, which are both subsisting on government loans.

On Friday, the Treasury Department said it loaned $2 billion to GM, bringing the automaker's total to $15.4 billion. Chrysler has borrowed $4 billion and could get $500 million more so it can keep running while it restructures.

But Ford, under the leadership of former Boeing Corp. CEO Alan Mulally, mortgaged all of the automaker's assets including the trademark blue logo a few years ago, when loans were easier to get from the private sector.

As of March 31, Ford had $21.3 billion in cash to help it survive the worst market for U.S. auto sales in 27 years.

The company said Friday it had spent just $3.7 billion of its cash during the first three months of this year, far less than the $7.2 billion it burned in the fourth quarter of 2008. Investors sent Ford's shares up 11 percent.

"I think the important comparison for us is 'Are we improving versus the fourth quarter?'" said Chief Financial Officer Lewis Booth. "Because the fourth quarter, things were really dreadful.

He said cost cuts and better pricing for its vehicles helped the company narrow its losses from $5.9 billion in the fourth quarter, and he expects continued improvement for the remainder of the year.

Ford said it was able to charge more for its vehicles, which are now coming loaded with features such as electronic blind-spot detection and technology that links drivers' cell phones and MP3 players to a voice-activated command center.

Chrysler, on the other hand, spent more on sales incentives than any other automaker, averaging about $5,000 per vehicle in March, according to Edmunds.com.

With a government-imposed deadline for massive restructuring less than a week away, Chrysler and federal officials held out hope that they could keep the automaker out of bankruptcy court, according to two people briefed on the talks.

Chrysler and the Treasury Department are preparing paperwork for bankruptcy filings one as a reorganization in Chapter 11 with government funding and the other as a liquidation if no government money is available, both people said, speaking on condition of anonymity because the fast-moving negotiations are private.

Chrysler has until Thursday to work out a joint venture with Italian automaker Fiat SpA. GM has until June 1 to make dramatic cuts.

Ford jumped ahead of both competitors in February with a new labor agreement that saved $300 million in the first quarter. A debt-for-equity swap shed $10 billion in debt.

Ford's overall work force in North America shrank 41 percent since December 2006, when it employed 122,400 salaried and hourly workers and began restructuring.

Ford wants to trim its work force even more. Of the 72,300 employees it had in March, 51,000 were union workers who have until May 22 to accept or reject a buyout.

"We started on this transformation of Ford two to three years ago," Mulally said last week in an interview with The Associated Press. "We were very clear with the government that we believed we had sufficient liquidity to make it through this, and we were not asking them for money."

President Obama has dismissed GM and Chrysler's viability plans as overly optimistic, given the current sales climate and the company's sluggish pace of restructuring.

While not discounting Ford's problems, analysts said the company has been more aggressive in key areas where the administration found fault with GM and Chrysler.

For instance, GM was faulted for its unwieldy size, with eight different brands. Ford sold its Aston Martin, Land Rover and Jaguar lines in 2008. It also reduced its stake in Mazda and is currently looking to sell Volvo. That will let Ford focus on Ford, Lincoln and Mercury.

Chrysler was also faulted for focusing on SUVs and minivans, leaving it ill-prepared for high gas prices. Ford is rolling out a mix of fuel-efficient vehicles that have been well-received by consumers who may be concerned about the uncertainty surrounding GM and Chrysler.

Ford's midsize Fusion model is a viable competitor against Toyota Motor Corp.'s popular Camry, with the 2010 models getting praise for quality, safety and fuel economy. More than 40 percent of the 2010 Fusions sold have been hybrids that get 41 mpg on the highway.

Ford is also bringing the Fiesta, its small European car, stateside next summer, and its compact Focus is selling well.

Ford's assembly plants will be churning out more of those products in the second quarter.

One day after GM said it would temporarily close 13 North American plants for up to 11 weeks this summer to slash inventories, Ford said it expects its production to increase 19.5 percent from the first quarter.

"We believe, with the decisive actions we have taken over the last few quarters, we have the dealer stocks well in line," Mulally said. "And with what we see with the reception of the new products, we believe we can go up a little bit more to support the real demand."

Ford said it's on track to break even or turn a profit in 2011. But the company isn't squeaky clean. It still has debt, an underfunded pension plan and a primary market the U.S. where consumers are skittish about buying a new car amid mounting job losses in a recession.

Should GM or Chrysler, or even a key supplier file for bankruptcy, Ford's production is likely to be affected. Mulally said the company has met with the government's auto task force to help it "understand the importance" and "interdependencies" of the supply base.

"The health of the supply base is probably the most critical issue as the government helps GM and Chrysler restructure," he said. "I think they will continue to pay the highest priority as they restructure to the supply base to make sure it stays intact for all of us."

Latest economic data suggests recession is easing

Evidence that housing is poised to improve and optimism about the results of banking "stress tests" raised hopes Monday that the recession is easing and helped lift a key stock market measure into the black for the year.

Construction spending and pending home sales both fared better than expected in March, and private economists saw the reports as further evidence that the overall economy is stabilizing after its bleakest stretch in a half-century. If so, the economy might be able to mount a recovery in the second half of 2009.

Wall Street took the same view. All the major stock indexes jumped more than 2 percent. The Standard & Poor's 500 rose 3.39 percent, showing a gain for 2009.

"Investors believe the worst of the downturn is behind us," said Mark Zandi, chief economist at Moody's Economy.com. "The economy is still in a recession. But the rate of decline is moderating, and a bottom for the housing market and the overall economy are coming into view."

Bolstering that picture were rising expectations that the government-run stress tests, showing how the nation's 19 largest banks would fare in a severe recession, have found most of them in reasonably good shape. The test results are expected to be released Thursday after markets close.

Federal Reserve Chairman Ben Bernanke has said none of the 19 banks will be allowed to fail and that any institution that needs to raise more capital will be given six months to do so.

If the bank cannot raise the needed capital as a cushion against future loan losses, the government will supply the needed resources, Bernanke has said.

The Fed chairman is scheduled to testify to Congress on Tuesday about the state of the economy.

The Commerce Department reported that construction spending rose 0.3 percent in March. It was the first increase after five straight months of declines. And it was far better than the 1.5 percent drop analysts had expected.

Meanwhile, the National Association of Realtors said its index of pending home sales rose 3.2 percent to 84.6 in March. That was the second monthly increase after the index hit a record low in January. The pending sales index is now 1.1 percent above last year's levels.

Typically, there's a one- to two-month lag between a contract being signed and a final deal being sealed. So the index is a good barometer for future home sales.

Economists saw both reports as good news.

"Things certainly look a bit less bad than in the dark days at the turn of the year," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a research note.

Some analysts cautioned that the economy still faces threats from waves of layoffs and rising mortgage defaults, which are causing more banks to tighten lending standards.

The Fed reported Monday that about 50 percent of U.S. banks had tightened their lending standards on prime mortgages and that 65 percent had tightened standards on nontraditional mortgages. Both percentages were higher than in the last survey in early February.

Many builders also are finding it harder to get lending for their projects because of rising defaults on commercial real estate.

Because of such problems, the overall economy, as measured by the gross domestic product, is expected to keep shrinking in the current quarter.

But Zandi said he expects a GDP decline in the current quarter of just 2.4 percent before GDP turns slightly positive in the second half of this year. That would be far milder than the 6.1 percent decline for the first three months of this year and the 6.3 percent drop in the final three months of last year �� the worst six-month contraction in overall economic output in a half-century.

The initial stress test results showed that Wells Fargo & Co., Citigroup Inc. and Bank of America Corp. would need to raise more capital, sources have told The Associated Press, though the banks are disputing those findings. Investors also have grown concerned about regional banks that carry risky loans on their books in such areas as mortgages, credit cards and commercial real estate.

The government will brief banks Tuesday on its final decisions about their appeals.

The construction report showed that spending on private residential projects fell 4.2 percent in March. It was the latest in a series of declines that began three years ago, when the housing bubble burst with disastrous effects for the home industry and the overall economy.

Nonresidential construction rose 2.7 percent in March, the biggest advance in nine months and the second straight increase. It was led by gains in office construction, hotels and power plants.

Government building activity also showed strength in March, rising 1.1 percent. A 1.3 percent gain in state and local activity offset a 1.7 percent drop in spending on federal projects.

The rise in state and local activity was viewed as an early sign of the impact of the $787 billion economic stimulus bill Congress passed in February to try to get money to the states for building projects.

Some analysts fear that the commercial real estate market could topple into the worst crisis since the last great property bust of the early 1990s. Delinquency rates on loans for hotels, offices, retail and industrial buildings have risen sharply in recent months and are likely to soar through the end of 2010 as companies lay off workers, downsize or close.

Economists are more hopeful, though, that the three-year slide in housing could be nearing a bottom, although they do not expect prices to stop falling until early next year.