Chapter 9. Investing in Investment Funds
- The sales charge is universally stated as a percentage of the selling
price, which includes the charge, making it appear lower than if
applied to net asset value. We consider this a sales gimmick unwor-
thy of this respectable industry.
2.The Money Managers,by G. E. Kaplan and C. Welles, Random House,
1969. - See definition of “letter stock” on p. 579.
- Title of a book first published in 1852. The volume described the
“South Sea Bubble,” the tulip mania, and other speculative binges of
the past. It was reprinted by Bernard M. Baruch, perhaps the only
continuously successful speculator of recent times, in 1932. Comment:
That was locking the stable door after the horse was stolen. Charles
Mackay’s Extraordinary Popular Delusions and the Madness of Crowds
(Metro Books, New York, 2002) was first published in 1841. Neither a
light read nor always strictly accurate, it is an extensive look at how
large numbers of people often believe very silly things—for instance, that
iron can be transmuted into gold, that demons most often show up on
Friday evenings, and that it is possible to get rich quick in the stock
market. For a more factual account, consult Edward Chancellor’s Devil
Take the Hindmost(Farrar, Straus & Giroux, New York, 1999); for a
lighter take, try Robert Menschel’s Markets, Mobs, and Mayhem: A
Modern Look at the Madness of Crowds( John Wiley & Sons, New
York, 2002).
Chapter 10. The Investor and His Advisers
- The examinations are given by the Institute of Chartered Financial
Analysts, which is an arm of the Financial Analysts Federation. The
latter now embraces constituent societies with over 50,000 members. - The NYSE had imposed some drastic rules of valuation (known as
“haircuts”) designed to minimize this danger, but apparently they
did not help sufficiently. - New offerings may now be sold only by means of a prospectus pre-
pared under the rules of the Securities and Exchange Commission.
This document must disclose all the pertinent facts about the issue
and issuer, and it is fully adequate to inform the prudent investoras to
the exact nature of the security offered him. But the very copiousness
Endnotes 583