Book review: The ultimate depression survival guide by Martin Weiss

The Ultimate Depression Survival Guide: Protect your savings, boost your income and grow wealthy even in the worst of times – Martin Weiss

Synopsis:
This book takes on two tasks: to analyse the current economic situation and see why a depression is likely to happen, and to give advice on how to protect your financial position if a depression does occur. The book starts by explaining why a depression is inevitable and explains why the government won’t be able to stop it from happening. In each chapter, step by step advice is given under topics such as “how to protect your job in bad times”, “How to go for profits in a down market”.

Many of the problems in the current financial system are identified and the author strongly makes his point that things will only get worse. Many comparisons are given between the First Great Depression from 1929 and the current situation to help explain why a Second Great Depression is inevitable. The author uses notes from his father to explain what it was like in the first depression.

What I gained from reading this book:
I read this book after seeing it on Amazon and the high average rating it received from the readers. To be completely honest, I was grossly disappointed by this book from cover to cover. My instincts were telling me the whole time that the author’s points were biased and not explained objectively. The author strongly emphasises that a severe depression worse than the ‘First Great Depression’ is inevitable. While he may have good reasons to say this, everybody knows that nothing in this world is 100% certain. To say that something is inevitable raises a red flag in my mind.

Another problem I had with this book was the advice given. Basically the author says to completely remove your money from real estate, stocks and even bank deposits and hold either cash or Treasury Bills. I was shocked at this advice. Then I remembered the title of the book “depression survival guide”. If a depression does occur, the people who follow this advice will be very glad they did. What the author fails to mention is that if a depression does not occur or if the global economy starts to recover (whatever the small chance), the people who followed this advice will deeply regret it.

I like to think of the advice as betting on a horse race. Imagine betting all your money on the horse named ‘Depression’. If ‘Depression’ wins the race, you win. If another horse wins, say ‘Recovery’ or even the least likely, ‘Expansion’, you lose big time. This book is betting that the economy will tank. Remember the saying not to have all your ‘eggs in one basket’? Well this book completely ignores that advice.

I also found myself frustrated with many parts in the book where the author would exaggerate problems by using bold or italic writing and using over the top adjectives. Phrases such as ‘financial war zone’, ‘crumbling economy’, or ‘jump from the frying pan into the fire’ really demonstrate the tone of the entire book. This style of writing felt very ‘snake oil salesperson’ to me and I am left feeling very sceptical. Everything seems to be either one extreme or another. For example, in the chapter entitled ‘How to escape the housing nightmare’, the headings use words such as: mania, corruption, fraud, cover-ups, deceptions, collapse! to tell you why you should sell. An objective discussion wouldn’t use such fear provoking words. The entire book is filled with over-the-top hyperbole that I can see will do nothing but instil fear in many people. Personally, this type of writing destroyed any confidence I had in the writer and his points.

When I finished the book, the first thing I thought to myself was that in ten years, either the author will be celebrated as a visionary, or he will be forgotten like so many other people yelling that ‘the sky is falling’. At the moment, many people are convinced that the author is right on the money.
So what did I gain from this book? I gained a basic understanding on how things have become the way they are now and an idea of what I could do if a depression does occur.

Positives:
Delivers what it promises: a clear guide to ‘survive in a depression’. Very insightful explanations on the current bailouts and how the economy has come to this situation. Provides good advice for those who are worried that they will not be able to survive a depression.

Negatives:
Assumes that a depression will happen and bases the advice solely on that prediction. Uses so much hyperbole it almost sounds like listening to a salesperson make a pitch. Does not explain the risks in the advice given and takes a very biased position throughout the book.

Recommended for: People who are worried about the possibility of a depression.
If you don’t think you would be able to financially survive a depression, this book gives you advice what to do.
If you are wondering why the situation is so bad and why it could get worse, the book provides in-depth explanations. Although I really disliked this book, I know that everybody needs to consider the possibility (not inevitability) of a depression.
Just remember, although I didn’t enjoy the book, many other people did, so feel free to read the reviews by people on Amazon to gain a different perspective.

Genre: Personal finance

Overall rating: 5 out of 10 stars



Australians can buy the book by clicking the picture below:


Where to from here:
I recommend the following book that gives fantastic advice on investing:
The four pillars of investing by William Bernstein

If you have read this book, feel free to leave a comment on your thoughts.

Book review: Five key lessons from top money managers by Scott Kays

Five key lessons from top money managers – Scott Kays

Synopsis:
This book is based from the information received in interviews between the author and five well known money managers: Bill Nygren, Andy Stephens, Christopher Davis, Bill Fries, and John Calamos. Discussing investment principles and valuation methods, the author has come up with five key points that each of the five money manager follows. The concepts such as intrinsic value and developing a valuation model are discussed in detail.
Basic finance principles such as the time value of money, dividend discount model and Internal Rate of Return (IRR) are also discussed with examples. Examples are used to explain how to use these tools in real life such as analysis of a situation when Home Depot’s stock provided a significant opportunity to profit. The process of screening stocks to match certain criteria is explained in great detail.

What I gained from reading this book:
This book was fantastic to read as it gave very clear analysis of the methods used by money managers and how to put together your own investment system. The principles are very clearly explained (better than many of my finance lecturers did) and very useful. The concept of valuation is extremely important but many people neglect to learn about it (think of all the investors at the peak of the dot-com bubble).

The chapters are very clear and well explained. I gained a lot from the step by step explanations and examples. This book taught me how to compute IRR better than my second year finance lecturer did. This book not only gave me valuable information that I can use with my own investments, but it also made my finance studies a lot easier. Although I don’t plan on investing in a way that is explained in this book, knowing the principles and how to correctly apply them is extremely valuable. I think anybody who is interested in investing can gain from this book as I have.

Positives:
Very clear examples and explanations. The information provided can be very useful in deciding whether other investments are worthwhile or not.
Detailed explanation on creating your own investment strategy and what should be included. Explains how by using a simplified strategy. Very easy to learn thanks to the author’s clarity.

Negatives:
Although the concept of valuation is simple, it is quite hard to come up with reliable valuations for companies in real life. This isn’t a negative for the book because the author explains the problem. I am just making this clear for those who may think it is easy to apply what it taught. I don’t really have any negatives for this book. Well, I wish it was longer. But there are plenty of other books to add to this information.

Recommended for: People interested in investments
I recommend this book for people who are serious about investing on their own. I gained more from this book than quite a few finance units I took at university. The small price tag of this book compared to the high cost of university fees makes this book priceless. The concepts were explained better in the book compared to my university lecturers.
By understanding what is needed to create your own investment strategy, you are more likely to succeed. In other words, if you don’t know what this book is teaching, you are at a disadvantage.

Genre: Investments

Overall rating: 8 out of 10 stars

Australians can buy the book by clicking the picture below: