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How to Retire Rich: Time-Tested Strategies to Beat the Market and Retire in Style
Now in paperback--the groundbreaking investment guide by bestselling author James O'Shaughnessy that shows you the simple way to create the fully funded retirement you deserve.
Even if you think you're in great financial shape and can afford two cars and several vacations a year, the numbers in your savings and retirement plan don't always add up to a wealthy--or financially secure--future. In How to Retire Rich , investment wizard James O'Shaughnessy uses his revolutionary analysis of the Standard & Poor's CompuStat Database and stock market history to identify exactly which strategies have consistently beaten almost all active stock pickers over the past four decades--and to show regular folks like you how to apply these proven formulas to your 401(k) and your savings plan, and, over time, grow as little as $2,000 into more than $4 million.
By adopting O'Shaughnessy's logical, proven approach and by avoiding hunches, hot tips, and trendy advice from high-profile gurus, you, too, can master the basics of investing, dramatically increase your net worth, and fund the retirement of your dreams.
Even if you think you're in great financial shape and can afford two cars and several vacations a year, the numbers in your savings and retirement plan don't always add up to a wealthy--or financially secure--future. In How to Retire Rich , investment wizard James O'Shaughnessy uses his revolutionary analysis of the Standard & Poor's CompuStat Database and stock market history to identify exactly which strategies have consistently beaten almost all active stock pickers over the past four decades--and to show regular folks like you how to apply these proven formulas to your 401(k) and your savings plan, and, over time, grow as little as $2,000 into more than $4 million.
By adopting O'Shaughnessy's logical, proven approach and by avoiding hunches, hot tips, and trendy advice from high-profile gurus, you, too, can master the basics of investing, dramatically increase your net worth, and fund the retirement of your dreams.
288 pages, Paperback
First published December 1, 1997
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Displaying 1 - 6 of 6 reviews
October 11, 2017
My notes from How to Retire Rich by James O’Shaughnessy
Glossary:
Market Capitalization: total dollar value of a company. Current share price multiplied by common shares outstanding. The larger the market capitalization, the less the stock bounces around.
Price-to-Earnings ratio: price of a stock divided by its annual earnings.
Price-to-Sales ratio: divide the price of a stock by the sales per year. Another method is to divide companies total market capitalization by its annual sales.
Strategies:
Reasonable Runaways: (volatile, but beats S&P 500 97% of the time in 10 years, 80% in 5 years)
1. Market capitalization must exceed $150 million.
2. Price-to-sales ratio must be lower than 1.
3. Buy the 25 to 50 stocks from 1 and 2 above that have the best one-year price appreciation.
4. Rerun the selection process once/year.
5. Probably want to have $10,000 to get it started (because you will want to buy 25-50 stocks).
Leaders with Luster: (less volatile, never lost money over 5 years, always beats cash/bonds over 10 years)
1. Market capitalization should be over 1 billion.
2. Cash flow should be greater then average.
3. Number of common shares outstanding should be greater then average.
4. Annual sales should be 50 percent higher then those of the average stock.
5. Once a year, buy 25 to 50 with the highest dividend yields.
6. Probably want to have $10,000 to get it started (because you will want to buy 25-50 stocks).
Combine those two strategies and it would have beaten the S&P 34 of the last 45 years.
Dog of the Dow: (another good long-term strategy for 10 stocks)
1. Start with the 30 blue chip stocks (Dow Jones stocks).
2. Rank them by dividend yield, from high to low.
3. Every year buy the 10 stocks with the highest dividend yield, replacing any that have fallen off the list.
4. www.dogsofthedow.com will give the list updated daily.
5. Can start with as little as $2,000.
Utility Strategy: (for those in or close to retirement. Often all stocks are utility stocks, but not always)
1. Go to the library and look at the Value Line Investment Survey.
2. Choose stocks with a rank of 1 (safest).
3. From that list (about 120) choose the 10 stocks with the highest dividend yields.
80% of mutual funds fail to beat the S&P 500.
Mutual Funds patterned after the above strategies:
Cornerstone Growth Fund: Reasonable Runaways
Cornerstone Value Fund: Leaders with Luster
Dogs of the Market Fund: Dogs of the Dow
Brokerages:
Lowers priced brokerages are listed at www.investorhome.com or www.wallstreetcity.com
Barrons keeps survey results and developments of on-line brokers: www.barrons.com
Payment for order flow (a controversial practice whereby brokers pool stock orders into a large block and then give this block to an exchange to trade). Make sure they don’t do this.
Glossary:
Market Capitalization: total dollar value of a company. Current share price multiplied by common shares outstanding. The larger the market capitalization, the less the stock bounces around.
Price-to-Earnings ratio: price of a stock divided by its annual earnings.
Price-to-Sales ratio: divide the price of a stock by the sales per year. Another method is to divide companies total market capitalization by its annual sales.
Strategies:
Reasonable Runaways: (volatile, but beats S&P 500 97% of the time in 10 years, 80% in 5 years)
1. Market capitalization must exceed $150 million.
2. Price-to-sales ratio must be lower than 1.
3. Buy the 25 to 50 stocks from 1 and 2 above that have the best one-year price appreciation.
4. Rerun the selection process once/year.
5. Probably want to have $10,000 to get it started (because you will want to buy 25-50 stocks).
Leaders with Luster: (less volatile, never lost money over 5 years, always beats cash/bonds over 10 years)
1. Market capitalization should be over 1 billion.
2. Cash flow should be greater then average.
3. Number of common shares outstanding should be greater then average.
4. Annual sales should be 50 percent higher then those of the average stock.
5. Once a year, buy 25 to 50 with the highest dividend yields.
6. Probably want to have $10,000 to get it started (because you will want to buy 25-50 stocks).
Combine those two strategies and it would have beaten the S&P 34 of the last 45 years.
Dog of the Dow: (another good long-term strategy for 10 stocks)
1. Start with the 30 blue chip stocks (Dow Jones stocks).
2. Rank them by dividend yield, from high to low.
3. Every year buy the 10 stocks with the highest dividend yield, replacing any that have fallen off the list.
4. www.dogsofthedow.com will give the list updated daily.
5. Can start with as little as $2,000.
Utility Strategy: (for those in or close to retirement. Often all stocks are utility stocks, but not always)
1. Go to the library and look at the Value Line Investment Survey.
2. Choose stocks with a rank of 1 (safest).
3. From that list (about 120) choose the 10 stocks with the highest dividend yields.
80% of mutual funds fail to beat the S&P 500.
Mutual Funds patterned after the above strategies:
Cornerstone Growth Fund: Reasonable Runaways
Cornerstone Value Fund: Leaders with Luster
Dogs of the Market Fund: Dogs of the Dow
Brokerages:
Lowers priced brokerages are listed at www.investorhome.com or www.wallstreetcity.com
Barrons keeps survey results and developments of on-line brokers: www.barrons.com
Payment for order flow (a controversial practice whereby brokers pool stock orders into a large block and then give this block to an exchange to trade). Make sure they don’t do this.
September 9, 2015
This book was written in 1997 and as such is a little dated, but the basic theory of creating your own 25-50 stock portfolio has some interesting points. I think the bulk of what the author espouses is now available through mutual fund and ETF offerings, but it was still a good read.
November 10, 2023
My sister and I read this when we were much younger. I was speaking with my sister recently and she said that she still uses the reasonable runaways strategy in her play money portfolio. She told me that she was able to get in on the meme stock trend early because this screener strategy showed her that Game Stop stock was rising and so she bought in when the price was still pretty low and sold the stock shortly after the meme stocks made a sensation in the news, she did very well with the rise in value of game stop and it was all attributable to her using the reasonable runaways stock screener suggested in this book by James O'Shaughnessy.
November 5, 2020
I have read this book a couple times and keep returning to the idea of mechanical investing. This book provides clear methods for growth and value investing as well as portfolio suggestions to fit different stages of life and emotional responses. Chapter 7 titled Pitfalls, Roadblocks and Excess Baggage should be the mantra for every investor.
January 27, 2012
Same story as with my other books, not fair to give myself five stars but want to see how it affects recommendations.
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February 11, 2016Author urges everyone to act now and act aggressively.
Displaying 1 - 6 of 6 reviews