The New Money Masters

by John Train

Profiles of investment wizards offer insights on the world of finance and describe specific techniques and experiences. Those profiled represent a variety of investment perspectives, including technology, value, emerging markets, specialty companies, and micro-caps. Their methods are explained and their similarities and differences are clarified. Train is founder of an investment consulting firm, and has written columns for the Wall Street Journal , the Financial Times , and Forbes . A hardcover edition of this book was published in 1989 by Harper & Row, Publishers. Annotation c. Book News, Inc., Portland, OR (booknews.com)

Genres: Finance, Business, Nonfiction, Money, Biography, Buisness, Economics

400 pages, Paperback

First published January 1, 1989

About the author

John Pell Coster Train was an American investment advisor and writer. He was a founding editor of The Paris Review.

Reviews

[Nicolai · Rating 5 out of 5]

1. Jim Rogers - top down investor. Finds countries that have more potential than is generally believed. Short countries that everyone is bullish on. 1. improving. 2. better off than commonly accepted. 3. convertible currency. 4. liquidity. You have to be right as well as different. there has never been as rapid a depreciation/debasement in resevere currency as is happening. the trick to getting rich is correctly sizing up suply and demand. dont lose money. if you do not know the facts, dont play. ben graham - buy a stock when it simply cannot get cheaper. Jim - buy when things will get better.

2. Micheal Steinhardt - strategic trader. "You never make big money in the market without getting in the way of danger" When long - low multiple dull stocks, laggards with recovery potential. When short - best known companies, the arenas of speculative focus, short the whose who? there is so much debt in the world, it will be repudiated and turned equity.

3. Philip Caret - Money Mind. Wants low D/E. If current ratio is low avoids; better than 2-1 in current ratio. no term debt. nothing with a mkt cap below $50m. mgt must own stock. 1. never less than 10 stocks in 5 fields. 2. asess every 6 months. 3. 1/2 of funds in incomne producers. 4. yield is least important factor in analyzing stock. 5. take losses quickly, profits slowly. 6. only invest where u can get details. 7. avoid inside info. 8. get facts not advice. 9. no mechnical formulas. 10. when stocks are high get 50% intofixed deposits. 11. borrow sparingly. 12. keep some cash. mildy pessimistic letter from chairman is good.

4. George Soros - short term volatility is the greatest at turning points and diminishes as a trend becomes established. by the time all the players have adjusted to a set of rules, the rules will have changed again. the essence to understanding markets is actuall an understanding of how the rules are evolving. a bull market survives and rises aboove a number of tests until it appears invulnerable, theit is ripe for a bust. when a stock reflects two pressures, one favourable and one unfavouable, one or the other pressure will prevail in its valuation as the market does assume a neat middle ground, but rather discounts one or the other alternative; so you have to keep both in mind and be prepared for both. the consumer is the last strong component of the economy. fundamental valuation holds that price reflects assets and underlying value, but it too can affect value in a virtuous cycle. reflexivity - perceptions change events which then change perceptions. particpants have an imperfect understanding - fog of war. reflexivity operates best between lender and collateral (the act of lending increases the value of the collateral the loan is based on - this cycle is thrown into reverse in the bust) and regulator and economy (the least regulation is apparent during credit expansions - this is followed by excess regualtion after the bust). classic eoconomic theory does not hold in markets in which there is wide public participation which ebb and flow with group passion. the concept of equilibrium in classical eocnomics is a myth - buying and selling is based on expectations.

boom and busts follow a cycle
1. unrecognised trend
2. self reinforncing reflexive process kicks in
3. a TEST passed
4. growing conviction
5. divergence between reality and perception
6. climax
7. mirror image self reinforcing cycle in opposite direction.

trend is your friend but contrariness is sig of investor. u know you are getting a bargain if there are no other buyers.

5. Old Money - new money that has learned to survive.

6. George Michaelis - apostle of ROE. markets play the meeting of emotion and intelligence. if you have a weak serve there is no point in coming in to the net behind it - low risk tolerance. buy earning power at a discount. high roe and roa - analyze where does it come from? wana feel for a stock? own it.

7. John Neff - discipline patience and income. bird in hand is the dividend. more certain. a good manager sells more quickly when things are going wrong - even though it is hard to admit that you were wrong. hunt a bargain. low d/e, good cashflow, above avg roe, good mgt, good outlook, god product/service, strong market. leave some on the table.

8. ralph wanger - A. look for good small companies in growth sectors. B. look for trend leaders that will benefit most from trend.

9. peter lynch - has in portfolio - growth, underpriced assets, special situations and depressed cyclicals, defensives in downward market.

growth or value? growth captures a premium in slow times, value captures a discount in growing times.

[Jeffrey · Rating 3 out of 5]

I actually stumbled onto this book accidentally and the cover was interesting enough for me to take a look. In all a slightly inconsistent, but passable read, but not quite as good as the Market Wizards series.

The book does have some good sections - the chapters on Ralph Wanger and Peter Lynch, were well put together and gave some good insight into their trading/investing styles (Wanger's colourful "Inside Zebra" and "Cricket Limit" metaphors were so accurate and entertaining).

However there are a parts of the book that are not so great - the "Old Money" chapter in particular feels neither particularly insightful or interesting (maybe this section has not aged well). At times Train gives too time to actual interviews with the traders, for example his section of Soros quotes largely from Soros' The Alchemy of Finance.

In conclusion, the book has some good nuggets in their, but their is probably a reason why it has largely been forgotten compared to say Schwager's Market Wizards.

[David · Rating 5 out of 5]

Love to read anything written by John Train

[Tab Williams · Rating 3 out of 5]

I just didn't get much out of the book. The chapter on Lynch was the best. Soros, Neff, and Wagner chapters were also good, but overall disappointing. The discussion around each's style is just too simplistic to be useful.

Chapters: Jim Rogers, Michael Steinhardt, Philip Carret, George Soros, Old Money, George Michaelis, John Neff, Ralph Wagner, Harvard, Peter Lynch

[Caracalla · Rating 4 out of 5]

Interesting read, building my picture of finance a little but mostly interesting for being informative on the economic history of the 70's and 80's and for the insight it offered into the lives and thoughts of a group of right-wing, old white men just before the 90's. Soros seems something of a miracle, treating speculation logic as a sort of quantum mechanics (contradictory positions on market moves does not make much sense, but apparently hedge funds are built to make quick changes easily to bets and that that was just adding to that agility). He made a billion, escaping scot-free from the hubris of putting massive amounts of highly-geared capital on small moves in the market in an incredibly volatile period. Mostly the book espouses the theory that world-class investment is the matter of incredibly individual investors like Peter Lynch who work endlessly (as in never, ever, ever taking a break, madly switching from one research task to another) and there's lots of contempt for institutions a la Goldman. Two slightly odd chapters on trust fund management for large families like the Rockefellers and the management of Harvard's endowment indulge Train's interests more than anything else, but perhaps it is a useful comparison, to have a few groups that Train is the first to admit aren't brilliantly successful and more importantly cannot enjoy sustained success. They're also unusual operations, so always interesting. One of the best things included was a selection of Ralph Wanger's reports, who Train claims is the greatest writer in finance; he was certainly an interesting perspective to hear from, although he monstered a quote from Thucydides Book VI and appeared distastefully right-wing in some of his opinions (his whining about bureaucracy, particularly regulations mostly made to protect consumers, for example). The book ends with a very well-written post-script that interestingly enough repudiates lucre in finance and general ethics and praises investors who are instead fascinated in their own work and motivated by this fascination.

[Tirath · Rating 4 out of 5]

An amazing look at the pre 1990 finance world.
Things have a way of staying the same.

What makes the book interesting is that it was compiled in the aftermath of the 1987 crash and just before the early 90s recession - -
And hence, the thoughts and commentaries of the money managers profiled seem to weight heavily on gold, oil, crisis, over-valuation, Russia issues, Middle East issues and such.
Oddly similar to today.

The profiles on Lynch, Rogers, Soros and Carret were the best for me.