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Review: The Big Gamble: Are You Investing or Speculating
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Norm Goldman


Reviewer & Author Interviewer, Norm Goldman. Norm is the Publisher & Editor of Bookpleasures.com.

He has been reviewing books for the past fifteen years when he retired from the legal profession.

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By Norm Goldman
Published on December 16, 2008
 



Authors: José D. Roncal and José N. Abbo

ISBN: 978-1-60494-038-1

Publisher: Wheatmark

Before you invest your hard earned money do you ever pause and think for a moment if you are actually investing, speculating or gambling? Do you really know their differences, particularly that we are now living through “the mother of all bubbles?”


 

Click Here To Purchase and/or Find Out More About The Big Gamble: Are You Investing or Speculating?

Authors: José D. Roncal and José N. Abbo

ISBN: 978-1-60494-038-1

Publisher: Wheatmark

 

Before you invest your hard earned money do you ever pause and think for a moment if you are actually investing, speculating or gambling? Do you really know their differences, particularly that we are now living through “the mother of all bubbles?”

According to authors José D. Roncal and José N. Abbo's of The Big Gamble: Are You Investing or Speculating, devastating financial bubbles do not occur because of some international conspiracy. Most bubbles occur due to a herd mentality wherein average folks witness their friends and neighbors getting rich and they don’t want to miss the boat. Very often what happens is that people stop thinking realistically and cross the line from investing to speculating and finally to out-and-out gambling.

The Big Gamble provides readers with a significant insight and perspective on the differentiation between investing, speculating and gambling in order to be able to make informed and rational decisions about where to invest your hard earned money. You journey with the authors as they trek from the tulip fields of the late seventeenth century Holland and the South Seas to the twentieth century and the gambling casinos in Las Vegas. And if you are interested as to how a bubble begins and busts, Roncal and Abbo will point you in the right direction and even give you some clues as to how to avoid the next bubble or wisely capitalize on it.

The book divides itself into two sections, the first dealing with Investment, Speculation and Gambling and the second with Speculation: It’s Good for you and for Our World.

In the first section the authors focus on financial instruments such as stocks, bonds, mutual funds and commodities as they explore such topics as why you are not really playing it safe when you invest conservatively, even in U.S. treasury bills or mutual funds, the three most important elements you need to know in order to invest wisely, nine financial risks you need to be aware of when constructing or allocating investments in your retirement plan, twelve cardinal rules of speculating which are very easy to fail to notice, why you should think twice before investing in huge companies as GM or Wal-Mart, (look what is happening to GM), three reliable economic signs that will show you the next big thing and identify potential bubbles when they are beginning to form.

Among some of the authors’ guidance that I found particularly enlightening was the need to pay attention to the needle on liquidity. As pointed out, problems surface when there is an excess of liquidity due to the fact that it can spill over and drive the value of investments way beyond their fundamental values, to irrational levels. Something we are probably very much aware of today. On the other hand and equally widespread today, too little liquidity can push investments well below their fundamental value. The authors inform us that the key to spotting the potential bubbles is to monitor the central banks and government action to see how tight or loose the two spigots are controlling money supply. We are counselled to try and anticipate where the liquidity is flowing. Is it moving from stocks to bonds, for example, or vice versa? Is all of the money going into real estate or into commodities? Succinctly, “an excess of liquidity creates excess demand of an asset, which push prices higher, reflecting lower return expectations among irrational participants (who think they are investors.)”

The second section delves into the risk of starting your own business and making it grow. This may be the riskiest speculative adventure of all. In this section, we are given a brief history of some of the most famous and successful business investors and visionaries such as the railroad tycoons and robber barons, Howard Hughes, Steve Jobs, Bill Gates, Larry Page and Sergey Brin of Google fame, Jeff Bezos of Amazon, General Mills, Donald Trump and Sam Walton of Wal-Mart.

It is here where we learn what it takes to build a “household name” company from scratch and make it succeed. The authors also show us how to weigh the risks and rewards of speculating on new ideas while they are still in their embryo stages and the single most important ingredient for an innovating idea-the ability to turn it into cash. 

The urgency of Ronco and Abbo’s message cannot be underestimated in to-day’s economic climate. Unfortunately, many of us read these books when it is too late to rectify our mistakes, however, perhaps we will remember it as a wake-up-call before the next bubble comes around. Yes, unfortunately, there will be another bubble, however for now, I hope we can soon get out of the present mess we are in. 

 Click Here To Purchase and/or Find Out More About The Big Gamble: Are You Investing or Speculating?