Everything Finance

In his newly released book How I Managed $20,000,000,000.00 by Age 32, Slome shares what he learned on his way to becoming an investment giant, trading billions of dollars while rubbing elbows and hanging out with corporate heavyweights Eric Schmidt (CEO of Google), Jeff Bezos (CEO of Amazon), and John Chambers (CEO of Cisco Systems).

“In this period of economic uncertainty, it's important to study and master both innovative and time-tested strategies,” says Slome.

“Don’t respond emotionally to the situational noise you hear daily. Don’t react to fear. Open up your eyes and pay attention to the facts. The truth will set you free."

Here are the key recommendations he has for surviving the present economic climate.

1) Don’t listen to the TV and take what you read as gospel. Reporters are merely looking in the rear-view mirror and telling you what happened – not what IS going to happen. You make money by anticipating what’s next, not by reacting to what has happened.

2) Invest objectively and independently, not emotionally. The worst decisions are made under the pressure to follow the herd. It is best to buy fear and sell greed – not the opposite. The historic Nifty Fifty, technology, real estate, credit, and tulip bubbles exemplify the hazards of following crowds.

3) The financial markets are inefficient and emotional in the short-run and efficient in the long-run. History proves over and over again that an unbiased approach that takes advantage of short-term dislocations will lead to prosperity. This philosophy requires a patient, then aggressively opportunistic mentality if you want to build true wealth over time.

4) The long-term efficiency of the financial markets requires a healthy dosage of passive investing strategies. Seventy-five percent of all active professional money managers underperform the passive indexes over time. Investors can dramatically improve their investment performance over the long run by integrating passive investing products like index funds and exchange traded funds (ETFs).

5) Understand 3 things: Fees, fees, and fees. Brokers (salesmen) do a great job at being your friend and partner, and they are perfectly willing to make excessive fees for this privilege. It’s your responsibility to understand and ask the right questions that are buried in the fine print. The more you pay in fees, the further you push out retirement and the farther the path to reach your financial goals.

6) Don’t be myopically focused on your backyard. Opportunity abounds internationally, especially in certain emerging markets. The U.S. is 5% of the global population, but 25-30% of global Gross Domestic Product (GDP). Our slice of the GDP pie will be smaller in the decades to come due to faster growth rates abroad. Grab a larger slice of the pie by opening your eyes to international possibilities.

7) Experience matters. Would you want a nurse to handle your brain surgery? Or how about the flight attendant controlling your plane? Obviously not. And so goes the case for your investment/financial advisor. It behooves the investor to shop around and ask the right questions. Are the advisors registered? What type of education do they have? Do they hold any certifications? Have they ever invested money before, or are they just selling product?

8) The power of compounding interest is a miracle. Einstein called the power of compounding interest the "8th wonder of the world." What would 1¢ invested in 1492 by Christopher Columbus be worth today if it was invested at 6% with interest compounded? The answer: $114,242,178,628.50. Yes, that right, $114 billion with a “b”! Apply the power of compounding to your portfolios.

9) Taxes matter. That’s great if you make a lot of money, but if you pay it all back to the IRS in the form of capital gains or estate taxes, then what good is that? Longer term tax efficient products and strategies will build your wealth faster, all else equal.

10) Learn from your mistakes. The best investors make errors, learn from them, and avoid repeating similar mistakes in the future.

Slome says that perhaps the most important recommendation is the crucial need to have a disciplined, systematic investment plan that can be reviewed periodically to chart your path to your financial goals.

“Wallowing around in fear or sticking your head in the sand will make achievement of financial success difficult.”

How I Managed $20,000,000,000.00 By Age 32

By Wade W. Slome

List $25.95

Hardcover: 212 pages 9 x 6 inch

ISBN-10: 0615251587 ISBN-13: 978-0615251585

Published October 31, 2008

Available at bookstores online.

For more information visit www.Sidoxia.com