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See updates to the book
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Paperback, 336 pages
Plume, December 24, 2012
ISBN-10: 0452298628, ISBN-13: 978-0452298620
Hard to believe, but this is the fifth edition of The Neatest Little Guide to Stock Market Investing, a book that just won’t quit on the long-term seller list. Why? Because it presents a clear, concise, and highly effective approach to stocks and investment strategy, explained in a way that anybody can understand.
While it’s suitable for beginners, the book includes strategies that even seasoned pros will appreciate, chief among them its small-cap value averaging strategy that returns 3% per quarter, come what may, achieving an astounding 12.6% per year — much better than the market’s long-term average and leagues ahead of almost all professional money managers (but not the ones who’ve read the book and put the plan to work for their clients).
Other material from the book’s wealth of information:
Accessible and intelligent, The Neatest Little Guide to Stock Market Investing is what you need to keep pace in the current market.
“Jason Kelly captured my investment methods well, and better than most who have tried to describe what I do.”
— Bill Miller, Portfolio Manager, Legg Mason Value Trust
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The Neatest Little Guide to
Stock Market Investing, 2013 Edition
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Paperback, 320 pages
Plume, January 2010
ISBN-10: 0452295823, ISBN-13: 978-0452295827
I’m very pleased to announce the debut of the 2010 edition of my bestselling book, The Neatest Little Guide to Stock Market Investing. This is the book’s fourth edition, with more than 200,000 copies sold, making it one of the most popular stock books ever written.
Once a book becomes so well established, updating it gets tricky. On the one hand, the author must be careful not to break what’s already working so well. On the other hand, life moves quickly and even a bestseller needs to be kept fresh and pertinent to current news. Let me tell you how I approached the task when revamping this title for its 2010 edition.
The most obvious new information was the near collapse of the financial system in 2008. That wreaked havoc on even the best-planned portfolios, as every investor will recall. Did the market crash invalidate the book’s permanent portfolios? The star of them, Maximum Midcap, had performed splendidly from 2002 to 2007 in the Fed-liquidity-driven market run, turning $10,000 into $28,495. The same strategy left untouched, however, plunged 68% in 2008. Those who did not watch the market carefully as the subprime housing bubble stretched thin and burst, suffered heavy losses. Too many sold at the strategy’s lows, just before its breathtaking recovery from March. From its low in March to its high this month, the strategy has gained 228%. It already recouped its losses from the great crash for those who stayed put, but became a veritable money machine for those who got out and back in at the right moments.
This new edition helps readers find those right moments.
I realized that the book was missing a set of tools I use every day to keep tabs on market health and the risk level of investments I hold: technical analysis tools. Charting is a primary part of most stock investors’ approach to timing, and a certain element of timing is needed in every investment program. In my desire to keep the book light and easy in its earlier edition, I chose to skip technical analysis in favor of fundamental analysis, the checking of a company’s debt levels, marketing plans, and valuation in an attempt to know if it’s a bargain or not. The latter comes more naturally to people, in my opinion, because it’s close to how we manage our own personal financial lives. Technical analysis can seem arcane.
My challenge then was to introduce just enough technical analysis to help readers avoid plunging years like 2008. I researched extensively to find the charting methods that combine the best accuracy rates with the easiest usage. Some techniques have high accuracy but are extremely hard to interpret or monitor for anybody not working the market full time. Others are simple to use, but not very accurate. The sweet spot occurs when a measure is fairly accurate and fairly simple to use.
Once I found a subset of measures in that sweet spot, I ran regression tests on them in combination to validate what my own experience had already shown to work pretty well. The tests did confirm my own experience, and I chose a group of three fairly accurate, fairly simple measures that become even more accurate when used in combination, with two of the three firing the same signal being the call to action.
Those three measures are the simple moving average, MACD, and RSI, and they’re introduced and explained in this book’s hallmark style in a new section in Chapter 4 called “Limiting the Downside with Charts” on page 131.
One thing I do between editions of the book is collect feedback from readers, and I learned over the past two years that, while many people like the firepower of the permanent portfolios, others wanted me to present a less stressful, methodical strategy for extracting steady profits from the market. This is a tall order, to be sure. The axiom holds that the more return an investor seeks, the more risk he or she will need to take (within reason, of course). Balancing the risk and reward of a portfolio is the art of the successful investor. Is there a low-stress way to map out the money growth we need and then keep that growth on track?
Yes! I’m proud of a new system introduced in this edition that uses a technique called value averaging to achieve a steady rate of growth. I didn’t invent the approach. I took research presented in a 1988 article by Michael Edleson, who later expanded the concept in his book Value Averaging: The Safe and Easy Strategy for Higher Investment Returns, and applied it to the new market products available today. The result is a system that we’ve been using in The Kelly Letter for more than a year to extract 3% quarterly growth out of the S&P SmallCap 600 index of smaller companies.
Why 3% per quarter, you may wonder. That rate becomes a 12.6% annual growth rate, which is 20% higher than the S&P 500’s long-term rate of 10.5%. That level of outperformance — thanks to the magic of compounding — turns a substantial profit over time. Yet, it’s modest enough to keep the amount of new money required to a low level.
I’ll give you a nodding acquaintance with the strategy here. You’re probably familiar with dollar-cost averaging, which is just adding the same amount of money to an investment on a steady basis. For instance, you might add $100 per month to an index mutual fund. It works well for a couple of reasons. First, you build a capital base over time and, second, the steady payments automatically buy more shares when the price is cheaper and fewer when the price is more expensive. If the shares are $5 in October, $10 in November, then $8 in December, your $100 would have bought 20 shares in October, 10 in November, and 12.5 in December.
Value averaging asks this question: instead of just sending the same amount of money when the price is cheaper, why not send more? Then, the benefits of buying more of the cheaper shares will be magnified, right? You bet, and that’s what we accomplish with value averaging. We put in place a framework for knowing whether we need to send more money, less money, or even pull money out of the investment to keep it on track to reach our growth rate target. In our example, that target is 3% per quarter.
The beauty of the new strategy is that it enables investors to ignore much of the natural volatility of the market but — even more important to investors these days — the artificial volatility inflamed by shenanigans of government, banks, and big business. The game has changed a lot in the last two years, with the strokes of pens from the Treasury and the Fed having much more to do with the direction of any stock than the stock’s product or marketing plans. In such an environment, which is nearly impossible to forecast, tried-and-true growth rules are invaluable. I hope you benefit from the ones explained in this edition, which are presented in “Value Averaging for Steady Growth” on page 110.
Beyond those big strategy enhancements, the 2010 edition brings a thoroughly updated list of websites and resources, extends the book’s classic examples with fresh data so you can see how the situations have changed or remained constant through the fire, and shares reflections from master investors Bill Miller and Charles Michaels, each of whom navigated the rough market and emerged wiser for it.
All in all, a compelling bundle of information for just $10.88, one that I believe you’ll find useful as you reconfigure your portfolio for a new decade. As always, I welcome your thoughts and suggestions once you’ve had a chance to buy the book and implement its techniques.
“Many investors want to know how and where to get started in investing and also improve their results. Jason Kelly does a terrific job of providing a plethora of resources, approaches, and ideas that will help any investor no matter their level of experience or aptitude.”
–Charles E. Kirk, The Kirk Report
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The Neatest Little Guide to
Stock Market Investing, 2010 Edition
See the performance of the book’s portfolios
See updates to the book
Buy it for $9.75
Paperback- 304 pages (January 2008)
Plume; ISBN: 0452289211
For over a decade, Jason Kelly has provided investors with the insider knowledge and time-tested strategies they need to maximize their investment programs. This thoroughly updated edition of The Neatest Little Guide to Stock Market Investing includes:
About his section, Bill Miller wrote, “Jason Kelly captured my investment methods well, and better than most who have tried to describe what I do.”
An accessible, intelligent, and highly effective approach to investing, The Neatest Little Guide to Stock Market Investing is an invaluable resource for investors everywhere.
The Neatest Little Guide to Stock Market Investing
Buy it for $10.50
Paperback- 258 pages (January 2004)
Plume; ISBN: 0452284732
The Neatest Little Guide to Stock Market Investing has established itself as a clear, concise, and highly effective approach to stocks and investment strategy. Honing in on tried-and-true investment principles, from market history and master strategists like Peter Lynch, Benjamin Graham, and Warren Buffett, The Neatest Little Guide to Stock Market Investing has taught investors of all walks how to create and refine a profitable investment program.
Since the dot.com crash and ensuing bear market, significant changes have come about in the investment world, and The Neatest Little Guide makes the most of the lessons learned. In this revised edition, readers will receive:
Much has changed in the markets, and investors need the right information to keep pace. Rooted in the principles that made it invaluable from the start, The Neatest Little Guide to Stock Market Investing is a resource that no serious investor can be without.
Original 1998 Edition
Buy it for $10.36
Paperback- 288 pages (January 1998)
Plume; ISBN: 0452278708
It’s time for you to jump in the water and ride the high tide of the stock market. Jason Kelly, author of The Neatest Little Guide to Mutual Fund Investing, shows you how to invest with this eye-opening, user-friendly handbook that puts all the information you need right at your fingertips. In clear, uncomplicated language, he tells you everything you need to know about:
Combining friendly guidance with sound financial expertise and advice from master strategists like Peter Lynch, Benjamin Graham, and Warren Buffett, The Neatest Little Guide to Stock Market Investing will get you started on a profitable investment program. From the safe shores of a savings account to the open seas of the stock market, you can navigate the fiscal tides for fun, profit, and financial security. You’ll find a lifetime investment partner in this neat little guide.
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Subject: Typo on Website
I love your TNLGT Stock Market Investing 2008 Ed. Read it cover to cover when my cousin got it for me for Christmas.
I just want to point out a typo on this page:
Down by the TNLGT Stock Market Investing 1998 Ed, the description calls it “The Neatest Little Guide to Mutual Fund Investing”. Just thought I’d point it out.
Thank you for these books!
Thank you, Bob! It’s actually not a typo, but a reference to the only previous book I’d written in the series at that time. Since then, the stock book has gone on to dominate the series and become the new title used to tell people who I am, as in: “Jason Kelly, author of The Neatest Little Guide to Stock Market Investing, studied…”
I’m glad you like the books, and hope you look forward to the 2013 edition of SMI with breathless anticipation!
I understand from an email from Amazon that you have a new book coming out, called The 3% Signal. They said it will be out in 2015. Is there any more information I can obtain about the book? (Without giving away any of your secrets, of course!)
Thank you for the interest, Larry!
The book presents what I consider to be the stock market’s new best practice, a technique that unseats dollar-cost averaging from the top of the heap. The 3% Signal combines elements of DCA, value averaging, and indexing in a simple two-fund portfolio that’s adjusted to a growth target just once per quarter. The plan beats the market, dollar-cost averaging into an S&P 500 index fund, and the vast majority of supposed experts because they can’t even beat the market. Here’s the press release:
A revolutionary new investing strategy that improves performance, lowers cost, and offers stress-free profit
THE 3% SIGNAL
The Investing Technique That Will Change Your Life
by Jason Kelly
Bestselling author of The Neatest Little Guide to Stock Market Investing
“What the experts don’t want you to know … is that prices are all that matter. Ideas count for nothing; opinions are distractions. The only thing that matters is the price of an investment and whether it’s below a level indicating a good time to buy or above a level indicating a good time to sell. We can know that level…”
— Jason Kelly, The 3% Signal
The Great Recession recently exposed the dangers of the stock market to millions of investors, many of whom are still struggling to recover. Wall Street culture dictates that investing should be a fast-paced, frenetic activity requiring breaking news feeds and input from experts. Yet, the approach fails because investors easily fall prey to predictions from market pundits — which statistically are wrong 50 percent of the time.
Bestselling investing author Jason Kelly says that following stock tips from experts results in more activity, higher stress, and higher costs, but lower performance. After twenty years of market research, Kelly maintains that predictive investing—timing the market—simply doesn’t work. The result of his work is the 3% Signal plan, based on the principle of reacting intelligently to the past, rather than guessing the future.
In THE 3% SIGNAL, [Plume; March 2015; ISBN: 978-0-14-218095-2] Kelly shows how to compare the balance of a stock fund to a 3 percent quarterly growth goal, then follow the resulting signal to either buy shortfalls up to the goal or sell surpluses down to it. Using just a stock fund and a bond fund, the system relies on price fluctuation alone to generate market-beating moves. Based on mathematics — not speculation — the 3% Signal reacts intelligently to price changes by automatically buying low and selling high. The plan requires only four quarterly trades per year, clearly signaled with an easy calculation. This offers investors a reliable growth plan without the need to obsessively monitor the market.
Investors will learn how to:
> Save time with a technique that requires just fifteen minutes per quarter
> Identify when a stock fund is indicating that it is a good time to buy or sell
> Set a performance goal
> Avoid the pitfalls of emotional and reactive investing
> Improve returns in IRAs, 401(k)s, and other investment accounts
Kelly’s THE 3% SIGNAL is an easy-to-follow plan for both veterans and novices that offers market-beating returns over time, and promises to change the way we think about investing.
ABOUT THE AUTHOR:
JASON KELLY is the bestselling author of The Neatest Little Guide To Stock Market Investing and editor of the popular weekly newsletter The Kelly Letter, which runs the 3% Signal plan. Kelly is a former technical writer for IBM at its Silicon Valley Laboratory in San Jose, CA. He divides his time between Colorado’s Rocky Mountains and Japan.
THE 3% SIGNAL
PLUME / On sale MARCH 2015
$16.00 / 978-0-14-218095-2
http://jasonkelly.com and @TheKellyLetter
For additional information or to schedule an interview with
Jason Kelly, contact: Mary Pomponio / 212-366-2218 / email@example.com
Plume is a member of the internationally renowned Penguin Group (USA) and boasts many bestselling and prize-winning authors, including Dorothy Allison, David Benioff, Jennifer Chiaverini, Tracy Chevalier, Lev Grossman, Daniel Levitin, Danica McKellar, Joyce Carol Oates, Marisa de los Santos, Natasha Solomons, Jill Bolte Taylor, and many others.
Will you eventually be publishing The Neatest Little Guide To Stock Market Investing for Kindle or iTunes for the United Kingdom?
I’m not sure. Because it’s a different rights market, a UK publisher would need to buy the rights to sell a native UK edition. However, since the North American e-book is in English, you could buy it in the meantime. Some of the spellings would be different, but understandable. It’s at this page at Amazon.com. Thanks for the inquiry, and happy reading!
I picked the 2008 book up at a yard sale in 2012. Read it, and used the guide to narrow down a list of a handful of stocks that met all the criteria. I picked at&t and sold it off a few years later for a nice profit. I didn’t really have a lot of money to invest so I didn’t do much of it anymore. I opened the spreadsheet I had used in 2012 and looked at the prices of the handful of stocks the book had filtered, and what the prices did in the months and years following that and I was shocked. All but probably 2 of the 20s climbed steadily and would have been a great investment.
Excellent, Kevin! I’m glad to hear it. I recommend getting the new edition of my stock book, and also a copy of The 3% Signal for perspective on how little value is added to the process by media and forecasters. That’s useful no matter what approach a person decides is right for them.
First and foremost thanks for sharing your knowledge and ideas, I thoroughly enjoyed this book and found the concept of Value Averaging captivating which led me to the 3% signal which I’ve just started.
I am however, having a hard time making sense of your recommendation of using a leveraged product for long-term investing. If I refer to the this which describes why such product isn’t suitable. Namely, the fact that they are daily rebalanced.
Could you briefly clarify your position and reasoning on this?
I also thought I would take this opportunity to share a google sheet which I created based on your stock watchlist. All the data collected is mostly automated. For anyone looking to use it please make sure to check the tickers in the formula’s. Some of them are “hard wired” as the data is collected from 4 different sources (Intrinio, Google, Yahoo, Reteurs) with different ticker symbols.
Please see my recent video on this subject:
All my best,
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