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Buy and Hedge: The 5 Iron Rules for Investing Over the Long Term (Minyanville Media)

Buy and Hedge: The 5 Iron Rules for Investing Over the Long Term (Minyanville Media) [Kindle Edition]

Jay Pestrichelli , Wayne Ferbert
4.0 out of 5 stars  See all reviews (1 customer review)

Print List Price: £18.99
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Product Description

Product Description

If you're trying to build wealth, sharp market downturns are your worst enemy. And today, they're happening far more often: in the last 18 years, the S&P 500 has experienced sixteen violent market declines. Institutions and professional investors have mastered powerful hedging strategies for dramatically reducing the risks of market volatility. Now, you can do it, too--and you can't afford not to. In Buy and Hedge , two leading investment experts show how to apply hedging as part of a long-term program for growing and preserving your assets. CNBC Fast Money guest Jay Pestrichelli and seasoned financial industry veteran Wayne Ferbert show how to systematically protect yourself against violent downward moves while giving your portfolio maximum room to run in upward markets. The authors' techniques are easy to use, can be applied to most investment vehicles, and require surprisingly little "care and feeding" once implemented. You'll discover how to:


·         Take advantage of the hedge-building mechanisms built into low-cost index funds

·         Invest in your ideas with confidence, because you've hedged the downside

·         Systematically manage portfolios for risk as well as return

·         Master and apply the "5 Iron Rules of Buy & Hedge”

·         Use options to manage risk, not to create excess leverage

·         Generate more dividends

·         Effectively manage cash

From the Back Cover

Grow Your Assets and Reduce Your Risks the Way Top Money Managers Do
“This book is an absolute must read for investors in today’s markets. Wayne and Jay provide a clearcut set of rules for investing that reduce portfolio volatility and provide the formula for superior long-term performance. Don’t just buy and hold—Buy and Hedge!”
—Joe Moglia, Chairman and former CEO, TD Ameritrade

“‘Buy and hold’: How many times have you heard that phrase? If the last ten years have taught us anything it’s that ‘buy and hold’ has become as obsolete as a VCR. In Buy and Hedge: The 5 Iron Rules for Investing Over the Long Term, Jay Pestrichelli and Wayne Ferbert have provided the average investor with a road map for success in today’s turbulent markets. Over the years I have learned that there are no magic bullets for investing, but this book highlights common sense and winning strategies that will protect and grow your hard earned cash.”
—Guy Adami, CNBC’s Fast Money

“In the current financial climate, truth and trust are the most valuable commodities, and risk management trumps reward chasing. This book and the authors hit on all cylinders.”

—Todd Harrison, Founder and CEO, Minyanville Media

“If you are a beginner, [this book] will introduce you to concepts you may have never even considered in a straightforward, easy to understand manner. And if you have been investing for yourself for years, you will still find the discussion of risk and the advanced tactics enlightening. Buy and Hedge is a great resource that you will consult time and again as you master each tactic.”
—Pete Ricketts, TD Ameritrade Board member, Chicago Cubs Board member, and former COO, Ameritrade

“Buy and Hedge provides individual investors an alternative method to manage risk in their portfolios. This book comes at a critical time as markets have become more volatile and more individuals are managing their own money.”
—Christopher Larkin, Senior Vice President, ETRADE Securities

Product details

  • Format: Kindle Edition
  • File Size: 2853 KB
  • Print Length: 304 pages
  • Simultaneous Device Usage: Up to 5 simultaneous devices, per publisher limits
  • Publisher: FT Press; 1 edition (29 Sep 2011)
  • Sold by: Amazon Media EU S.à r.l.
  • Language: English
  • ASIN: B005GXM5NQ
  • Text-to-Speech: Enabled
  • X-Ray:
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (1 customer review)
  • Amazon Bestsellers Rank: #253,312 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

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Most Helpful Customer Reviews
By David P
Format:Hardcover|Verified Purchase
The overall strategy proposed looks like an excellent way to reduce some of the downside risk in a portfolio. The first half of the book establishes the motivations for the buy and hedge strategy and their "golden rules" of investing. The basis of the approach is to make use of options alongside any investment to set a know level of downside risk. The option is like taking out "insurance" and has a cost but this cost can provide you with downside protection. The second half of the book is an introduction to traded options and how to use them to provide this "insurance". It introduces options from the beginning and gradually builds up to more sophisticated option combinations to implement different tactics to provide the cover you want. The text is clearly written in a "teaching" style with examples to support what is being presented.

Overall I found the book very good in the way it introduced the strategy and in its explanation of the way to use options.

What I felt was missing was a couple more chapters about how to apply the new "tools" in building a real portfolio. I felt like I now had the theory but wanted to see how to use it in practice. In this respect you are very much left to figure it out for yourself. I'm sure the authors have lots of wisdom and experience on this that could have been presented.
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Most Helpful Customer Reviews on (beta) 4.2 out of 5 stars  51 reviews
24 of 27 people found the following review helpful
4.0 out of 5 stars Like a seat belt for the stock market 23 Oct 2011
By LSzczech - Published on
If you've never thought about protecting your retirement investments or college fund by hedging (i.e. buying insurance), you should read this book.

If you've never thought about trading option contracts to REDUCE risk in your portfolio, you should read this book.

If you're investment style is still based on buying a bunch of stock mutual funds and some bond funds and then refusing to look at your account statement for years on end, then RUN to your PC and order this book. And pay for express shipping.

Having worked with Jay and Wayne for a number of years, I know they've spent plenty of time in the financial service industry trenches and they have seen more than enough people screw up their futures by blindly adhering to losing investment strategies day after day.

They offer a conservative, time tested approach to protecting your capital. And while they will never win a writing award (enough with the pizza coupons already), they try hard to teach you what they know. This is not one of those cook books where the chef holds back an ingredient or two so you'll continue to the buy the secret sauce.

It's all there. One could argue it's too all there at times as the simple strategy path they're mapping will veer into foreign trading language and complex spread trading that's beyond, I think, a beginner's needs. Still, hang in there as much of what you'll learn will save your investing butt in all kinds of market conditions.

I look forward to see what they write next.
25 of 29 people found the following review helpful
3.0 out of 5 stars Expensive risk control 27 Dec 2011
By Steve Burns - Published on
Format:Hardcover|Vine Customer Review of Free Product (What's this?)
This book will be educational for new investors and traders for the explanations on how to hedge investments and trades.

It also gives readers the five iron rules of Buy and Hedge:

1. Hedge every investment.
2. Know your risk metrics.
3. Construct a long term, diversified portfolio
4. Unleash your inner guru.
5. Harvest your gains and losses.

While the authors suggestion of controlling downside risk is great advice, it can be done much easier with simple stop losses than by purchasing expensive options that are sometimes 5% to 10% the cost of the stock or ETF itself. This really hurts the possible upside in any investments, you add in the slippage of illiquid options and commissions and the authors strategy gets very expensive. When simply cutting your losses when a stock drops below near term support or 5% would have the same basic affect as their hedging strategy.

Also in bear markets their strategy will of course out perform the S&P 500 because instead of huge losses because the put protection kicks in.H However in bull markets this system will under perform because put options will be wasted money on insurance in an up trending market.

I am all for managing risk in investments and hedging your bets, however I believe therr are much easier and more efficient ways to do this than the authors suggest.

This is a great read for educational purposes on how options hedging works and will help manage risk in a brutal bear market but it is time to trade with risk on in a bull market in a clear up trend.
14 of 16 people found the following review helpful
5.0 out of 5 stars Buy & Hedge - A must read for today's market 17 Oct 2011
By Logan E. - Published on
The timing couldn't be any better for this type of book. If you aren't at least a little uneasy investing in today's volatile market than you should check your pulse. I am not a "sky's falling" type of person but for anyone that has had to start over after 2001 and again after 2008 you definitely understand the value of defining your risk for every position you enter. I found this book to be an easy read. Each chapter and topic covered are nice and short making it easy to pick up and put down without having to start over. The authors also had some fun with the examples and stories used making it actually enjoyable to read and not boring and dry like so many other similar type of books. The profit/loss graphs made even some of the more complicated strategies easy to comprehend. Whether you are just beginning, been trading forever, trade a 100 times a year, have never sold anything you ever bought, trade for growth or trade for income, do it all on your own or trust someone else to do it all for you the "5 Iron Rule for Investing" and this book are still for you.
12 of 14 people found the following review helpful
5.0 out of 5 stars I'm convinced this is the ONLY way to invest 29 Dec 2011
By KT1000 - Published on
Format:Hardcover|Verified Purchase
I've done it all, commodities, Options, Currencies, Stocks, Option Spreads, you name it. And over 20 years. My success, just like the authors pointed out in their experiences, has been all over the map. The one thing missing from my years of trading? Consistency. I am 100% confident that this book will change my life, and the way I invest as I know it. Of course, I'll still have a 5 or 10% stake in specs, that's just something I enjoy doing. But I'll never enter an investment without a longer time horizon and the appropriate hedge. Their website points out the results these authors have achieved. It's not get rich quick, but it's consistent, above the benchmarks returns. And the real key for me? I can go to bed at night and sleep through til morning without getting up at 3 am to see what the futures market is doing. If China tanks, or a bank fails, or we invade Iran, I am covered. I've read literally hundreds of investment books, on every topic imaginable. This one goes right to the top of the best of the best. Congrats to the authors for a fine publication, well explained, thoroughly analyzed. I just today made several trades, hedged, and will be making many more over the coming weeks. I'll report back in 6 months or so for an update. I'm certain it will have one result, 5 STARS.
17 of 21 people found the following review helpful
5.0 out of 5 stars Buy & Hedge Review 11 Oct 2011
By Felix Davidson - Published on
Format:Hardcover|Verified Purchase
Full disclosure...I used to work with the authors and know them well (and was able to get an early edition as a result!). They do really "eat their own cooking" and the disciplines and strategies outlined in "Buy and Hedge" are ones they themselves have used for many years with great results. These methods help maximize returns and provide staying power regardless of the market conditions. The practical application examples are outstanding at walking you through the strategies and for the average self-directed trader/investor a perfect reference to improve your skills. Lesson learned the hard way (trust me, I have the scars to prove it)......ALWAYS hedge, especially if you are trading big. This book helps train you how....worth the read.
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Popular Highlights

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The Successful investors used protection in their portfolios, and the worst investors did not. The best group tended to use stop orders, stop-limit orders, and/or Options to create loss protection in their portfolio. &quote;
Highlighted by 36 Kindle users
Generally, downside risk for index investments should range from 8% to 15%, and for individual stock picks, the range should be from 10% to 20%. &quote;
Highlighted by 34 Kindle users
Here are the three basic tactics that we recommend that use Options: • Married put (or the inverse for short positions, married call) • Collar • In-the-money Options (also known as ITM calls or ITM puts) &quote;
Highlighted by 33 Kindle users

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