The first edition of this book came out in 2003, just before the 2004-2007 Bull Run commenced. This version is shorter with 187 pages and the theme of a secular bear still makes sense. According to Mauldin, in a secular bull market, an investor should search for assets that offer relative returns—stocks and funds that will perform better than the market averages. If you beat the market, you’re doing well. But the centre-piece of Bull’s Eye Investing is to focus on absolute returns and not just the benchmark.
The book looks into why strategies go in and out of favour and why one should be sceptical of those who give financial advice. This is why in a secular market, investors get more cynical of future growth. The lessons shared by Mauldin are pretty time tested as the one where he suggests that one should invest like Benjamin Graham by systematically buying companies that are priced so cheap they can be cut up and sold for spare parts at a profit.
However, value investing requires time and research, besides patience, which many investors may not have. Another important lesson, especially when one is trading—cut your losers and let your winners ride. Things like setting up stop losses on your positions should be the disciplined manner for investors to operate. Most importantly, one should have an exit strategy, which means there is no need to fall in love with a stock.
This book, like other in the series has plenty of lessons to learn from. The effect of demographics on the markets and why chasing performance doesn't work are well documented, which make for an interesting read with examples that one can easily relate to. Don’t expect a quick fix way to grow money, but you will find plenty to keep you grounded.
Author - John Mauldin
Publisher - Wiley India
Price - Rs 299
