Saturday, September 09, 2006

Book Review: The Single Best Investment

I recently completed reading The Single Best Investment: Creating Wealth with Dividend Growth, by investment manager Lowell Miller. The dust cover additionally describes the book as "The Classic/Revised & Updated".

The subtitle describes how the wealth is to be created: by finding reasonably-priced (perhaps even so-called "cheap" stocks), reasonably-yielding dividend-paying stocks, that have a history of raising their dividends over time.

As readers to this blog know, I am a fan of both buying stocks with below average PE ratios, and with good (and rising) dividend yields as a way to outperform the market (which is the essense of the approach recommended in this book). This is also something I've written about here, here, and here. So this is an approach that I personally recommend as suitable for practically any type of stock-market investor.

This book is useful for both beginning investors and those with more experience, particularly experienced investors weary of the "next great stock" approach. Mr. Miller does teach the keys to finding the right kind of stocks, that will allow an investor to "sleep easy", knowing that the stocks chosen using this approach are likely to be far less volatile than the market in general, and to have great staying power over the longer term. All with the likelihood of achieving achieving above-market-average rates of return. What more could most investors want?

Of course, this also provides the opportunity to hold these stocks outside of tax-sheltered accounts for long periods of time, thereby reducing both transaction costs, and capital gains. Another wonderful benefit.

Finally, the book isn't filled with lots of technical jargon and is a nice easy read.

However, having sung the praises of this book I also have to note a few a warts with the book. Although it's stated as an "updated" version, there are places in the book where it's not clear what time frame is being talked about: now, or examples which were current when the orginal version was published (about 10 years ago). Also, some of the examples are also dated, and it could have been very useful for the author to show how, for instance, five or ten stocks recently purchased in the portfolio he manages, fits into this approach. A few changes to the book could have resulted in a great book showing a a great approach, rather than just a good book with a great approach. Overall though, these warts aren't enough to really detract from the overall content and message of the book.

In the end, this is a book I definitely recommend this as a good addition to any investors library, with a very solid approach, and with very high off-the-shelf usefulness. I'll definitely be lending this book to my teenagers to read and for them hopefully to practice the approach!

Finally, I would like to thank and acknowledge the publicist (Jo Treggiari of The Print Project) for providing me with a complementary copy of the book.


The Confused Capitalist

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