At Trader Plus we have a strong aversion to books with logos on the cover. Nothing screams out self-published quite the same, and despite the growing quality of self-published trading and investing books they are yet to reach the tipping point towards consistent quality.

In this case we’ll make an exception, because the logo belongs to Morningstar and the publisher is multi-national Wiley – both early indicators of quality despite the adage to never judge a book by its cover. So does it live up to the branding? In a word, yes.

Heather Brilliant and Elizabeth Collins deliver a compelling case for the introduction of the concept of moats into your fundamental analysis techniques. Moats refer to those barriers that particular companies are able to establish to limit the effectiveness of competitors (for example, through protecting their work with patents or making it difficult for customers to switch to competitors). Unlike other texts that rely on generalised examples, Brilliant and Collins provide scenarios from actual trading companies to illustrate these concepts.

Where the book offers particular value is through its later chapters focusing on industry sectors and specific analysis techniques to assist with each. Even if you have no intention of doing this analysis yourself (and, surprise surprise, there are some operators out there that do offer this particular research) it’s useful skimming to get a better understanding of a company’s potential performance and performance issues unique to that sector.

The negatives aspect of this book is that it is walking a very narrow line between highlighting the pathway or the pitch. Of course the authors are relying on real-world examples from Morningstar’s knowledge bank – they would be derelict if they didn’t. But by showcasing the extent of the analysis and the high level of granularity required, many traders may feel that the moat is just too wide for them to personally fully harness this valuable tool.

Market: Beginner – Intermediate

Verdict: Worth the investment. Although you may never use the techniques yourself, many of the methods contain valuable insights to approach valuations and analysis of potential investment opportunities. Well worth the read to not only hone in on practical applications, but also get a broader feel for an interesting arena of professional analysis.

There are many urban legends that get thrown around the school yard, but the one I used to like the most was the fact that a single daily newspaper apparently contains more information than the average woman in Victorian England would learn during her lifetime (unless, of course, she was totally up on the latest AFL scandal or reality television star’s love life).

These days, apparently, a similar effect is happening on the internet, where the millions of words added each day combine to create a hyperbole effect on the amount of “knowledge” available (now almost totally devoted to AFL scandals, pornography and reality television stars’ love lives, of course).

It’s hard to imagine the days before Google, Facebook, Amazon and the rest – even though they are less than a decade old.

But the names associated with that period in the late 1990s when the dot.com boom ummm… exploded… are a fantastic insight into the way we were. People such as James Packer, Malcolm Turnbull, Jodee Rich, David Lowy… all powerful people with big wallets and a burning desire to be at the forefront of the digital revolution.

On the surface, Kate Askew’s book dealing with the inside story of the dot.com explosion could have easily turned into one of those grating prolonged versions of “I-told-you-so”.
Yes, the figures were dodgy. Yes, we should have known better. Yes, it wasn’t actually different this time.

Some have retrospectively suggested that the best way to make money during this period was to take a noun, add “.com” and sell it to the nearest sucker. In fact, it wasn’t far from the truth.

As internet forums sprung up to extol the virtues of the internet in a gloriously unchallenged exercise in narcissism, stock prices kept rising up and up in the culmination of the ultimate self-fulfilling prophecy.

But the problem with this hindsight clouding our vision has forced us to forget that these were exciting times, and amid all the economic carnage that followed there were many clever people making plenty of clever deals.
And Askew’s book is there for every hair-raising moment, bringing a clarity to recent history that repetitively made me ashamed to admit I had forgotten some of it already.
And through it all, the characters loomed large and the big moves made overnight millionaires of many.

This book isn’t really about trading at all yet it should be read by every trader who has forgotten that although the invisible hand of the market is meant to be providing ultimate control, inevitably the individuals that create the market are prone to moments of mass insanity and gross delusion. This, apparently, is something that we learn every time there is a boom.

But don’t worry about the mining boom. This time, it’s going to be different…

Although the title sounds like there is the potential for some weird new trading craze, most Australian traders worth their salt will instantly recognise the name as one of the country’s leading educators and traders.
As you would expect from a man known as The Chartman on CNBC, Guppy Trading is full of charts and technical analysis toolkits to assist you in understanding both the basics and some advanced trading strategies. Really, books like this are the equivalent of a car dealership throwing open the doors and handing you the keys to everything – you can try out whatever you like and see if it fits your style. But we bet you decide to buy something.
Anyone with any desire to be a technical trader should read this. And technical traders should read it too – just to make sure you are getting it right.
Market appeal: Beginner – Advanced
Verdict: This book will pay for itself.

When I was younger I can remember poring over my grandmother’s collection of stamps and being told to be careful, because one day they could be worth a lot of money. Of course they were beautiful too, old relics of the British- Empire years gone by.
This is, for some, the inherent brilliance of investing in collectibles – the intangible rewards of indulging in a hobby or passion combined with the tangible returns on collecting well.
Some of these investments have come under fire lately – for example with the Cooper Review’s recommendation on exotic investment – but there is still a lot of merit in fully understanding the opportunities available. Beelaerts and Forde do an excellent job to digest the options across a wide subject matter (for every art dealer there is a coin collector and so on) in a book that is entertaining and quirky. For example, did you know that an invitation to attend the opening of Australia’s first parliament could be worth around $1000? It’s only armed with this information that your next visit to a dusty attic may generate significant returns on investment.
Market appeal: Beginner
Verdict: Add it to the collection. Yes, an obvious line, but true.

Another in the series of “Made Simple” books by Wrightbooks (the others covering forex, trading plans and shares), CFDs Made Simple is probably the one with the biggest demand.
Most traders understand the concept of CFDs, but few have a full grasp of the complexities of its trading paradigm or the full range of opportunities available to CFD traders – even if they have been trading other instruments for years.
Unlike some of the other titles which assume a certain level of naivete in their audience, CFDs Made Simple has a more savvy clientele in mind. The result is more engaging, allowing the reader to draw their knowledge from other areas of trading and apply it to the world of CFDs.
Market appeal: Intermediate-Advanced
Verdict: Like the “for dummies” series, this falls into the everything you wanted to know but were afraid to ask section of the bookshelf. But does that mean you should get it for the same reason you should eat your vegetables – more because someone else said so rather than the goodness of the deed? Not at all. You should get it because you will become a better trader.

“Failing to plan means planning to fail”. Sure, this might be the gazillionth time you have heard or read this statement, but it remains one of the great untaught areas of trading. It’s such an easy thing to tell people to create a trading plan – it comes in at about slide three of the presentation at a seminar, usually – and yet there is very little out there which will walk you through the basics of a good trading plan.
The Clarkes have adopted a holistic approach to the subject and it works well, with everything from the psychology of trading to the empirical methodology needed to refine the plan covered in detail.
In fact, this is the sort of book that experienced traders could also benefit from flicking through to get some ideas for different metrics or extra elements to add to their existing plan.
Market appeal: Novice-Advanced
Verdict: Unfortunately the phrase that opened this review is a cliché because it is true. If you want to develop your plan from scratch or improve your existing strategy, then plan to buy this book.

What are the key considerations people need to make when structuring their investment portfolios?
Risk management is the most important thing in managing a client’s investment portfolio and ensuring that the investments meet the client’s life and financial goals. Too often I see people simply gambling their money on the share market with low value, low liquidity stocks that have little prospect for future earnings as investors hope for a meteoric rise in price that will somehow be their ticket to financial salvation.
The eight attributes of an asset all need to be considered, no matter what your investment – Risk, Return, Liquidity, Volatility, Flexibility, Cost, Tax and Security.
Over and beyond that, the stocks into which you invest must have real income and actual profit or a serious and tangible opportunity to create both in the immediate future.
The ideal traits of the best companies to invest in are well managed, have a history of solid earnings, good return on equity, return on assets, good market share, economically resilient, highly competitive and differentiated, be in growth industries with high barriers to entry, low-cost structures and have recurring revenue.

Where do people often go wrong when they are starting out?
Many people, particularly beginners, have the attitude that they want to get rich fast on the stock market so they seek the panacea of investing in a piece of software, a stock-market guru or refuge in the latest expanding bubble (that often pops soon after they invest).
The wealthiest people I see make their money slowly through investing for the longterm in business or their careers and invest in shares and property to maintain their wealth at a level a few percentage points above inflation with well diversified portfolios in conservative assets including the top 150 stocks.

To what extent should people use professional advice when setting up the structure? Is there an element of self-education involved?
Self education is so important! Not only does formal education give you the basics, but reading magazines just like this one and newsletters gives you a good overview of what’s out there and you can decide what’s right for you.
Always do your own research and never rely on the media to give you a view – the figures never lie and reporting season is a great time to update your recommendations as the figures are new and up-to-date.
In seeking a professional, it’s important to choose someone with similar values and investment philosophy to yourself, someone that you can understand and most importantly, someone you can trust for the long-term to help you make smart decisions about your money.
I always say, there’s never a silly question when it comes to your own money – so ask lots of questions until you are satisfied. There are lots of people who are happy to take your money so be aware and find someone you can trust.

There are a lot of exotic or alternative investment portfolio structures – are these to be avoided or do they hold some merit?
Each product needs to be approached with caution – we generally avoid the exotics and if you use the rules above (the eight attributes and the company attributes) you won’t stray too far from the quality assets. Stick to the rule that if you truly don’t understand a product, then don’t use it.
Keep it simple. Because I manage the SMSF assets of hundreds of pre-retirees and retirees, we keep it conservative with top 150 companies, term deposits, ETFs and hybrids issued by the larger companies. It’s clear, simple and easy to understand and it’s saved us from the hungry bear claws of the GFC.
Also jump on to the ASIC consumer website and check it for scams and fraudsters (www.fido.gov.au)

Tell us more about your latest book?
The book is for all people interested in improving their financial situation. It’s simple and easy to read with live examples and case studies and rules of thumb. It was a cathartic experience for me to download my knowledge from many years of experience as an independently owned financial adviser. There’s a lot of noise out there in financial circles and I needed to tell it like it is without the flying the flag of a major financial institution.
Successful financial management is relatively easy but it takes patience, application, consistency and commitment to the cause.
This book will give readers a good overview of all of the concepts a modern and professional financial adviser should be addressing.

What’s next for you?
Professionally, I’m hoping to get the tick of approval from my publisher for a Self Managed Super Fund DIY Guide, as that is a particular area of interest for me and my clients.
Personally, I have another baby on the way and a few months of nappies and sleepless nights ahead. Hopefully plenty of skiing and surfing will follow – after all, that’s what good financial management is all about – a better lifestyle.

Consumer price index
A consumer price index (CPI) is a measure of the average price of consumer goods and services purchased by households within an economy. It measures the average change in prices paid for a constant basket of goods and services from one period to the next within the same area. It is compiled from a sample of prices for food, shelter, fuel, clothing, transportation and medical services.
The percentage change in the CPI is the main measure for estimating inflation, or price growth, within an economy and changes in the cost of living. Rapid increases in the value of the CPI indicate inflation; rapid decreases can suggest the onset of deflation – a decrease in the price of goods and services leading to low or no economic growth. Economists and other market analysts tend to focus on the CPI-U figure in the United States. The CPI-U figure, or the core inflation rate, excludes food and energy components from the measurement, as these tend to be the most volatile and seasonal prices.
The US Federal Reserve, like all central banks, closely monitors the CPI as its main indicator of inflation within the economy. Sudden or unpredicted changes to the CPI lead to sharp increases in currency market volatility as traders react to changes in the CPI number in anticipation of moves by the central bank to keep inflation under control.

Producer price index
The producer price index (PPI) is a collection of indices that measure price changes by domestic producers, and how the producers’ cost of materials can be passed on to consumers in the form of higher prices for their finished goods. The PPI measures price changes from the business side as opposed to the CPI, which measures price changes from the consumer side – what businesses are charging rather than what people are paying for products. The PPI records changes in prices in percentage terms over the previous recording period for a wide range of industries in the US economy, including manufacturing, mining, agriculture, forestry, fishing and energy production. It is a broad-based indicator that reflects changes in production costs across virtually the whole US economy, providing a valuable insight into any inflationary pressures that may be starting to build. If producers are paying more for their inputs, these costs will be passed onto consumers, which in turn affects the CPI.

Commodity Research Bureau Futures Index
The Commodity Research Bureau Futures Index (CRB Index) measures changes in the prices of 17 commodities actively traded on US futures exchanges; these commodities are raw materials or products that are associated with the beginning stages of production. Changes in the prices of these materials are among the first to react to changing economic conditions. It is an early indicator of changes in the business climate and inflation. The CRB Index is also an actively traded futures contract, so tracking changes in the value of the index is simply a matter of monitoring changes in the price of the CRB futures contract. The commodities included in the CRB Index and their sub-group weightings within the index are shown in the table.

The CRB Index makes it relatively easy to watch for changes in commodity prices and inflationary trends.

This edited extract was from ‘Forex Made Simple: Simple, Easy to Understand Strategies Anyone Can Use for Success!’ by Kel Butcher. The book is available through Wrightbooks. RRP $27.95.

iPhones and Blackberrys
When financial services comparison website Cannex reported on Australian stockbrokers last year, the two brokers that RECEIVED five star ratings both offered the webIRESS platform – Amscot Discount Stockbroking and First Prudential Markets.
The webIRESS platform has remained popular with active traders and the platform is available for iPhones and BlackBerry devices.
In particular, the webIRESS platform has been the platform of choice for busy, but still trading, business executives using BlackBerrys.
Access to the webIRESS platform will usually cost you unless you make a certain amount of trades each month. The amount will vary broker from broker.

Brokers all right
Commsec was the first broker to release an iPhone app. The iPhone app allows traders access to MOST features, such as watch prices, setting up watch lists and viewing charts. More recently, it’s received some poor reviews from users after a recent update.
Westpac has recently launched a new web-based mobile trading platform and this uses the same set-up and style as Commsec.
Bell Direct WAS one of the first brokers to move into the mobile market. In addition to mobile accessibility, it also allows traders to SMS orders.
Surprisingly, while Macquarie Edge and E*Trade have led the market in many areas, we are still waiting for them to deliver truly first-class mobile-trading applications.