Drop what you’re reading when this gets published

Michael O’Higgins and his son are about to start working on a new book.

O’Higgins, author of Beating the Dow (1991) and Beating the Dow with Bonds (1999)  has written two of the best personal finance books I have ever read. And I’ve read more than 300 of them.

What makes these books so great? They’re “teachers” in the purest sense: easy to understand, simple to follow, and they stand the test of time.

Michael O’Higgins’ new book, I believe, should be one of the most eagerly anticipated finance books ever written.

Not since Benjamin Graham’s 5 year revisions of the Intelligent Investor  has a series of finance books this powerful been devised.

When he wrote his first book, Beating the Dow, he explained a strategy that the average Joe could follow to trounce the market. He had been doing it himself for years, and by 1978, he took his DOW beating show on the road.

Between 1978 and 1998, the strategy averaged 20.93% annually. Let’s put that in perspective. If you were lucky enough to listen to O’Higgins and follow his strategy back in 1978, you would have turned $10,000 into $541,022 (pre-tax) after just 21 years.

If you had bought a copy of Beating the Dow in 1991, you would have averaged 26.36% for the next eight years.

But in 1998, everyone and his dog was throwing money at the stock market. And why not? Whether it’s stocks in the late 20s, late 50s or late 90s, we love buying what’s expensive. Like American real estate in 2005, and gold today, we’re tickled by rising prices.

And sadly, most of us follow through like lemmings to eventual slaughters, singing the same old song: “This time it’s different”

Not O’Higgins.

He didn’t want any part of the rising stock bubble in 1999, and like a great teacher, he wanted to show how to avoid the bursting bubble and keep making money. That’s when he penned Beating the DOW with Bonds.

Devising another simple strategy, he explained how investors should shift into bonds, t-Bills or gold, when certain market conditions existed. And he showed how to do it. I partly followed his philosophy myself, and I owe the man a giant “thank you”.  …read more

Following him loyally in 1998 would have seen investors find refuge in bonds paying 7.5%. And as stocks crashed between 2000 and 2003, bond prices rose, furthering profits for bond holders. O’Higgins’ converts would have continued to make bucket loads of money while the world crashed around them.

Then in January 2002, he went into gold at $280/oz. Nobody wanted it. Gold was dirt cheap, and it had trailed inflation (as an average) since 1801. Yeah, you read that right. Inflation beat gold from 1801 to 2002.

And while so many people are now warming up to gold as an investment, despite its overheated run, O’Higgins is about to bail, suggesting that he’ll sell near $1,400 an ounce.

Well… gold’s price is at the guru’s selling point. And the ever-disciplined contrarian is likely unloading after a 400% gain.

He runs his own investment management service for high net worth clients. No doubt they view him as the Messiah.

That said, he’s a generous man: one who published what he was doing in 1991 and 1999. And he explained why.

From what he suggested to me, via email (yeah, it was a bit like chatting with Elvis) this book has some time to go before it’s published.

But when it hits bookstores, drop what you’re reading, devour it, and follow what the man has to say.

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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5 Responses

  1. Never heard of these books, but if they have your endorsement I'm going to have to track them down and buy the new one when it gets published.

  2. So, should I be selling off my gold? 😛

    I definitely do expect prices to be volatile. However, as I say again and again, gold isn't an investment: It's stored wealth and money. All the paper in the world can catch on fire but your gold will still be there. I'm not a gold bug and I'm not about to put everything into there and stake out a cabin in the woods, but gold has been mankind's chosen form of money for thousands of years, and I don't think it hurts to keep at least some assets in there.

    I really gotta check out this guy. Thanks for sharing, Andrew.

  3. Marco says:

    Hi Andrew,

    I've read his stuff in the past, an easy read, a simple strategy that generated excellent returns. Can't complain about that! These investing strategies tend to be contrarian which isn't such a bad idea. Buying things at a discount when they still have value is a good thing. We do that when purchasing consumer goods but somehow forget to apply the same strategy when it comes to investing.



  4. Thanks for reminding me about those books Andrew. It makes my wife's Christmas shopping for me very easy 🙂

    BTW – wifi in Buenos Aires works great 🙂


    My Own Advisor in sunny Argentina

  5. larry macdonald says:

    O'Higgins seems to have his investing act together. I worry tho that as people read his books and follow his advice (especially Beating the DOw stuff), the alpha gets dissipated (going by EMT).

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