Get your own Free Home Page
Get your own Free Home Page
Firstly, this is a book for someone who would rather earn a reliable 5% than a volatile 10%.
This is all very well and good, but the author never mentions this point. he just assumes that everyone would rather earn a reliable 5% than a volatile 10%, and works from there. He never acknowledges that many people would accept some volatility in return for higher profits.
He certainly never acknowledges that anyone would dream of ever accepting the chances of a small loss in return for even more return, say 15 or 20%.
It's OK to write a book for very conservative investors. But is should be said that this is who the book is for. The way Thornton writes one could think that there is no such thing as a more aggressive approach.
Likewise, he only considers positive gearing to be aceptable. Once again this is a valid viewpoint, but it needs to be said that other viewpoints exist, if only to explain why this approach was chosen.
Reading between the lines this conservatism may stem from some of his earlier investments, which did not turn out very well. Investing during the depressed and inflationary 1970s, he had properties where the capital gain did not keep up with inflation. Had he been relying on high leverage he could have lost big. So he learned that the conservative, invest only for the rental, approach was the safe way to go.
Once again, this is a perfectly reasonable conclusion, but to present it as the only possible approach is to ignore huge areas of investor behaviour which need to be addressed, if only to explain why they are wrong.
Return To Patrick’s
Homepage
