Combat Finance

日期:2014/08/04

Combat Finance  by Kurt Neddenriep applies military values to the field of investments. Nennenriep served for 20 + years in the Army Reserves rising to Lieutenant Colonel while appparently serving as a successful vice presdient in the Morgan Stanley Wealth Managment Division. He has many friends among fellow officers in the Military that he served with and he mixes their insights with interviews of them and pictures with his own guidance.

The book is divided into nine short chapters. The first and most useful to me applies the principles of basic training to investments. The motto of the basic training in all branches would seem to be get there with the right equipment, time, uniform, and attitude and maintaning a military bearing and everything will be all right. The financial analogue is to know what all your revenues and expenses are, cut the expenses to the bone, save for the future, develop a fall back plan, and listen to your superiors. He suggests that everyone needs a side man or wing man to prosper as in the Army and that you should follow the general orders. Guard everything in your base of operations, and only quit your post when properly relieved. Obey the orders of your superiors, which he suggests means to take care of your family in a professional fashion. Your financial bearing is to live within your means and to get rid of all debt.



The second chapter talks about all the reserves that military commanders maintain and suggests that you maintain a reserves for unforeseen bad experiences, financial calamities, and big moves in the market and grand opportunities when distress happens in markets or real estate.

The third chapter describes how to choose a house that you can afford. It uses the insights of planning a big, small or outpost in the combat world. He emphasizes you have to defend your house, but in order to win a war you have to get out of it. He uses insights from the mayor of the combat base to tell you how to buy a house, taking account of what many don't take into consideration, the manifold expenses in keeping it up, and the possibilities that the resources that you'll have to keep the house will dry up.

The fourth chapter is about the importance of training in the military, and how you should always be preparing for different scenarios in the future. He believes that saving is the best way of preparing and shows how compounding even as little as 4,500 a year over a lifetime can lead to over a million at retirement.

The fifth chapter is a tribute to the coast guard, and how they protect our home front. He sees insurance of all forms as the investors coast guard and recommends every kind of insurance including life, disability, long term are, homeowners insurance, health insurance, etc.

The sixth chapter describes the advisers that a good president of his own investments should have showing the importance of your investment adviser, CPA, attorney, and life insurance agent. He gives examples of the importance of delegation.

The seventh chapter describes the importance of strategic objectives and mission statements. "Make a list of all your primary strategic objectives and prioritize them in order of importance". Ask where you want to get, who's going to get your there and how you plan to accomplish the goal.

The eighth chapter describes coordinating all your investment activities the way the military divides up its activities into ground, sea, and land. He likens bonds to the armed forces, individual domestic stocks to the navy, international stocks to the air force, and alternative investments to the marines, and suggests you need each of them in your portfolio.

Finally, he has a chapter on what the fights is for. In the military he believes it's the fight for freedom. In the investment front, he believes the fight is for your financial future.

Okay, the book is very prosaic. And the author doesn't seem to know much about index funds, and the proper balance between stocks and bonds during the age cycles. One also questions whether the military person is putting tremendous input into an area that has little potential output of positive value. The excursions into Iraq and Afghanistan which the author is so proud of and apparently implemented so effectively did not seem to have a high mechanical advantage relative to the input. Yes, they knew how to kill the enemy, build schools, keep them away from the IED's et al, and bring their soldiers back when injured but if you timed all your investments into buying Argentine debt in the last 50 years, you'd have a hard time justifying your expertise and activities.

But it has many insights for and principles to apply for those who can find a proper goal in life. The author recommends checklists and procedures that have served the military in all its branches over hundreds of years. There is much to learn from their evolution in the field of investments. And to his credit Colonel Neddenriep and the colleagues he interviews seem like men of integrity, and loyalty that you would want to have as friends and role models.

P.S. I apologize for this prosaic review. But the book is prosaic but valuable, and I would recommend it to anyone, especially those starting out in our field, and those with an all too ephemeral view of life and markets.