Thursday, April 19, 2012

The Lazy Investor by Derek Foster

I don't want to be snide, but this book could have been called, The Lazy Author: How to write a sequel without making a new point.

For those who don't know, Derek Foster shot to fame when he published his first book, Stop Working: Here's How you Can!, in 2005. The book chronicled how Foster was able to retire at age 34 by investing in strong, dividend-paying stocks. The book was intriguing and containing several excellent investment tips.

The Lazy Investor is Foster's follow-up book and contains an explanation on how to enroll in SPPs (stock purchase plans) and DRIPs (dividend reinvestment plans). It also has a section on how to teach children about money. The section of SPPs and DRIPs is interesting, but by no means groundbreaking. The discussion on children, meanwhile, is highly questionable. For instance, Foster is not a proponent of registered education savings plans (RESPs) which is fair enough. His "analysis" of why his hold this position, however, is very weak, as his "calculations" of future education costs come across as blue-sky chit-chat rather than firm financial analysis. As a case in point: Foster predicts that it will be easier for young people to find part-time work in the future because of the impending retirements of the baby boomers. Consequently, his children should be able to partly-fund their education in the future, which reduces the need to invest in RESPs. This may or may not be true, but this "logic" is not conclusive proof of anything. This is something you would say while having a beer with friends, but not a rigorous financial analysis when making an investment decision.

The rest of the book contains a lot of information that can be useful, e.g. only investing in Canada, concentrating on dividend paying stocks, living frugally and only buying stocks for recession resistant companies. However, all of this information was already in his first book, so this discussion does not add anything new. Furthermore, I found the writing style to be grating at times. To use an analogy, reading this book is like reading the blog of a bright but self-centered high school student, i.e. while containing some interesting points, the tone is very casual, the simplistic explanations try to come across as expert advice, and the context is always self-referential. In fact, I got the sense that Foster wrote this book so he could tell the world how great he is, and how lucky we are hear his great investing tips.

Now, to be fair, I did enjoy Foster's first book, and as such am interesting in reading his other works. That being said, I would not recommend The Lazy Investor as it is, well, a lazy book.

1 1/2 out of 5 stars