Book Review > Blue Chip Investing

With his latest book, Blue Chip Investing, Alan Hull demonstrates that with a sound investment plan and an appreciation of risk management, investors can out-perform the professionals in the share market. Furthermore Hull’s method is simple and can be managed successfully in less than half an hour per week. This book will be of interest to those who believe that investment in the stock market is risky and beyond the skills of the average investor: a myth which is promoted to advantage by the managed funds industry.

Investors who are new to the stock market usually lose money because they have no investment plan to guide them in what to buy, when to buy, when to sell and how to manage risk. Hull solves this problem by providing a simple, easily managed strategy which is a well thought out investment plan incorporating sound money management. Hull’s simple logic is to outperform the index by investing equal amounts of available capital in no more than 10 of the fastest rising stocks in the ASX200.

Once the portfolio is established it is managed at the end of each week which requires very little time. If Hull’s plan is followed closely it is well suited to the investor who has little time to devote to the market since the strategy is well tested, has good risk strategies and outperforms the vast majority of managed funds. From the data that Hull provides on his portfolios this system has significantly outperformed the ASX200 by about 20% each year, over a four year period.

Apart from providing a method for investing in blue chip shares the book includes a useful section on investment planning including a section on alternative investments. There is a useful chapter on using managed funds as investment vehicles, with advice on the assessment of fund performance and fees. Hull also includes some useful observations on selecting investment advisors.

Hull’s earlier books introduced this investment approach and with this current work he has codified it into a simple method for profiting in blue chip shares. This book is recommended for the investor who has little time to devote to the share market or feels that it is overwhelming and complex. This simple and low risk approach should also be of interest to trustees of a self managed super fund. In this book Hull has shown that an average investor can out-perform the professional fund managers and achieve this with low risk and with a small investment in time.

Bill Dodd is a member of the AIA.