I was a big fan of the Getting Going column that Jonathan Clements used to write The Wall Street Journal. Mr. Clements does not write for the Journal anymore but he has a book out called The Little Book of Main Street Money: 21 Simple Truths that Help Real People Make Real Money. The book isn’t exactly new (published in June 2009) but I’ve been meaning to read and review it — Mr. Clements is a terrific writer and anything from his oeuvre is worth reading. I dropped into a Chapters store near my home hoping to pick up a copy of the book but instead I stumbled on a new book by Derek Foster “Stop Working too: You Still Can!”

Regular readers might wonder why I would waste any more time or pixels on Mr. Foster but I confess to the same morbid curiosity displayed by drivers slowing down to rubber neck at a crash site. I did not buy a copy of the latest book but I did browse through it. Here are the highlights:

  1. Foster has ditched the “Canada’s Youngest Retiree” tag and is now calling himself “Canada’s Millionaire Investor”. Which begs the question: Didn’t he claim in the first book that even young retirees don’t need anywhere near $1 million to retire?
  2. If you ignored Foster’s background, you would concede that the book isn’t bad overall. The book is filled with conservative tips: negotiate a discount from the posted rate on the mortgage, take advantage of mortgage pre-payment privileges, don’t take on credit card debt, invest in TD e-Series funds and ETFs, check out DRIPs, construct your own Principal-Protected fund, etc.
  3. Believe it or not, you’ll even find some discussion on risk. For instance, Foster even acknowledges that his “money for nothing” strategy has a “catch” — an investor could miss out on substantial gains. He should know: stocks are up 30% (excluding dividends) since he sold his entire portfolio to implement a strategy of selling put options.

There is little to quibble with the do-as-I-say part of the book but Foster maintains that “his strategy” of dividend-growth investing is still working even though he got off that train earlier this year. Overall, this isn’t a bad book but with the beating that Foster’s credibility has taken, I wonder if this will be as successful as some of his earlier books.

This article has 20 comments

  1. I’m a new reader and so I was wondering how his reputation has taken a beating lately? He came and spoke to my class and seemed like a good guy who had an interesting strategy he was trying to help people learn about (though of course making money off it)

    Thanks!

  2. Interesting, I will check out the book.
    @KingCanuck – he spoke to your class? Hopefully he wasn’t teaching elementary school kids about options trading;) I personally think the criticism Foster has received has been unfair. He’s trying to share what has helped him and I am sure he is sincere. Let people decide for themselves what parts of his books are relevant and suited to their own situations.

  3. At least he doesn’t seem to follow the Steve Martin technique for not paying taxes on $1000000:

    First get a million dollars…. and it goes downhill from there.

    C8j

  4. Nothing new here CC. Foster is simply reprinting advice and financial tips that others have published long before he decided he would become an author (he’s really just a good marketer).

    His acknowledgement that “money for nothing” has a catch seems a little insane to me when we all told him that strategy had a “catch”. I don’t think he made very much money off that so here we see him back with another book.

    “The Foster Effect” appears to still be in full swing and I just shake my head at his attempts to profit off the naive tendencies of his readers.

  5. I don’t have a problem with Foster writing more books – the fact that we know his history fairly well doesn’t change the fact that he likes writing books and it’s a free country! 🙂

    When I look at all the books written by “experts” and their websites etc – some of them are experts, a lot are not. The only difference between Foster and many other authors is that I know his background.

    Look at people like Orman, Ramsey etc – they are celebrity gurus and they don’t know sh*t.

  6. Canadian Capitalist

    @KingCanuck: I suppose Foster spoke about dividend-growth investing. He is a bit low on the credibility department because he bailed out of his strategy when it hit a patch of trouble but still says “his strategy” is working. You may want to check other posts on this topic on the blog.

    @MoneyEnergy: I don’t think the criticism that Foster has attracted is unfair at all. One of the main criticism is his misrepresentation of the investing methods he used to first retire and then stay retired. He pretends that dividend-growth investing helped him retire whereas there was nothing slow and steady about his investing process but a series of leveraged bets that may not have worked.

    @Brad: I don’t think the new book will be as successful but they again “gurus” like Harry Dent seem to be selling books alright.

    @Mike: Of course, Foster has every right to write as many books as he wants. Now, I don’t know the background of every guru out there but to my knowledge, Orman or Bach don’t misrepresent facts. They may be preaching material that they themselves may not practice (it cracks me that Orman will recommend hanging on to stocks when they are plunging fast — not exactly wrong advice, but she owns nothing but T-bills or bonds) but that is a much lesser offense. A better comparison would be Foster and Kiyosaki.

  7. Selling puts = Long Term Capital Management…A disaster waiting to happen.

    I guess investors forget that the 100 year flood seems to come every 5-10 years…selling puts eventually results in complete destruction of a portfolio and the net worth of investors.

    Did Foster discuss LTCM in creating his “sell puts” strategy? If the creators of the Black-Scholes model (Nobel Prize winners no less) can’t get it right (twice), how can the novice investor?

  8. hmmm… “construct your own Principal-Protected fund”… what’s that, something we should know about… is it the subject of past (or future) posts?

  9. Canadian Capitalist

    @LateStudent: I don’t recall writing a post on this topic but try Google. I found one on Where Does All My Money Go?

    http://www.wheredoesallmymoneygo.com/build-your-own-principal-protected-notes/

  10. Do we have any idea how Foster’s recent books have been selling? I know his credibility is low among communities such as these, but if you randomly came across his book in a store, or happened to catch an interview where he described his path to success/retirement – a novice could still easily be enticed.

    What seems awfully silly is that his strategy keeps changing to reflect new topics he hasn’t written about yet.

    I suppose after a few more books he could write a definitive one titled “Money-making strategies that DON’T work”. That’s something I’d buy since he’d be experienced and knowledgeble 😉

    • Canadian Capitalist

      @Sampson: John Heinzl noted in his column that Foster made “$200,000 in profit” from his books. Assuming $10 to $15 in profits, Foster has sold 13,000 to 20,000 books. His first book was easily a best-seller (5000 copies or more). If we assume Foster sold 10,000 copies of his first book, his 2nd and 3rd books did not sell as well. Too bad Chapters does not report sales rank as Amazon does. Still, you have to admit that Foster is making good money from his books.

      http://www.globeadvisor.com/servlet/ArticleNews/story/gam/20090312/RDEREKFOSTER12

  11. Funny you can write a book about investing an not get nailed by the OSC…..but if you talk about it on the radio like that “looking out for your money” guy….the OSC will fine your butt off……

  12. He dropped that “Canada’s youngest Retiree” tag line because I beat him! Suck it Foster.

    I’m sure some dot com cash out kid with pimples or trust fund kid or slacker or guy who won the lottery or married well, or whatever has beat us both by a decade or better.

    The punchline to all of this is that he might be right. This could be the Armageddon of bear markets and we’ll be living in huts and hunting with spears after the whole thing collapses. If that happens, and he writes a book about his investment acumen, I’ll buy that book. Hopefully he took the proceeds (haha) and bought himself something nice.

    It seems he’s not retired at all, just changed careers.

    • Canadian Capitalist

      @Retired at 31: Foster actually says that he changed the moniker because of (valid) criticism that he switched careers to writing and promoting his books. And yes he may have felt challenged by your tag too 🙂

      Actually, I don’t fancy the chances of his new book. His first book was brilliantly marketed and received widespread positive press coverage. Now, some sections of the press have started to go negative on Foster. That can’t be good for business.

  13. Foster is about to take ownership of Bank of America shares in Jan ’10 at $40 thanks to his sold puts! BAC is trading at $15.66 today.

    Dave

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  15. I own some of Foster’s books and I have to say that I did enjoy Stop Working in a sense that even if he didn’t provide the soundest of strategies, I felt that his work on that book was Foster at his best and that he was not misguided. You could tell he believed in that strategy to the core and it transcended into his book. I liked it because it motivated me as an investor – not because it was the best strategy of all time.

    Unfortunately, in his subsequent books to follow, Foster seems to get lost as to what his strategy really is, and I think a lot of his readers got lost with him because of the confusion surrounding as to what he was trying to convey. I mean, I like to know tips about DRIPs and so forth, but going from a strictly ‘buy and hold for life strategy’ to going all out with options didn’t jive too well with me.

    After reading over Cdn Capitalist’s thread and links to what has recently happened, I had no idea that Foster bailed out on his original strategy to the extent that he did and cashed out over 400k of his portfolio. It appears as if that moment could have been his ‘last nail in the coffin’ so to speak integrity wise vis-a-vis his original strategy.

    Nice thread.
    Cheers

  16. This guy makes no sense.

    The Rat hit the nail on the head.

  17. Pingback: » Derek Foster’s fourth book Canadian Business Blogs | Advice on Investment in Canada, Stock Market, Small Businesses Opportunities

  18. Here’s the best strategy. Buy gold & silver bullion. Crash JP Morgan!