The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself

By Jason Zweig (Wiley)

The latest entrant in the Little Book series is by one of my favorite financial writers, Jason Zweig of The Wall Street Journal. As befits a Little Book, he has boiled down investment principles into three simple rules, to which he assigns biblical importance: (1) "Thou shalt take no risk that thou needst not take;" (2) "Thou shalt take no risk that is not most certain to reward thee for taking it;" and (3) Thou shalt put no money at risk that thou canst not afford to lose." Everyone should use the answers to these questions to form an investment policy, he says.

From there, the book moves into a discussion of the many flavors of risk management, from maintaining sufficient liquidity to making reasoned investment decisions. For Zweig, an investor's greatest enemy is impulse, which almost invariably will guide you toward the wrong decision. His mantra: "When the market is open, your wallet should be closed." In other words, investors should take time to investigate and ponder.

This Little Book would make a nice holiday gift for the more risk-averse clients in your practice. But beware: Zweig believes that risk tolerance questionnaires are baloney.