Customer Reviews

The Dick Davis Dividend: Straight Talk on Making Money from 40 Years on Wall Street

5 star:		(12)
4 star:		(1)
3 star:		(2)
2 star:		(1)
1 star:		(1)

 

 

If you think this review is long, wait until you see the book - 454 pages.

I don't feel satisfied with the book. The reviews for it were great, it was recommended on a popular investment blog, I expected a lot. As someone who has been investing for several years, I don't think I got what I expected.

Without the preface, acknowledgments, etc, the book is 454 pages long; it's well written and well organized. But the first 50 pages are about Dick Davis, his early childhood, how much he enjoyed his summer camp, etc. I think I learned more about Mr Davis than I need to know.

One useful thing identified in the first part of the book is how Mr Davis operated as a media commentator and later as author of his newsletter, The Dick Davis Digest. Mr Davis writes that he was not comfortable recommending stock, bonds, and investments, so he focused on reporting what OTHERS were recommending, always trying to present a balanced view. I concluded that's the format for the rest of the book - what other people think with some input from Mr Davis, and of course Davis selected the people and work he's cited. I do think he tried to present a balanced view, or at least a view that is not so presumptive as to imply "this is the only way to do it, anything else is wrong!".

My basic frustration with the book is that I concluded that Davis was summarizing (often with other peoples words or work) what he has been led to believe are truths about the stock market, how to invest in it, etc, as opposed to presenting specific information that has worked well for him and why - there's a big difference. If you've been paying attention to mainstream commentary over the years, you've probably heard most of what's in the book. For example, at one point Davis argues that index investing is the way to go because so many experts use index investing; that argument left me cold, I'd like to see some numbers that lay out an irrefutable case. I'm not sure there is an irrefutable case.

Other examples: Mr Davis is comfortable with a portfolio of 80% passive investments (index funds) and 20% active investments (almost anything else). Why 80/20? My sense is that it's a consensuses number based on what investment luminaries he's dealt with have hit upon. No original analyses, it's probably ball-park right, just go with the flow.

Mr Davis presents 28, as I recall, lazy portfolios that were developed by investment luminaries. Enroute we learn that Andrew Tobias is concerned with gay issues and that Jim Lowell lectures on philosophy and religion and is an avid sports fisherman - why do I care? What we don't get is any sense as to how well the portfolios have performed in comparison to each other over a common time frame. Seems to me that without considerable analyses regarding the performance and relative performances of the portfolios we are left simply with a collection of hypothetical portfolios - which to me amounts to trivia.

He discusses mutual funds vice ETFs, and you've probably heard the tradeoffs before.

In fairness, Mr Davis does include several good resource lists for things like classic investment books, newsletters, financial blogs, etc. I've seen similar lists in other publications, but having them all drawn together in one book has value.

If you are a beginning investor perhaps this book has value, you may not have heard or read about some of the topics covered and it may offer some issues for you to think about. If you've been investing for even a few years, you've likely seen or heard nearly all the investment material covered in the book. Either way, it's a long read.

Whether you are an experienced or inexperienced investor this book will help you understand the limitations of the so-called market experts, the news media and most importantly, your limitations. The sooner you learn these lessons; the better off you'll be for it.

Don't rush through this 450 page book - Dick's lessons are best if left to sink in. Read the chapter on his personal background - it will give you a good understanding of who Dick is and how he came to obtain such useful information about investing.

This book is not for those who want to actively trade stocks or who are looking for the next great method for picking stocks. This book is for the person looking to become a better long-term investor and for the person who wants to learn how to use her mind and the media to her advantage.

Dick's discussions about the irrelevance of news, the role of the financial media, the under acknowledged role of luck and the utter unpredictability of the markets are spot on. His advice is so common sense, yet only obvious in hindsight. The wisdom in his book will likely prove to be timeless.

This letter which I sent to Mr. Davis says it all:

Dear Mr. Davis:

I hope that you get this message.

I am in the middle of your book, The Dick Davis Dividend, and wanted to let you know how great I think this is. It is a must for every amateur investor. I have been playing the market, and have been glued to CNBC for years. Your candor, your honesty, and your insight has made me feel so much better about investing and about myself.

The point you make about the dishonestly of TV personalities, the nearsightedness of CNBC, and the overall hype, is worth a million dollars. The fact that "no one knows", has been forgotten by me and many others, who are buffeted from day to day, by news, and talking heads. Your book has enabled me to let go, and relax. I'm sure the 2nd half will give me good ideas about what to do, with my fairly large portfolio. And yes you're quite right, about the value of inaction. After all, my worst moves have been 2nd guessing myself, and selling (Apple for one).

Thanks again. Peter L. Coplin, M.D.

He got the letter and thanked me. Now I'm thanking him. Great book.

After seeing all of the 5-star reviews, I expected a lot more from this book than it delivered. My principle criticisms are basically two-fold: first, it badly needs an editor to eliminate repetition; second, there are few, if any, new ideas or viewpoints presented.

On the first point, the author repeats himself many times on many points. To be sure, he warns the reader of this and does it deliberately, but this reader did not appreciate the redundancies. I'm also not sure what value 28 model portfolios have other than boredom. Heck, I can supply a dozen or so myself if he really wants completeness.

The second criticism, others might call a strength. Dick Davis used to publish a newsletter that was a digest of other analysts, newsletters, and advisor publications. Similarly, this book is a compendium of the thoughts of others, filtered by Dick Davis with an MPT/Index fund bias. So far I have no problem with this. However, his sources are the usual ones -- Malkiel, Markowitz, Swedroe, Bogle, Buffett, Lynch, etc. Get the picture? If you've done any amount of reading in standard investment literature, you will find nothing, NOTHING new. If you haven't, you'd be better served reading Tobias's "The Only Investment Guide You'll Ever Need" or the recent "Little Book" by John Bogle.

Not a bad book, but far from a classic.

Dick Davis has done a great service to both novice and experienced investors by providing his concentrated wisdom about markets in his book "Dick Davis Dividend." The book is a veritable treasure. It cuts out false promises and hype endemic in most books on the type and deals with the subject in a comprehensive and intelligible manner.
The subject of investing is of utmost importance yet deplorably neglected in our educational system. Dick has taught the subject with ardent sincerity and great expertise over several decades. Do not buy the book if you are looking for making a fast buck or looking for individual stock tips. Dick goes beyond the patronizing lures set by the financial establishment and focuses on furnishing his readers with solid and useful advice that will stand in good stead to them for a lifetime.
I have read more than two hundred books on investing and have taught the subject at the college level. I have also been a long time investor. I find Dick's book to be one of the best on the subject of investments and would recommend it without hesitation. I am not easily impressed and I have my differences with Dick in some areas, like market timing, for example. But that pales before the unimpeachable wisdom contained in Dick's book. I am sure readers will find the book very beneficial for their financial prospects.

On the front of the book there is a quote by Larry King calling the author "the best stock commentator I have ever heard." That is what this book is, a commentary about the stock market in general and the virtues of being a passive investor in low load mutual funds or ETFs.

The majority of the book consists of generalities about the market that based on his numerous years of following the market Davis feels are most important for investors to learn: the news follows the market action, news reporters try to explain the daily stock moves and may not be right about the real reasons, passive long term investors should not worry about the news since they are in it for the long haul, news is only important if its about a fundamental shift for your company, you more than likely can not beat the market so you should use a diversified portfolio of mutual funds or ETFs, you should buy for the long term but if the market fundamentals change you should rebalance the portfolio, invest in mutual funds or etfs when stocks are cheap, etc. You can guess from these subjects that the author is heavily biased in favor of being a passive investor. The book is filled with quotes from Peter Lynch, Warren Buffet, and a host of other investors to back up this point of view. For investors who want to follow this path, he includes a 28 model index giving examples of diversified portfolios of mutual funds and etfs so investors can get an idea of how to do this. Davis also touches on active investing, some generalities about that way of investing (like keep investing using a system as long as it works, etc.), and gives lists of 60+ books, sources, and newsletters that have proven to be good for active investors.

But again this is more of a commentary book about personal observations made by author and his pointing out how other investors have been successful in the market. Detailed discussions and use of market metrics (P/E, PEG, technical anaysis, etc.) are little to nonexistent; you can get the same level of detail from a tv interview with Warren Buffet or Bogle. His commentary on some subjects (such as why not to listen to the media because they focus on the short term is 30+ pages)is somewhat overdone (in fairness, Davis points this out in the first of the book). Davis really doesn't give his own experiences in investing, he just points out what others have done and what statistics have shown. He also points out several times that in the courses he teaches most of his students are confused by him because he presents the whole story of a stock, both good and bad, and leaves it up to them to decide what to believe rather than giving a strong opinion; that pretty much sums up this book.

If you are an advanced to intermediate active investor in individual stocks (I consider myself intermediate), the book has good generalities to remember but if you are looking for something more like a Peter Lynch book with specifics you will be disappointed; the reason for two stars. If you are a beginning investor, an investor who doesn't have time to follow the market but wants to participate in investing, or a stong advocate of the Bogle method of investing, you will find the book interesting and probably deserves 4 stars. Personally, I think you can get the same info in more detail from books by Ken Fisher, Peter Lynch, John Bogle, and about Warren Buffet.

Probably the best investment book I've ever read is this new book from Dick Davis titled appropriately, "The Dick Davis Dividend: Straight Talk on Making Money from 40 Years on Wall Street."

Davis writes with great conviction about aIl that he's learned over the years and his book is truly a tour de force for investors. His detailed treatment of the ins and outs of both active and passive investment strategies is a real delight to read. It helps that I'm personally a big fan of his most fundamental recommendation - an 80/20 split between index funds and actively managed investments.

If you're looking for one book to guide your investment efforts, this is the one - Dick Davis is the new "Ben Graham" for individual investors!

I must confess that I had merely heard of Dick Davis, but did not know much about him until reading his book. I enjoyed his book, and think it is useful to new investors, and investors that have been unsuccessful in actively managing their own portfolios. I have read the whole book; this is not a review that comes from bullet points suggested by the publisher or author (sent to me and others, I have ignored them). I do have a minor criticism of the book; more on that later.

The Book

The first thing to appreciate about the book is its structure. After learning about the long career of the author, the book begins with a small amount of basic ideas per chapter, moves to progressively larger numbers of ideas per chapter that are less basic, and then returns the way it came, ending with progressively fewer ideas per chapter, but more basic ones.

The second thing to appreciate is the humility of Mr. Davis. His first answer to most investment questions is "I don't know," followed by reasons for and against the proposed course of action, after which he would indicate an opinion if he has one, and then say that he could be wrong, and that it would be good to do further study.

What does the book emphasize?

* Passive investing (ETFs and index funds)
* Careful selection of active managers.
* Imitating those carefully selected active managers if one decides to invest in common stocks directly.
* Avoiding too much trading, because the average investor tends to panic at bottoms, and get greedy at tops. Buying and selling have to be properly timed, because the average investor tends to do worse than the buy-and-hold investor.
* Be careful with costs on mutual funds. Most aren't worthy of the fees, and with bond funds, cost advantages are the most durable.
* Invest for the long haul, realizing there will be bumps along the way, and keep enough excess liquidity on hand.
* There is no one right person or opinion. Things shift in the market, and trends often last longer than expected.
* Be wary of news flow; get a thick skin toward the multitude of opinions presented.
* Asset allocation is the key discipline to risk control; diversify broadly by asset class, country, style, etc.
* You can't win every time, but you can tilt the odds in your favor.
* Use stop losses to limit losses. (I disagree. Use loss points to review your thesis, and if it is wrong, sell. Get a second opinion also. Otherwise, buy more.)
* Rising dividends beat high dividends
* Many strategies can work in the market; it's more a question of when and how you apply them.
* Macro forecasting rarely works.
* Buying and holding the equity market tends to work over the long run, so have a core investment in the equity markets.
* Humility is a core character attribute of good investors. (Be more like Charles Kirk, and less like Jim Cramer... he spends several pages on this.)

Beyond that, Mr. Davis gives lists of good investment books, good investment blogs (I`m not on his list, so it goes), quotations, and active managers. I thought his favorite active managers to be a very good list for those looking for active mutual funds. The investment books were generally classics, though some are too new to tell. As for the blogs, well, we are here today and gone tomorrow. We are only as good as the last few things we publish, so good financial blogging is not something that a book can capture. We vary too much.

Now for my one criticism. The book has one long chapter on index fund portfolios that takes up 20% of the book, and gives 28 models (with sub-models) for "set it and forget it portfolios." There are a couple of problems here: first, there are too many strategies here, and many don't differ enough to deserve separate inclusion. Second, it would be better to spend more time on the factors behind why someone might choose one approach rather then another. What goes into creating a good asset allocation? How much should I have in bonds? Foreign bonds? Foreign equities? Cash? Obscure asset classes? I'm not asking for detailed math, but rules of thumb for average investors to follow, so that they could find a passive strategy that is among those strategies that would be more likely to meet their needs.

But with that one cavil, I can recommend this book to investors, particularly those that have not done well with active management. This book won't teach you what to do, as much as how to think and discipline yourself. Most investors should limit their options in investing because their emotions and abilities aren't suited to the violence of the markets.

For investors that do well with active management, you don't need this book, but you might like it for the stories that he tells, or as a gift for relatives who need to follow a more passive style of investment management.

This book is near 500 pages long and it could've been done with fewer than 50 pages. Mr. Davis simply repeats himself over and over and his writing style is so disorganized and redundant that I got lost from chapter to chapter and finally lost interest all together. If you are looking for good investment advice, don't bother with this book. However, if you want to read a non-fiction novel, then this book might be of some entertainment value.

This book is, without question, one of the best investment books available. Mr. Davis is a phenomenal writer who conveys concepts with ease, taking care to reiterate those concepts that many investors would prefer to overlook. The reader can tell that Mr. Davis truly cares about helping others learn to invest wisely. The book includes a culmination of wisdom learned over a lifetime dedicated to the investment field.