45 of 46 people found the following review helpful
on October 9, 2006
Despite its preposterous title (how can a financial advisor with any claim to rationality be so self-assured), this book is good read for the average investor. It has one mediocre, one average and one excellent sections. The last section alone (see more detail below) is worth the book's price!
The book's three sections cpver material as follows:
Section 1: making the case as to why short-term trading, trying to time and/or beat the market by following pundits' advice, etc. is a "loser's game" - is, in my opinion, WEAKEST part of the book - it is full of quotes that are redundant to the point of almost being self-undulgent in stressing that only a small fraction of investors would ever beat the returns of broad market indices, such as the S&P 500. Those convinced of this philosophical view can skip this section altogether.
Section 2: discourse on efficient market and modern portfolio theories -- as popular expositions on efficient markets and portfolio diversification go, Swedroe does an AVERAGE job, covering the essentials on risk and return (for better long-term risk/retun analysis see "Stocks for the Long Run" by Jeremy Siegel; for better discourse on diversification, see "The Intelligent Asset Allocator" by William Bernstein)
Section 3: Here is where Swedroe shines - he illustrates the benefits of modern portfolio theory by showing long-term (20 years) risk return of 3 hypothetical portfolios with different degree of diversification between asset classes (large- and small-cap US and international stocks and US bonds);the author further lays out a rational systematic approach towards building a diversified portfolio, based on investor's liquidity contraints, comfort with international and tracking error (deviation from most popular US stock indices); management of assets in a taxable and non-taxable accounts is also well covered, as are practical strategies, as index investing, rebalancing, dollar-cost and value averaging.
The book also has 9 Appendixes, some of which, such as a discussion on "recommended investment vehicles and sample portfolios" go in as much a detail as covering the strategies of specific mutual funds, which the author recommends.
All-in-all - there is much useful practical advise here for the average investor; not much for the more sophisticated reader.
60 of 63 people found the following review helpful
on April 24, 2005
No doubt you've heard many times something to the effect: "this is the only book you'll need to learn how to invest." Well, this time believe it-this is the only book you'll need. If ever we reach the point where we have private accounts in Social Security, this book should be required reading for everyone before they undertake their private account.
I note that all of the reviews on Amazon of Larry's latest book are positive-and with good reason. My endorsement of this book is twofold: (1) it is the strategy that I use, and (2) I use this book as my main text in a college investments course called Applied Investments, where I teach students how to take control of their own personal investments and not be dependent on brokers/financial advisors.
Being a Finance professor I was well aware of the evidence regarding active management v. passive investing, and when I first began looking for books for my course, I did a lot of reading of books by such people as William Bernstein, Burton Malkiel, and John Bogle of Vanguard-all of whom are ardent proponents of passive investing. All of these people (as well as others) regularly cited Larry Swedroe's books and articles, so I decided to go straight to the horse's mouth, so to speak. What a great find!
Mr. Swedroe writes with a clarity that is rare, especially in Finance. In addition, he backs up all of his positions with academic research, which of course, makes it an excellent book to use in an academic setting. But don't be put off by this-he doesn't let the research discussions get in the way of what he's trying to explain. He takes you through the evidence and then shows you exactly how to earn market rates of return through the application of passive investing, asset allocation, and rebalancing. It's all in this book. If you follow what he teaches you to do, your financial house will be in order, and at the end of your investment horizon, your will be much better off.
35 of 37 people found the following review helpful
It's a shame to think of how much money I've lost "investing" in the stock market over the years. I wish I had read the book The Only Guide To A Winning Investment Strategy You'll Ever Need by Larry E. Swedroe about six years ago...
Chapter List: Why Individual Investors Play the Loser's Game; Active Portfolio Management Is a Loser's Game; Efficient Markets I - Information and Cost; Efficient Markets II - Risk; The Five-Factor Model; Volatility, Return, and Risk; Six Steps to a Diversified Portfolio - Using Modern Portfolio Theory; How to Build a Model Portfolio; Index Funds, Passive Asset Class Funds, and ETFs; The Care and Maintenance of the Portfolio; Implementing the Winning Strategy; Summary; Appendices; Notes; Glossary; Recommended Reading; Acknowledgments; Index
The main thrust of this book is how to use a passive approach to investing to consistently get market or above-market rates of return. Swedroe makes an extremely strong case for the use of index funds as the primary investment tool. He does this by comparing the average performance of actively managed funds, and shows statistically that in nearly all cases, it's impossible to consistently beat the market. If you look at selected years, it's possible to "beat" the market, but over the long run the passive approach will always win. And when you figure in the tax advantages and the administration costs of a churned fund, the gap between active and passive fund management is even greater.
If you are an investor, it's worth reading... Even if you don't agree, it will give you some food for thought.
15 of 15 people found the following review helpful
on January 22, 2006
In despair over wondering how anyone could make sense of investing (it always seemed like playing slot machines to me) I bought the 1998 edition of this book. It wasn't hard to understand, and in early 1999 I reworked most of my investments according to its advice. My resulting portfolio sailed through the bad years of 2000-2002 just fine, and has continued to shoot up since then, nearly tripling in value between 1999 and late January 2006. This is the only investment approach that has ever made sense to me, and it really does work! The Intelligent Asset Allocator by William Bernstein is another great book detailing the same approach.
22 of 24 people found the following review helpful
on April 21, 2005
Larry has not only done it again, but done it better. The first book I read on investing was the initial edition (1998) of this book. Having just finished the latest edition of the book, Larry has added lots of new content.
The many and new real-life stories throughout the book are filled with wisdom and insight. Many of the references and statistics cited have been updated to reflect the changes in the market conditions since 1998. The comparison between index funds, passive asset class funds and ETFs is very well presented. The new appendices address some timely questions and common investor concerns. The one thing that has not changed is the winning investment strategy! Overall, my kudos to Larry on a job well done.
Most importantly, this is the BEST book for the layman (or professional) to get a gut feel for how to take advantage of Modern Portfolio Theory (MPT). It not only explains the theory, but also gives step by step instructions on how to implement the strategy.
I am a fee-only investment advisor myself (not affiliated with Larry's firm) and I give a copy of this book to every new client. It is simply the best way to educate them about the winning investment strategy. Thank you Larry!
14 of 14 people found the following review helpful
on January 23, 2005
Winning Investment Strategy is a very good book. I learned how the principles of Modern Portfolio Theory are applied through the Five Factor Model into actual passive index portfolios.I better appreciated how an Investment Policy Statement,rebalancing and Monte Carlo Analyses allow an investor to take ownership of their assets' growth and to control one's urge to make impulsive changes that may hurt returns. I am glad the book included a chapter on commodities. Several charts were helpful to me and I copied them for quick reference. These included one that dealt with an asset allocation model that offered the best return with the least risk, as well as charts that assist in determining one's need, willingness,and ability to take risk. No special math or financial skills are required to understand this book just a willingness to read carefully. The glossary too is very helpful.
21 of 23 people found the following review helpful
on April 18, 2005
I enjoyed this book a great deal. It provides an excellent background for why indexing and diversification are so helpful, and provides real-world examples of how it has worked in practice. Unlike many other books, this one is not only informative, but useful. It skillfully addresses not just asset allocation, but location as well, with a clear explanation of the tax consequences of putting various securities in different accounts. I've become moderately addicted to a lot of books like this one (Malkiel, Bogle, Bernstein, etc.), and this ranks up there with the absolute best of the best. As dubious as I was of the title, it may actually be true. Moreover, the author was kind enough to respond -- the same day -- to a question I had regarding the material in his book. You won't find a better book, or a more conscientious and genuinely helpful author, than here.
12 of 12 people found the following review helpful
on December 30, 2004
This new edition of this book retains the elegant readability of the original, plus it includes new data and reflections on more recent market events. It was interesting to revisit, to realize that the same insights Larry Swedroe described when his book was originally published in 1998 have remained every bit as applicable today, demonstrating the strength of the approach. Whether you've read it the first time or not, it's definitely worth taking a look at today.
11 of 11 people found the following review helpful
on January 15, 2005
I purchased this book in 1998 and at that time adjusted my investments accordingly. As someone who has a poor gut instinct for investing and has followed a lot of advice from the "experts", I found Mr. Swedroe's advice to be valuable and rewarding. Being mainly a 401k investor, after my employee deduction I do not have much extra cash to invest in stocks or extra time to constantly track the markets. I am not looking for the score of a life time, all I ask is to at least get a return equal to the S&P or do a little better. Picking funds that consistantly do this has been a challenge over the years, and has resulted in either getting out too soon or staying too long. Following the concepts in the book, I have seen my investments weather the downturn in the market and rebound nicely. If you have a large enough sum of liquid savings you are willing to risk with a stock broker you may be able to do better (or worse). For my situation, the guidelines in this book have allowed me to invest in funds that will do as well as the market, and by simply checking the progress four times a year and rebalancing when needed, have beaten the market. It also provides enough information to adjust your risk as your age and goals change through life. It may be basic information for someone with a business education, but it has been a sensable, no nonsense, no guessing approach for me. Especially after losing money listening to the experts with the business educations.
22 of 25 people found the following review helpful
on August 12, 2005
This by far the most usable of all the asset allocation fund books I've read. Succinct, understandable and totally applicable to one's ability to produce an asset allocation portfolio using low cost index or exchange traded funds. Swedroe explains the importance of understanding the randomness of the market, the power of low mangement fees and the need to periodically rebalance your portfolio.
In one extraordinary chapter he follows the effects of adding different classes to the porfolio mix (e.eg 60% stock with 40% bonds) and how it affects the percentage return, the standard deviation and, most importantly, the growth of a dollar. Totally fascinating, and for the greedy among us, a breath of fresh air in the smoky confusion of personal investment conundrums.
If your have any serious interest in investing your own capital for maximum returns with minimal hassle, get this book. Swedroe in using Markowitz's Nobel prize winning (1990) theory of portfolio construction clearly illuuminates intelligent asset class allocations. Read it,and all will become translucent; you will be one happy capitalist, for sure. Jim B