Customer Reviews

Hazardous to your Wealth: Extraordinary Popular Delusions and the Madness of Mutual Fund Experts

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1 star:		(4)

 

 

This screed is filled with truly awful mutual fund investment advice. The book has two redeeming virtues. The first is its rich lode of unintended humor, beginning with its title. Its other virtue is the advice here is so bad that a completely contrarian strategy has much merit: Do use indexed funds and whenever possible avoid using actively managed funds. Do not overweight your portfolio with US large cap growth funds, instead diversify. Making sure to include investments in large cap value funds, small cap value funds, and micro cap funds.
Mr. Markman makes much of checking the historical performance of investment strategies. So lets check the historical record. Three of Mr. Markman's mutual funds have been in existence for over five years. Here are the five year annual growth rates for the three funds as reported by Morningstar in March of 2002, Aggressive -1.21%, Moderate -0.12%. and Conservative 1.76%. Had you invested $100,000 in each of these three funds five years ago, your $300,000 investment would be worth $302,611 today.
Mr. Markman vehemently disapproves of the diversified indexed investment strategies of the DFA family of funds. Consider three of their indexed funds in asset classes Mr. Markman beseeches investors to avoid. Namely,the DFA large cap value fund, small cap value fund, and micro small cap fund. They had the following five year annual growth rates in March of 2002. Large Cap Value 11.74%, Small Cap Value 14.64%, and Micro Small Cap 10.98%. (Morningstar was again the source of the data.) Had you invested $100,000 in each of these three funds five years ago, your $300,000 investment would be worth $540,559 today.
Avoid this nonsense like the plague. For sound investment advice read the books by Malkiel, William Bernstein, Swedroe, Bogle, and Charles Ellis instead.

This book is useless. If you bought into Markman's scheme, you have been hurt...badly. Markman obliterated his investors (Markman Multi-funds) over the past 2 and 1/2 years and is merging all of his funds into one to bury his abysmal performance. This book is drivel and was written by Markman to market his money management business. Run, do not walk, away from this self-promoting fluff.

The underlying message of this book is that for long-term results, invest in large cap US stocks, or funds comprised thereof. Chapter two effectively debunks using small caps as a significant part of a long-term portfolio, both with tight reasoning and solid data. Chapter 3 argues against using international funds for diversification, again with data for support. It would have been nice to include data supporting his contention that international funds' performances are due more to currency fluctuations than an increase in the intrinsic values of the stocks.

The rest of the book, besides a refreshing discussion of the difference between risk and volatility, was basically an expostulation as to why US is currently the best place to invest and will likely remain so. Again all very interesting and possibly true, but not a great deal of hard data was cited for support.

Besides wishing for more data to support his arguments, another quibble I have is his rather confident view on how effective and open the government and private regulation of the US market is. While our financial system IS amazingly honest (after serving 6 years as a Foreign Service Officer in Africa and a year in India, I know graft and corruption!), he doesn't even mention our S&L fiasco.

It's a book worth reading, though a serious editor could have reduced it to a longish magazine article. I am not about to jettison all my "myths...delusions and...madness," but I'm going to check out the other authors he recommends. It's clearly worth a peek behind the wizard's curtain!

All of the other reviews here were written within a few days or weeks of when the book came out, which leads me to believe that the readers were Markman's friends or clients. The reviews seem to stop once it got to roughly February, because that's when the roof came in on Markman's logic.

He was lagging the indexes for years before -- he lost a famous bet with Vanguard founder Jack Bogle that his Markman funds could outperform an index fund -- and so he came up with this garbage to justify his bad numbers.

It worked, for awhile, mostly because the market was being kind to the kinds of stocks he favored.

But about two months after this book came out, the market tanked. And now that Markman disdains diversification, investors in his mutual funds have suffered big losses in 2000 due to this strategy.

I recently attended a conference in Boston where Markman was on a panel, and it became clear that most of his ideas were easily debunkjed.

He gave away free copies of this book. I read it hoping to see more in it, to see some basic reason why he came to these conclusions and how maybe I had missed something when he got whupped on stage that day. It just doesn't stand the test of time.

Even though I got the book for free, it wasn't worth the investment of time it took to read it.

If I had a financial planner, I certainly wouldn't be using one after reading this book! I found something interesting on almost every page. It's a far cry from the dry advice offered by most books and articles on investing! Mr. Markman provides new insights into practical approaches to investing that avoids the pitfalls of traditional financial planners. He not only explains why the investment industry has led people astray, he has straightforward remedies. Plus, the book is never boring. I read it in a few hours. I'd recommend it for anyone who's dissatisfied with their investment results over the past few years.

After reading Bob Markman's book "Hazardous to Your Wealth" , I understand the reason I will choose their firm as my financial advisor. For twenty years, I let the "experts" stock brokers, a financial advisor recommended by Worth magazine and a local trust bank handle my investments. "Can you believe it," I experienced zero growth in 20 years from these experts. Bob's book outlines in laymens terms his reasoning, his approach to the mutual fund market changes of today. Most books on financial planning would have me lost after the first chapter. I would throw them down discouraged telling myself, "leave it to the experts". Bob's book from beginning to end is understandable. Now at least I know what and why Markman Capital makes the choices they make. However, I'm still not smart enough nor courageous enough to make the choices myself. His book has taught me that volatility does not equal risk! I'm 71 years old and am a believer that growth is still necessary. Don't pass up this opportunity to grasp the market fundamentals.

Robert Markman shot himself in February. His investment approach had not been working and he had made promises he couldn't keep. I hope no one who invested with him and lost will do the same. Help is available.

An excerpt from this book is in the February 2000 issue of Worth Magazine. That excerpt is one of the best supported and useful articles I have read in the financial press for quite some time. The author analyzes a number of investment fallacies, with specific academic references to long-held beliefs but with a very readable tone throughout. If the rest of the book is as good as this excerpt, then it should become a mainstay on every long-term investor's shelf, right beside classics such as Malkiel's A Random Walk Down Wall Street and Bogle's writings on long-term mutual funds.

Bob Markman's views are backed by experience that has provided me a return of 42% for 1999, thus exceeding my expectations and, equally important, providing a comfort level that enables me to stay in the market.

Well, if you are expecting another book of "guesses" about where & how you should invest your money, you're in for a surprise. Bob Markman dispells about every investment theory out there. But the exciting thing is that he gives documented statiscal data backing up his theories. For instance, he tells you why investing in large caps is the way to go rather than small caps...read the book to find out why! He suggests American companies rather than foreign. But most of all I appreciate how Bob recognizes how great we have it here with the American economy. Yes, he's a bit red, white, and blue, but perhaps we should all be a bit more inclined to praise what Americans are able to accomplish in this "land of the free." This book will give you great debate data...you'll come off as really sounding creative and informed if you've read the book. Run, don't walk to get your issue.