This book describes the many benefits of index mutual funds. Yet it also provides a framework for understanding why indexing should be the investment strategy for any investor today. This includes an explanation of why Morningstar, Value Line, stockbrokers, investment gurus, the financial media and others so often fail investors. The book also explores the role of index funds in the context of asset allocation and portfolio diversification.
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Editorial Reviews
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Recent fluctuations aside, the stock market continues its seemingly inexorable ascent; declines have always righted themselves over time. For investors who believe this will continue, Simon argues that the safest and surest way to participate in the market is to put money into index mutual funds. An index fund is one with a portfolio made up of securities that constitute a particular market index, such as the Standard and Poor's 500 or the Russell 1000. Simon explains how the "indexing revolution" came about and contrasts index investing with selecting individual stocks or relying on the fortunes of any particular fund manager or investment "guru." He also provides nuts-and-bolts details on how index funds work, and he spells out their advantages--less risk, minimal cost, and less emotional stress. Taking on such sacred cows as Peter Lynch and Morningstar, he also suggests that those in the investment information industry oppose index fund investing because it eliminates the need for their services. David Rouse
Review
Although bookstore shelves are choked with mutual fund investing books these days, Index Mutual Funds: Profiting from an Investment Revolution is one of the few that deserves the attention of anyone that has ever invested in a mutual fund. It is not only well-written, it is a scholarly work that presents a strong case for investing in index mutual funds and supports it by citing a wealth of scientific research. Unlike many mutual fund "how to" books that contain the author's opinions regarding the best way to invest in mutual funds, this one draws its conclusions from the research of others: academics, institutional investors, and mutual fund sponsors...If you have never owned an index fund, I'm sure you will after you read Mr. Simon's book. His case for investing in them is that strong. -- Mutual Fund Letter, March 1998, Copyright (c) 1998, Dr. Gerald W. Perritt
Do your clients really get their money's worth from actively managed mutual funds? ...It's a question you're probably asking yourself these days. And Scott Simon's new book can probably help you to find the answer that's right for you and your clients. What's different about this indexing book? With a foreword written by John Bogle and an endorsement from indexing guru Rex Sinquefield, it's safe to say that attorney-turned-investment advisor Simon has captured the essence of the indexing argument, from whether it's possible to beat the market consistently to the veracity of making investment choices based on performance track records. ...What's more, he's made the indexing case in a clear and logical argument that takes a reader through the thought process that is required of anyone who decides to index - or not. After reading Simon's book, if you're not compelled to add passive funds to your clients' portfolios, then indexing isn't for you. Period. -- Dow Jones Investment Advisor, April 1998
Do your clients really get their money's worth from actively managed mutual funds? ...It's a question you're probably asking yourself these days. And Scott Simon's new book can probably help you to find the answer that's right for you and your clients. What's different about this indexing book? With a foreword written by John Bogle and an endorsement from indexing guru Rex Sinquefield, it's safe to say that attorney-turned-investment advisor Simon has captured the essence of the indexing argument, from whether it's possible to beat the market consistently to the veracity of making investment choices based on performance track records. ...What's more, he's made the indexing case in a clear and logical argument that takes a reader through the thought process that is required of anyone who decides to index - or not. After reading Simon's book, if you're not compelled to add passive funds to your clients' portfolios, then indexing isn't for you. Period. -- Dow Jones Investment Advisor, April 1998
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Most Helpful Customer Reviews
23 of 23 people found the following review helpful:
5.0 out of 5 stars
A Compelling Study of Index Funds, A Must-Read for Investors,
By A Customer
This review is from: Index Mutual Funds: Profiting from an Investment Revolution (Hardcover)
This book is an excellent and comprehensive study of index mutual funds. By discussing the theories behind index funds, Mr. Simon makes a compelling case as to why they are a superior investment vehicle for most, if not all, investors. In short, decreased costs and decreased risk will create, in the long run, a higher return for invetors. Specifically, Mr. Simon states that index funds will outperform conventional methods of investment (stock picking and convemtional mutual funds) due to decreased management costs and taxes. Active management strategies (again, stock picking and convemtional mutual funds) churn a lot of fees and create many taxable events. Index funds, however, mirror the market -- no such acitve stock picking is necessary. Instead of employing expensive stock pickers and research teams to choose stocks, index funds use mathematical formulas to mirror the index. Instead of constantly buying and selling stock (and creating taxable events), index funds buy and hold. Therefore, there is an inherent cost advanatage in index funds. This cost advantage is especially significant when compounded over the long term. Also, because an index fund is more diversified that a typical portfolio or fund, the risk is lessened, thereby increasing overall performance. The book cites numerous studies and invokes Nobel laureates to support this diversification theory. A stock picker may have some big winners, but on average his losers will make him underperfrom the index, especially when the increased costs and taxes are taken into account. The book documents how some of the greatest investment success stories in recent years inevitably, over the long run, "regress to the mean" (i.e., fall back to the average). The logical and restrained message of this book sets it apart from many other investment books. These books promise results based on investment strategies that are risky or difficult at best and foolish at worst. Mr. Simon's stategies are simple, solid, and proven. In fact, the book cites numerous examples of major pension funds and companies now utilizing index funds. The book also displays a healthy skepticism for the traditional investment information delivery system, and shows why it is not in the best interest of the investment community to promote index funds. Compared to other books and articles on the market, this book is an extremely comprehensive, even scholarly, treatment of index funds. This book should be read by all would-be investors -- before putting any money into the stock market.
25 of 26 people found the following review helpful:
5.0 out of 5 stars
An Excellent Manual for the Intelligent Investor,
By A Customer
Amazon Verified Purchase(What's this?)
This review is from: Index Mutual Funds: Profiting from an Investment Revolution (Hardcover)
I have spent the last three months researching index funds for purposes of writing a professional paper, and this book is by far the best source of information on the topic that I have found. But it's more than that. In making the case for index funds, Mr. Simon provides a succinct, yet intelligible, description of modern portfolio theory and its place in the world of finance.If you are interested in subjects like portfolio theory, decision-making under conditions of uncertainty, the efficient market hypotheses, game theory, the Third Restatement of Trusts and zero sum games, and just the mention of people as diverse as Peter L. Bernstein, John C. Bogle, Warren Buffett, Alfred Cowles, III, Eugene Fama, Mario Gabelli, Elaine Gazarelli, Edward C. Halbach, Jr., Roger Ibbotson, Peter Lynch, Burton G. Malkiel, Harry Markowitz, John Neff, William F. Sharpe, and Rex Sinquefield causes you to hyperventilate, then this book is for you. Don't let the tacky cover put you off (It would be more appropriate for "How I Went From Nothing to Being a Billionaire in Three Weeks.") This is a well-written and useful book.
14 of 15 people found the following review helpful:
5.0 out of 5 stars
In-depth coverage of Index Mutual Funds,
By A Customer
This review is from: Index Mutual Funds: Profiting from an Investment Revolution (Hardcover)
Scott Simon's book thoroughly reviews the many advantages of index funds, and the disadvantages of actively managed mutual funds. Many of the standard arguments are presented--the cost advantage of index funds, the difficulty in picking a superior actively managed mutual fund in advance, etc. But, the author has managed to add a few wrinkles here and there. Did you know that investing in index funds can reduce your stress? Well, according to this book that is one of the more important advantages. The book is well documented (as you would expect from a former tax lawyer). Of note is a chapter devoted to the "nuts and bolts" of index funds which gives thorough details about the operations of index mutual funds. The appendix also contains good descriptions of the major indexes.
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