on September 21, 2010
One of the advantages of a college education with a major in finance is that you learn the fundamentals, and, more importantly, you learn the boundaries of the universe in terms of what the field includes and what it excludes. Spend an hour or so reading this book, and you will also get that comfortable feeling that comes from knowing that you understand what personal investing is really all about. You will get the "big picture" and how it affects you.
I have been a full time faculty member teaching at the college level for the past 35 years and must say that the authors have managed to capture the essence of personal investing in about as few pages as I have ever seen and with a clarity that is very rare in books on this topic. I intend to make it required reading for both my undergraduate and graduate personal finance classes.
I might also add that any negative reviews posted to this site are likely to come from Wall Street brokers who make their living by exploiting the general public's ignorance on investing. These brokers don't like books that clarify and illuminate rather than mystify and obfuscate basic principles. As a lifelong educator, I applaud Goldie's and Murray's noble effort to help readers educate themselves so as not to be fooled by the same Wall Streeters who disgraced themselves in 2008 and nearly destroyed our economy with their greediness. Anyone who feels they don't know enough about investing should read this book. It is a gem.
on August 29, 2010
You won't be getting this book from your broker for Christmas. You don't need to read a bunch of "Beat The Market!!!!!" books to develop a sound approach to investing. Evaluate your personal investment goals and timeframe, take a gut check on your appetite for risk, and accept that risk and returns are correlated. The authors make a compelling, data driven argument in under 100 pages that describes a "no regrets" approach to investing. Market timing, stock picking, commodity speculating, etc. ultimately benefit the trading pros over the average investor. Choose your asset allocation model with a few simple principles, then buy diversified global capitalism for your equity component with low expenses. And hold it. Done. You won't be the big winner in any given year, but you will likely out perform 95%+ of investors who buy the proven myth that they can beat the market. There are many purveyors of this snake oil, but few truth tellers. Murray and Goldie get it right, and this book is so short and to the point that you must read it.
on August 21, 2010
I just read The Investment Answer this morning in under an hour and it is brilliant -- comprehensive without being overwhelming, easy for a broad audience to read and understand, and most importantly, easy for anyone to execute.
Over the last 30 years, this is the model we have used to invest, and it has served us very well. But we have not been able to articulate this sensible plan to friends and family (especially our children) in a way that was understandable and compelling. The temptation to "take the bait" from Wall Street is strong. Many friends and colleagues who are more "sophisticated" investors suffered the sad outcomes so elegantly described in the book.
Gordon and Daniel -- thank you, thank you for writing this book. I am placing my order for 10 copies to give away to family and friends this morning. You have accomplished what few have -- a lasting legacy that will positively impact many families for a lifetime!
on October 20, 2010
Like losing weight, successful investing is based on a few simple concepts. However, also similar to losing weight, the concepts are not always easy to implement. It takes discipline to execute the simple concepts of eat less and exercise more. It also takes discipline to execute the simple concepts of diversification and rebalancing. Dan Goldie and Gordon Murray have done a terrific job of breaking down successful investing to a few core concepts. They explain the concepts in layman terms, always keeping it short and simple. The beauty of this book is the brevity yet clarity of each concept covered. You do NOT need to read a 300+ page book to understand investing. There is now this book, which is under 80 pages...but even a quicker read than you might think because of the font and graphs. I read the entire book in two hours one evening. I have an undergrad degree in Finance and Economics and have spent about five years combined time earning my CFA and CFP(r) designations. YET, if you simply commit to spending two hours reading this book, you will be privy to all the key investment principles that took me 20 years in the business to discover. Not only do I give this five stars, but I plan on buying 50 books and giving them away to every relative and friend I have. Disclosure: I don't know either author nor have I met either one. I'm just in the same industry and delighted that someone actually wrote the book that I wish I had written.
on August 26, 2010
Several years ago, Gordon sat my husband and me down to show us the beta version of this book. We'd been friends for years and he felt strongly that we needed to know how to protect our money. His arguments were so clear and compelling that we moved our investments from a traditional retail broker to an investment advisor with an investment philosophy based on the concepts in this book -- efficient markets, modern portfolio theory, diversification, and asset allocation.
For the first time, we felt confident that we and our investments were in good hands. Then the recession hit. Our portfolio did less badly than many and rebounded faster than most. And with this book, we understood why.
Run, don't walk to buy this book or download the pdf version. It will give you the peace of mind and sense of control that ONLY happens when you understand how the financial world really works. With what we learned, we felt ready to act in our own best interests. You will too.
on January 8, 2011
I have studied investments for 30 years as time permitted. Been the IPO route, hedge funds, managed accounts, fee only, you name it. This book summarizes the lessons I've learned the hard way. Unless you are are crook, super lucky or an insider, you will not beat the market. Like he says, dump the financial advisor/manager parasites, get an IRA and dollar cost average into the mutual fund investments listed, adjust for age/target retirement/risk/rebalance. Easiest/best bet: start at age 20, put 400+/mo into a target date retirement fund from a big player like Vanguard, and just forget it till 5 years from cashing in. Easily a mil. Don't forget inflation: triple-quadruple it if you can. Critical: 2 damned good private disability policies + term life. The best laid plans....
on September 10, 2010
Dan and Gordon have written the book that I've wanted to write for years, but never found the time. It is clear and concise. I read it in less than an hour.
The authors do a great job of explaining the difference between an independent investment advisor and a salesman working in Wall Street's broken business model. This is something that the vast majority of investors do not understand.
Even novice investors will find this easy to understand. Perhaps even more important, it debunks the myths that prevent most investors from achieving success. Read it and buy another copy for someone that you care about.
on January 16, 2011
I had high expectations for this book based on the reviews here and in the New York Times. I was very disappointed.
The book is very short. The authors' claimed motivation is that they are providing a distillation of the key points you need for understanding how to manage you financial assets. In reality, all they provide is a cursory overview of a small fraction of the issues and decisions involved.
In the very first chapter they recommend that you should hire a professional money manager to manage your assets. Then they provide a very brief and superficial overview of how to pick a manager and some of the topics you will need to understand when talking to the manager. After reading their overview, you will know a small part of the vocabulary involved in financial management - asset classes, diversification, fee structures, expense ratios - but there are two problems. First, you will not understand these concepts well enough to really know what you are talking about. Second, there are a large number of concepts that the authors leave out. For example, by and large, they fail to discuss the subjects of managing financial assets in a tax efficient manner and the placement of asset classes in taxed or tax deferred accounts.
One contradiction in the book particularly bothered me. In a later chapter, the authors talk about the impact of fees and expenses when picking mutual funds. They assert that it is important to keep fees and expenses low and they advocate passive funds partly on this basis. This is all very good advice. However, this seems at odds with their initial recommendation, which they asserted in the first chapter, that you hire a fee-only based financial manager to manage those funds - effectively adding a typical 1% fee on top of the fees you are paying to the mutual fund company.
The authors' discussion of how to manage your assets only allowed two alternatives - do it yourself or seek a fee-based financial manager. This is much too simplistic. Consider for example, life-style mutual funds, or the free financial management services that many major mutual fund companies now offer. My supposition is that the authors operate in a world of very well healed clients where the client's life style allows the freedom (and resources) to pay for a fee-based financial manager.
Given the daily barrage of investment shows, the non-stop stream of investment advice, the obsession of millions of Americans with the market--as a hobby, a lottery, a game at which you win or lose--this is a productive book to read even if you think you know the "investment answer" to begin with. The public's constant preoccupation with "star" fund managers, with ratings of funds that, after 10 years, tend to converge, whether growth funds or money market funds, in percentages gained and lost--all borders on Freudian narcissistic anal fixation. This book's very brevity, on the other hand, challenges the notion, espoused by many, that what the public, including young people, need most is "education" about finances. No wonder we're losing ground to nations like China and failing to produce better thinkers and scientists if that's the general understanding of the term "education." Investing is about common sense, statistics, and being in possession of some crucial "information"--which is a far cry from the life-changing, mind-expanding potential of a broad yet deep "education."
If you're incapable of tearing yourself away from CNBC for a single day or of checking on your portfolios by the hour, this book could lead to a fuller, more rounded and productive life. It covers what is largely familiar territory for those who are aware of the enormous odds against simply matching the market averages and who have learned about "efficient markets" and the advantages of "passively managed," or "index funds," which are always the best bet at staying even with the market while not giving back any earnings to the high-expense funds that trade heavily. It endorses "diversification" but warns against diversifying over narrowly--as some investors are prone to do when their singular success in one technology stock leads to purchase of many more stocks in the same sector.
Perhaps the most surprising statement made by the authors--especially after the public has been constantly teased by prospects of higher and higher gold prices and the virtual "necessity" of having at least 10% of one's life-savings invested in the metal--is the authors' contention that gold, silver, platinum, titanium, hard commodities and agriculture--don't belong in the average person's portfolio, period. Commodities take you out of the earnings stream and and limit positive growth. Above all, capitalism by its very definition means a "positive return" for the economies that practice it. As a so-called "hedge," commodities don't reduce risk, which is what investing should be about: instead, they increase risk, whether in terms of a short-term loss or a short-term gain. Investing in commodities is nothing more than a bet. The authors bluntly say that, in their opinion, investors don't need alternative investments such as commodities in order to have a successful investment experience.
In short, investing is about going on a trip to a place you firmly believe exists and to which you would like to travel. It's not, contrary to the practice of many investors, a game of winners and losers, so why "hedge" against either possibility? Yet some people will buy expensive insurance contracts in the event the trip is cancelled or invest in over-priced umbrellas in the event of rain. If such use of time and money is fun, and you don't mind the extra cost, do it. On the other hand, the authors are saying that if you want to experience worry-free investment success, save yourself all that wasted time and money and make the most out of your short life. At the very least, you'll save not just your money but some precious time and talent to give to those in need. Paradoxically, the person who stands to profit most, is the giver. That's when capitalism begins to run with, instead of against, the tenets of the world's major religions, including Christianity.
on September 24, 2010
I wish that someone had written such a succinct treatise on investing before I first started investing my money. I could have avoided some very counterproductive forays into commodities, oil and gas ventures, and other highly suspect "investments". Read this book before you implement your investment plan.