Customer Reviews

Wise Investing Made Simple: Larry Swedroe's Tales to Enrich Your Future (Focused Investor)

5 star:		(22)
4 star:		(3)
3 star:		(1)
2 star:		(0)
1 star:		(0)

 

 

Larry Swedroe's Wise Investing Made Simple uses short chapters and pithy stories to help readers rethink their basic premises and deeply held beliefs on how to be successful investors. The author asserts that most investors, without realizing it, do not know how markets work. Many investors are misled by conventional wisdom, economic forecasts, Wall Street recommendations, and CNBC gurus.

They mistakenly believe that smart people, working diligently, can discover which stocks are undervalued and should be bought, and which stocks are overvalued and should be avoided. They also believe that smart people can get in and out of the stock market at the right time. These mistaken beliefs lead to the search for a strategy that will "beat the market," a search that is doomed to fail.

Swedroe sets out to change the reader's understanding of how markets really work and to provide the reader "with sufficient knowledge to begin to make more informed and more prudent investment decisions." Along the way he debunks many investment fables, including: "Great companies make great investments," "Buy what you know," "Stocks are not risky in the long run," and "Past performance is a predictor of future performance."
.
Wise Investing uses inventive stories in a clear, understandable and concise manner to illustrate why economic forecasts are not useful, why trying to time the market or find undervalued stocks is a loser's strategy, and why finding the next investment superstar is nearly impossible. He illustrates why overconfidence can be dangerous and how investors confuse information with exploitable knowledge.

Swedroe uses analogies from such sports as baseball, basketball, golf, and football. He also uses game theory, horse racing, and insurance examples. Without straining, he refers to astronomy, astrology, alchemy, and mythology to keep the reader interested. Finally he peppers his stories with specific historical examples, which are very convincing. Each story makes a point, and the cumulative effect is impressive.

Some of the very practical suggestions include how to interview and evaluate a stockbroker and how to evaluate an investment strategy, both before and after it is implemented.

If you already know something about investing, this will still be a useful book, because of the cumulative logic of the chapters, the engaging writing style and the memorable stories. Wise Investing will be useful to financial advisors in explaining to clients how to avoid the common pitfalls.

Wise Investing is primarily a "why-to" rather than a "how-to", in that to implement the strategy correctly you may want to read his earlier book - The Only Guide to a Winning Investment Strategy You'll Ever Need - or you may need an advisor. His last chapter covers why some people should consider using an advisor and how to find one you can trust. (Full disclosure - I am a fee-only financial advisor.)

Wise Investing is a valuable addition to anyone's library of investment books. It will be useful for all levels of investors.

I've read all of Larry Swedroe's books on investing. As a wealth manager my objective is help clients make smart decisions with their money. "Wise Investing Made Simple" has two great benefits. Larry explains otherwise complex investing principles in simple, understandable terms using stories and situations familiar to most people. This has helped me hone my own skills to simply explain the complex to my clients and prospects. Also, it's been a great book to give to clients and prospects to deepen their own understanding of correct investing principles. There's so much investment garbage in the world. This book is a great antidote. I just bought an entire case of these books.

Larry Swedroe, a prolific author on investing, has written another great book. In Wise Investing Made Simple, he examines the very core of our beliefs that much of Wall Street and the media reinforce. Swedroe also explores the cost to the investor for assuming that these beliefs are true.

If you're looking for another book regurgitating data on the underperformance of complex active investing, you won't find it here. In place of mind-numbing, forgettable data, Swedroe imparts his message through real life stories. These stories give us something relatable and memorable to take away from the book, and inspire us to make changes - financial changes, in this case. Each story has a valuable "moral of the tale."

Stories are also more fun to read than a bunch of data tables, and Swedroe is entertaining as he delivers his valuable advice. The moral of his tale is to build wealth for yourself rather than Wall Street.

I'll admit, I'm a very neophyte investor. I found Swedroe's description of how the market works to make a lot of sense and the first few chapters alone gave me high hopes for the rest of the book. Instead, those few chapters are the only part I found very helpful. The rest was a combination of rehashing the same points over and over, or introducing some pretty generic pieces of advice.

When Swedroe used 'concrete' examples to make his points, the statistician in me felt his spidey sense tingling. Almost all of his examples involved someone trying to outcompete the market using an investment method that Swedroe obviously doesn't like. Often, the first person is contrasted with someone who uses the passive investment method that Swedroe does like. The problem is, a lot of these examples use the setup that the first investment method did well the previous few years, but at exactly the moment these people chose their respective methods, the market changed, thus 'proving' that the passive method was really the better one to choose and therefore since it was better to choose in the 'story' presented, it must be better now.

The problem, as anyone who knows statistics can tell you, is one of 'cherry picking'. If Swedroe had instead set the two investment methods against each other and chosen a decent number of random starting points to make his case, and they had indeed shown that the passive method of i nvesting works better in a significant number of those cases, I would have given a lot more credence to his arguments. Instead, I had the impression he kept looking for starting dates that would make his case, which is a very misleading way to present a case.

Now, I'm not saying he's not right, nor am I saying that he intended to mislead, but the evidence he gives doesn't convince me.

Investing is a scary topic, which is why so many of us have given our investing power to so-called "pros" only to discover it is they who benefit most. But by the time you finish "Wise Investing Made Simple", you will be far less intimidated (if at all), may well know as much as some of the self-proclaimed experts, and feel secure enough to handle your own investing. At the very least, you'll avoid making some of the big mistakes that, ironically, many pros make. And if you choose to use a professional financial advisor, you'll know exactly how to select one that will safeguard your interest.

While the title suggests a book for the novice, the information here applies to experienced investors too, because, as you will learn, there is often an inverse relationship between the supposed knowledge of the pros and the benefits they accrue for their clients, as 80% of supremely well-educated advisors fail in their stated objectives to "beat the market".


Now, a good story is memorable. And a good investor is one who must remember certain basics to withstand the marketing noise that competes for our attention. But nobody til now has distilled the frightening and enigmatic investing field into such fundamental, memorable, and fun to read "tales". This takes a mastery of the evidence and a voice that puts the reader at ease.

Swedroe's selection of stories--ranging from sports analogies to classic mythology, dialogues, idioms and parables--allow just about anyone to "buy-in" and relate to the workings and principles that underlie the seemingly complex investing morass. And he posits real situations for the characters (male and female) in his dialogues, which will resonate with many.

I could select any chapter as typical of how Swedroe makes the complex accessible, but the early section where Swedroe describes how market prices are actually set (in essence, the bedrock of all that money) clears the muddle and sets the tone for all subsequent stories.

Each of his tales has a moral which, collectively, sum up "Wise Investing Made Simple" in just a few hundred words. But it is the stories themselves that make you memorize their morals. Swedroe's writing style is clear and devoid of the linguistic clutter that obfuscates many books and articles that similarly claim to make this intimidating subject "easy". The work is simple without being insulting.


Finally, and most importantly, Swedroe's writing is based on evidence--peer-reviewed studies, not his own opinions. This particularly comforted me, and it should comfort you. Too often is it that a smooth-talking writer (let alone some excitable speaker on CNBC) can just tell the public what to do, absent supporting data. The point is that just because an authority passionately and even compellingly proclaims something, does not necessarily make it so. Swedroe's writing, both here and in his other work, is based on texts--references--that can be checked. I know. I checked them.

In sum, with "Wise Investing Made Simple" you'll learn what to do, what to avoid, and how best to get a real pro to do it for you, if you choose that approach. What's more, you'll know why you're doing it.

I've been reading Larry Swedroe's work for years, and I find his new book to be among my favorites (along with THE ONLY GUIDE TO A WINNING INVESTMENT STRATEGY YOU'LL EVER NEED). You'd think by now, he'd have said it all, but this current book says it in a way that is particularly readable since it's based on anecdotes, stories and a glimpse into Larry's personal interests. What repetition there is reinforces how timeless the wisdom is -- through all kinds of markets and for all kinds of investors. I find it comforting to know that the right answers yesterday remain the right answers today, and will likely still be the right answers tomorrow. How simple can it get?

Before this one I was reading Larry Swedroe's book " The only guide to a winning investment strategy you'll ever need", a book based on research, experience, facts and numbers - a must read for every investor (see my review there).
"Wise investing made simple" conveys its messages by some interesting stories about investing. You'll find all the usual mistakes one can make, you learn about the many traps out there used by the financial industry to get your money. These "Tales" are based on tremendous insight and knowledge about investing, and many years of experience in the financial industry. Some of the stories are really funny, e.g. those talking about the "noise" of the media. Each one ends with "The Moral of the Tale" a summarization to the point. I felt they are like a mirror, reflecting all the nonsense I was doing as an investor in the past.
But this is not where the books ends. It provides for great guidance to invest smartly by avoiding all those common mistakes instead. For each risk level an investor is willing and/or able to take you'll find sample portfolios - again holding passively investing mutual funds and alike.

I feel happy having read this book.Yes, I made many of the mistakes outlined in this book. Now I know how to fix them. These 2 books certainly will change the way I'll be doing my investing now and in the future.

Larry Swedroe does it again in this gem of a book as he puts to the test many common myths from the investing world. Mr. Swedroe relates investment concepts to everyday life in terms that the individual investor can grasp and understand in an amazingly quick read!

Whether it is explaining the efficiency of markets by relating them to the point spread of an athletic event or dis-spelling the common fallacy of buying what you know, the examples that Mr. Swedroe uses can be relayed to anyone who wants to learn how markets really work.

There are many people paid a lot of money in the financial services industry to convince you into thinking that you need to do certain things like picking actively managed high expense mutual funds, choosing individual stocks, etc. This book takes an honest approach to the process and in my mind is an invaluable resource for a successful investing future.

One of the top three investment books that I have ever read and one that I have recommended to numerous people who have been led astray by Wall Street myths.

Once again Larry Swedroe has given us a wonderful investment guide. This time he encapsulates the salient points in entertaining short vignettes, followed by a "Moral of the Tale." Larry opens the readers eyes to a sound and reliable approach that's there for the taking, except that the Wall Street Machine doesn't want you to know about it. If you're serious about educating yourself, then this is the book that delivers the right message about successful investing.
Jo-Ann Gallerstein, Managing Member, JG Advisors, LLC

Larry Swedroe has followed up his previous books with his most accessible and easy-to-read effort yet. In Wise Investing Made Simple, the concepts Swedroe has introduced previously are incorporated in stories that are cleverly wrought to not only amuse the reader, but to give him the basics of his investment philosophy in an easy-to-take formulation. In conjunction with his previous books, Larry has given the average investor the knowledge and tools needed to maximize income in ways that suit one's specific needs and personality.

While reading Larry's books, the same thought goes through my mind, as I'm sure it will for you: Anyone investing in the markets without this information is engaging in acitvity that could be hazardous to one's financial health! Following Larry's advice will ensure that - to steal an instance from Wise Investing Made Simple - the boat in the marina the investor has paid for will belong to him, and not his broker!