Winning the Loser's Game, Fifth Edition: Timeless Strategies for Successful Investing [Hardcover]

Charles Ellis (Author)

Editorial Reviews

Review

"This is by far the best book on investment policy and management." ---Peter Drucker on earlier edition of Winning the Loser's Game --This text refers to an out of print or unavailable edition of this title.

Product Description

The Classic Guide to Winning on Wall Street—Completely Updated and Expanded!

“The best book about investing? The answer is simple: Winning the Loser’s Game. Using compelling data and pithy stories, Charley Ellis has captured beautifully in this new and expanded edition of his classic work the most important lessons regarding investing. In today's unforgiving environment, it's a must-read!”
F. William McNabb III, Chief Executive Officer and President, Vanguard

“Charley Ellis has been one of the most influential investment writers for decades. This classic should be required reading for both individual and institutional investors.”
Burton Malkiel, author, A Random Walk Down Wall Street

“No one understands what it takes to be a successful investor better than Charley Ellis and no one explains it more clearly or eloquently. This updated investment classic belongs on every investor’s bookshelf.”
Consuelo Mack, Anchor and Managing Editor, Consuelo Mack WealthTrack

“A must-reread classic, refreshed and updated with the latest ‘lessons to be learned’ from the 2008-2009 market events.”
Martin Leibowitz, Managing Director, Morgan Stanley Research

“Winning the Loser’s Game has long been required reading for professional investors. . . . This elegant volume explores approaches for individuals such as relying on intellect rather than emotion, and building a personal portfolio by taking advantage of what other investors already know.”
Abby Joseph Cohen, Goldman Sachs & Co

“This is less a book about competition than about sound money management. Sounder than Charley Ellis they do not come.”
Andrew Tobias, author, The Only Investment Guide You’ll Ever Need

About the Book:

Peter Drucker referred to Winning the Loser's Game as “by far the best book on investment policy and management.” Now, in it's fifth edition, the investing classic has been updated and improved.

With refreshing candor, straight talk, and good humor, Winning the Loser’s Game helps individual investors succeed with their investments and control their financial futures. Ellis, dubbed “Wall Street’s Wisest Man” by Money magazine, has been showing investors for three decades how stock markets really work and what individuals can do to be sure they are long-term winners.

Applying wisdom gained from half a century of working with the leading investment managers and securities firms around the world, Ellis explains how to avoid common traps and get on the road to investment success.

Winning the Loser’s Game helps you set realistic objectives and develop a sensible strategy. You will learn how to:

• Create an investment program based on the realities of markets
• Use the “unfair” index fund to succeed, even in tumultuous markets
• Institute an annual review process to steer your investments well into the future
• Maximize investing success through five stages, from earning and saving through investing, estate planning, and giving

The need for a trustworthy investing guide has never been greater. Sixty million individuals with 401(k)s are now responsible for making important investment decisions. They know they’re not experts but don’t know whom to trust.

Winning the Loser’s Game explains why conventional investing is a loser’s game, and how you can easily make it a winner’s game!

See all Editorial Reviews

Product Details

• Hardcover: 240 pages
• Publisher: McGraw-Hill; 5 edition (October 2, 2009)
• Language: English
• ISBN-10: 0071545492
• ISBN-13: 978-0071545495
• Product Dimensions: 9 x 6.3 x 1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars  See all reviews (35 customer reviews)
• Amazon Bestsellers Rank: #34,594 in Books (See Top 100 in Books)

  #33 in	Books > Business & Investing > Economics > International
  #35 in	Books > Professional & Technical > Accounting & Finance > International

Customer Reviews

Most Helpful Customer Reviews

87 of 90 people found the following review helpful:

3.0 out of 5 stars Dissapointed...This should be an article, not a book, February 22, 2003

By A Customer

This review is from: Winning the Loser's Game: Timeless Strategies for Successful Investing (Hardcover)

Actually all the information in this book can summarized into a short paragraph (read this and skip the book):

You can never beat the market so invest in index funds. In the long run Taxes and Inflation will erode your investments and only stocks can safeguard you against it, so invest in index funds which have low taxes. Think long term (20+) years. Short term you will lose money so invest in index funds and dont go checking the stock quotes every day, or even every year. And did i mention index funds :)

102 of 109 people found the following review helpful:

5.0 out of 5 stars Avoid Stalled Thinking about Beating the Market, July 3, 2000

By	Professor Donald Mitchell "Jesus Makes Me a P... (Thanks for Providing My Reviews over 96,000 Helpful Votes Globally) - See all my reviews (TOP 10 REVIEWER)    (VINE VOICE)

This review is from: Winning the Loser's Game: Timeless Strategies for Successful Investing (Hardcover)

This book is based on a famous article written by Mr. Ellis in 1975, "The Loser's Game," that showed why professional money managers are unable to beat the market averages in 90 percent of the cases. In fact, the harder they try, the more likely they are to lose by increasing trading costs and mistiming their trades. The first two editions of this book were aimed at providing solutions to that dilemma for professional money managers. Mr. Ellis provides consulting advice to such professional money managers, and is in a good position to know what he is talking about. This edition is aimed at the needs of the neophyte individual investor. It is especially timely as we near the end of 2 decades of almost continual bull markets for equities.

The beauty of this book is that it is simple and easy to understand. Ellis designed it for anyone who has a genuine interest in getting good investment results, is willing to develop an appreciation for market fundamental, and has the discipline to pick an approach and stick to it.

In various chapters, the book describes why professionals do so poorly, and how the individual can have the same problems if not careful.

The key points of the book are that you need to establish your long-term investment objectives in writing, and with the expert advice of professionals, determine a well-reasoned and realistic set of investment plans that can help you achieve your objectives. You should set your asset mix at the highest ratio of equities you can afford financially and emotionally for the long-term. However you do this, don't try to beat the market. That's a loser's game. He emphasizes not making mistakes, not losing money relative to the market, staying in the market, and realizing that your real problem is beating inflation rather than the market. In general, doing less will be doing more. Avoid speculations, shifting funds continuously, and paying too much attention to near-term performance.

A good companion book for this one is John Bogle's recent one, Common Sense on Mutual Funds, that articulates many of Ellis' points in more detail and more graphically. As a historical note, Bogle writes in his preface to Ellis' book that he was inspired by Ellis' original article to make Vanguard's first indexed mutual fund in 1975.

In thinking about the advice here, I'm not sure that everyone needs professional advice to come out in the right direction. If you decide that you primarily want to pursue indexed mutual funds, there is little need for advice, for example. But if you do opt for advice, be sure you watch out for vested interests in the person giving the advice.

Also, the book doesn't do enough to address the conflicted feelings that people have about money. If you don't address those, you won't carry through on your discipline. I suggest that you read any of the excellent books on that subject and do the exercises in them.

I also suggest you find the calmest, sanest person you know who is good with investments (but is not an investment professional) and ask them to review how you are doing annually. This will help you keep your discipline. A parent, spouse, or good friend could be an appropriate choice for this role. Share this book with them first, so they will know what you are trying to do. Then explains your ideas, and spell them out on paper. Chances are you will outdo what you would otherwise accomplish.

Good luck in outperforming inflation!

Donald Mitchell

Coauthor of The Irresistible Growth Enterprise and The 2,000 Percent Solution

([e-mail])

188 of 210 people found the following review helpful:

1.0 out of 5 stars Winning by assuming your readers are losers, November 1, 2001

By	Michael Henry (Portland, OR USA) - See all my reviews (REAL NAME)

This review is from: Winning the Loser's Game: Timeless Strategies for Successful Investing (Hardcover)

"Winning the Loser's Game" is a bit of a mess on several fronts. It primarily fails due to the ill conceived idea and sloppy execution of updating a book originally written for the institutional investor to also address the individual investor. In theory this should have been possible but neither Mr. Ellis nor his editors have invested the necessary effort to do a credible job. Advice for the individual investor is bolted on pretty much at random, with at times hilarious results. For example, the "Managing the Manager" chapter is filled with advice on setting a useful agenda for your quarterly meeting with your investment advisor organization (including criteria for deciding when to fire a portfolio manager!), and the role your investment committee should play in modifying your investment policy. In the same breath, Ellis also advises the individual investor in search of an investment vehicle to check with their employer's pension manager for the names of a few well respected mutual fund companies, for example, Vanguard and American Funds. In short, the entire chapter is for the institutional investor with the exception of this single paragraph on how to find a good mutual fund. Even at that, the advice is laughable. (I'm sure we are all on a first name basis with our employer's pension fund manager.....) This unsuccessful attempt to modify the book for the individual investor continues throughout. Even when Ellis directly discusses the individual investor we discover he is primarily concerned with that class of individual investor with "significant assets", that is, for investors who have retained advisors; not your garden variety working stiff saving for retirement. And certainly, Ellis's notion of a financial "end game" consists not in the asset allocation shifts necessary when approaching, and in retirement, to insure that limited resources last throughout retirement, but rather in deciding how to best allocate one's estate at death: e.g. establishing scholarships, funding the arts, avoiding estate taxes, etc.

Mr. Ellis's sloppy handling of data is inexcusable, particularly for someone in a profession that presupposes competence with numbers and accurate (preferably also lucid and cogent) presentation of data. In the book's preface Ellis profusely thanks his editor Dero Saunders, and notes that Mr. Saunders "expects to be remembered as the editor who could remove four lines from the Lord's Prayer without anyone noticing". There is substantial evidence that to create this impression Mr. Saunders (and Mr. Ellis) intended to rely more on their reader's lack of perception than on their editorial skill. The book includes many, many, errors that are, I assume, the result of haphazardly updating text and tables from previous editions. Very often the figures in the text do not match the data in the corresponding graph or table, and vice versa (e.g,. see pages 5, 10-11, 33-34, 40-41, etc.), but in some cases the errors are just due to sloppy writing and proof-reading. For example, on page 33 we learn that since 1901, annual investment returns have ranged from at best 4%(yikes!) to at worst minus37.4%. Neither number, in particular the 4% number (thankfully), match the figures in the corresponding table on the next page. However, on page 40 we learn that that "over the past 50 years the actual returns have been between a loss of 43 percent and a gain of 54 percent". The accompanying footnote unhelpfully informs us that these numbers are "normal" while the numbers on page 33-34 are adjusted for inflation. How a loss of 43 % becomes a loss of 37.4% after adjusting for inflation is a bit of mathematical mystery.

The preceding examples were simply oversights and negligence. However, on page 123 Ellis simply misuses his data as he asserts that "over the long, long term" common stocks have provided real returns of 4 ½%. His version of the long, long, term is 1965 to 1994. (Then again, on page 42 he asserts the long term return for stocks is 6.1%, however, the data he references on page 41 computes to a 6.7% return, so I have no idea where he got the 6.1% number. Never mind....) I don't have any reason to doubt the 4 1/2 % return number for the particular 30yr period measured, and surely it would be a good thing to remind folks that it is very possible to have a significantly below average return over a lifetime of investing, but to represent 4 ½% as the long term average real return for common stocks in the US is simply wrong. [For what it is worth, Ibbotson and Brinson assert 6.7% (1940-1990) and John Bogle asserts 7.2% (1926-1997).]

In my opinion, Mr. Ellis is simply milking his very good 1975 article in the Financial Analyst's Journal (as he reminds us, "it won the profession's highest award".). In "Winning the Loser's Game" he recycles his argument, bolsters it with sloppily assembled data, and provides poorly organized advice to the investor on how to act on his argument. Much of the advice is undoubtedly true, but nevertheless, the book is poorly organized, highly repetitive, and a real grab bag of financial aphorisms, lacking the structure and clarity to give the interested reader anything to think through on their own. But then, this is I suspect, the real problem. In Mr. Ellis's estimation the individual investor is not capable of managing his or her finances alone, and they are advised to spend $10,000 to $20,000 every ten years for investment counseling and estate planning.

If you are interested in a good treatment of market efficiency, the nature of risk, and a rational framework for estimating future returns, and the relationship of asset allocation to risk, you would be much better off with Burton Malkiel's "A Random Walk Down Wall Street" and William Bernstein's "The Intelligent Asset Allocator".