Most Helpful Customer Reviews
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39 of 39 people found the following review helpful:
4.0 out of 5 stars
Very good book for beginners but not great, June 14, 2000
By A Customer
This book is one of the first finance books I bought and pretty darn near one of the last. It does a great job of making you differentiate what you need vs. what you want. For example, do I really NEED to buy another financial book or could I just borrow one from a friend or a library. I have even spent a couple hours in bookstores skimming certain chapters of finance books. It has provided me sound financial advice that is the core of my investment philosophy. I feel very confident in what I'm doing and why. That is one the positives. He will explain to you the principles behind his approach and let you carry it out on your own. He does not tell you to do A, B, and C. He simply provides you a nice foundation for investing based on a mix of his investment advice and historical performances. Every review I've read on this book has been positive so I would like to bring up some negatives. His book does not do a good job of explaining terminology. If you want to know what x-bond is exactly...good luck. Many terms don't receive the explanations a novice would need. Instead, you look in the index for a term, find it, then have to read a paragraph in which the term is used and you still don't know exactly what is means. Another negative is his ability to back track. He WILL present material as if it is black and white. Then 30 chapters later he will say something that contradicts it. There are obviously specifics that need to be discussed but aren't. Also, he is great at self promotion. This is a typical statement "If you don't understand what I just said, you need to by my book called so and so, if you still don't understand, by the book I wrote before that, etc." I have this book, 88 Rules, and Millionaire Next Door. 88 Rules is a hyped up condensed version of this book. Actually, I think some sections are literally copied word for word. In other words, IF YOU ARE GOING TO BY ONE OF HIS BOOKS, BUY THIS ONE AND DON'T WASTE MONEY ON THE OTHER ONES. All and all, I'm very glad I have this book BUT it could've been better. I have't read many financial books secondary my satisfaction with this one so I can't recommend a better book per se but this book does have negatives. Good Luck.
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30 of 31 people found the following review helpful:
5.0 out of 5 stars
Outstanding!, January 15, 2004
I just picked up a copy of The Truth About Money 3rd edition. Edelman has outdone himslef. This book is superb. So much information.Whether you want information on how to invest or what kind of insurance to by, it's in here. Edelman may not be as well know as Suze Orman, but he is the best. He know his stuff. Speaks from experience and has the client base, successful clients that is that can back him up. If you really want to make the most of your money then you must read this book. It is outstanding!
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29 of 30 people found the following review helpful:
1.0 out of 5 stars
book offers bad advice about index funds, February 28, 2007
Edelman's criticisms of index mutual funds are nonsense. Most blatantly, he sets up a false straw dummy, by saying that index funds are claimed to have ZERO trading costs. Rubbish! NO proponent of these has ever said that. Starting with the largest, Vanguard. All providers of index funds (and Exchange Traded Funds) assert that they have trading costs. Edelman surely knows this, yet he goes on to misrepresent index funds. In order to "refute" the "claim" by saying that they do indeed incur these costs. Neophyte readers without any background in financial matters might be taken in. It shows clearly the type of audience that he is aiming at.
Yes, index funds have trading costs. But so do actively managed funds. And the latter almost always do much higher trading. Reflected in the overheads. Index funds have expense ratios (overheads) of around 0.1-0.4%. Active funds are from 0.9-2% or more.
Another claim he makes is that index funds do mechanical buying and selling, without having a human actively consider these decisions. Yet this is a strength of index funds, not a weakness. When an active fund buys or sells, it could be right or wrong. It is not a given that the active fund will even be correct on average. And the current price of a stock reflects this give and take, across all active trading.
Edelman also says that when you buy an index fund, you could get hit with capital gains, if the fund sells stocks with large gains. But the low trading (=long holding periods) of an index fund, mitigates against this. Active funds are more likely to hit you with capital gains, because they trade much more frequently.
The strongest point he makes about index funds is that in a market downturn, they should underperform active funds. Because index funds must stay fully invested, whereas an active fund can have a cash position that cushions the fall in its stocks. Intellectually, this is the most plausible scenario for an active fund to outperform an index.
But hey, you know what? In the last US bear market, 2000-2, the main index funds still outperformed most of the large active funds. (Where both types invested across the market.) It turns out there is no guarantee that an active fund's cash position is sufficient to overcome a bad choice of stocks, whose prices fall more than the market averages. This 3rd edition was written in 2003, yet there is no reference to these events. Edelman did not update his remarks from the earlier editions. Sloppy.
He also quotes Forbes as deprecating on index funds. Wrong. Over the last 20 years, Forbes has consistently written favourably on these. Because the Forbes fund surveys and associated advice look approvingly on low overhead (expense ratio). As they have put it several times, the overhead is the most consistent thing you know about any fund, in bull or bear markets. Their surveys have shown that index funds outperform most active funds.
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