44 of 50 people found the following review helpful
Refreshing or Arrogant? Still a Worthwhile Investment Read,
This review is from: The Smartest Investment Book You'll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals (Hardcover)
The message here is that investors should take charge of their investment portfolio by determining an asset allocation model based on their tolerance for risk and invest their assets in index mutual funds (or ETF exchange traded funds) that track the U.S. equity, U.S. bond, and international markets. Trying to "beat" the market with actively managed mutual funds is a fool's game. Stock-picking and market-timing don't work. The popular financial media is a distraction. Your broker may not be acting in your best interest. Avoid hedge funds, margin, brokerage wrap accounts, proprietary brokerage ("house") mutual funds, B and C mutual fund shares, etc.
Even the author concedes that we've heard this before. His contention, however, is that many of those scholarly works are difficult to understand and have not achieved commercial success thus conveying the impression that you can't do this yourself. That's the rationale for this book. The ideas are concise and accessible. Many will be put-off by the book's aggressive tone (e.g. most advisers are "hyperactive" and self-serving). Many will find this tabloid-equivalency refreshing.
The basic ideas - the importance of asset allocation and low investment costs - and many of the specifics - the recommended portfolios - of this book make sense for many investors, I'm not sure all. Solin talks about including bonds as "ballast" in a portfolio, but what about the specific value of tax free municipal bonds? Among the best performing investment classes in recent years (and at other times) have been real estate and commodities. These diversifying asset classes are overlooked, even though ETFs track indexes for those different markets. Another reality is that many retirees are looking for investments that produce strong (monthly) cash flow, yet these are also ignored.
One of the risks faced by an investor is that the rush of certainty imparted by this book can persuade them that they have learned all they need to know. A little bit of humility (uncertainty?) is a good thing for an open mind in an unpredictable market.
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Showing 1-2 of 2 posts in this discussion
Initial post: May 25, 2007 2:34:05 PM PDT
Skip Savage says:
Yes, humility will save you a fortune by stopping you before you make an overconfident excursion into a high performing asset class. Today, traps like emerging markets, commodities or real estate await those who have not yet been humbled.
Posted on Oct 18, 2007 5:30:42 AM PDT
Last edited by the author on Oct 18, 2007 5:42:00 AM PDT
I. Seligman says:
Conservative bulls and bears make money over years, those who jump in and out of high performing areas, like real estate and foreign funds risk unpredictably great gains and losses. Real estate is now in the dumps, down 25-45% and foreign markets are at a risky all time high now. Wanna jump in now?
Some stock brokers are honorable and invest well, many do not, and you don't have the financial savvy or experience to know the difference-that's why you are with one! Scary. Be it Merril Lynch or Northern Trust, the branch managers know to the penny which of their stable of brokers are making the most or least for their clients, and which are about to be let go for skirting the law. Somehow, they don't share this with you.
I lost a lot of money on 7% loaded funds and stocks pushed by "oh so friendly" commissioned brokers. When they gain their commission income on loaded funds and high trading fees, and make poor investments for the inexperienced (especially young families, single women, widows) suing or arbitration gets you back only 5% of your loss. Ouch.
Better to stay with 3 or so index funds, and if you must, keep a small amount of "gambling" with ETF's or the current "hot item" limited to 5-10%, and you will retire ahead of those with the stockbrokers. The trading with brokers saps your retirement money, and increases theirs-they are masters of this game! Why pay $200-400 a trade with them on a stock, when discount agencies charge $8-10? YOU need to know more about investing-you put in years to earn the money, put in 20" a month to watch it grow and grow. Why support stockbrokers, who put you into lousy "investments" and still make money while you "eat" significant losses? The game is rigged!
Index funds over time, when readjusted somewhat according to the overall market and the closer you get to retirement, do make solid sense. Frequent "market timing" does not make sense. I only wish I ditched the supposedly "smarter" stock brokers years ago. I'd have been waaay ahead!
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