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The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New Hardcover – Bargain Price, March 8, 2005
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“Jeremy Siegel’s lively new book is much more than a typical Siegelian guide to asset allocation. It is a masterful, provocative, fact-stuffed, commonsense, and creative guide to profitable stock-picking strategies. Even the most cynical and experienced investors will gain from reading Siegel’s latest contribution to their well-being.” —Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk
“Jeremy Siegel is a wise man and an astute observer of the ever-changing investment universe. The Future for Investors is essential for the professional and serious amateur investor to navigate the new era.” —Barton M. Biggs, managing partner, Traxis Partners
“The professor who taught America to love stocks in the 1990s is as optimistic as ever. But he’s added a new twist to his theory: Get dividends.” —Money magazine, December 2004
“Siegel thinks about the future in a unique and original way, with insightful thoughts about the broad sweep of history as well as hard-headed investment analysis.” —Robert Shiller, author of Irrational Exuberance and The New Financial Order
“The ‘Wizard of Wharton’ weighs in on the markets ahead. . . . Deeply committed to understanding the macro-financial sector and its constant change has made him an outstanding teacher for [those] who hunger for his brand of forward-looking economics as they apply to the markets.” —Stocks, Futures & Options magazine, September 2004
Top Customer Reviews
However, I agree with some of the criticisms of the book as well:
1) Siegel does not address the tax impact on dividends. His research uses 1957 as a starting point. While our current dividend tax rate is 15% at the federal level, during most of the period from 1957 the rate was higher (sometimes the same as the income rate). During these times, the reinvested amount of the dividend would have only been about 60-70% of the total. Thus, returns would have been lower. (Some people have said that this would only make a marginal difference - maybe so, but it might have changed his argument in comparing Standard Oil to IBM as well as the small advantages he pointed out in some of his stock recomendations. A 1% per annum difference over a multi-decade period amounts to serious money).
2) Siegel cites Altria as the best performing stock during this period. I won't disagree with the conclusion, but I will point out that going for high dividends and reinvesting them works well only when the company survives. What if Beth Steel had been your choice rather than Altria? You would have received lots of dividends and reinvested them, but the ultimate outcome would have been a disaster. The point is that reinvesting dividends works especially well when the reinvestment happens during a difficult time for the stock AND (most importantly) the stock MUST recover from those difficult times.Read more ›
However, I am perplexed on a key element. His case is largely based on historical evidence that purports to show that high dividend yield stocks, with dividends reinvested, have accumulated more total return than growth stocks or index mutual funds. However, his calculations do not account for the deleterious effect of taxes on reinvested dividend. (He says in an endnote that taxes are not significant for the portfolios he chose, but does not explain why; for most common stock portfolios, taxes are significant.) Dividends are taxed yearly and until recently at a higher rate than that of capital gains and that of retained earnings, which are not taxed at all. If taxes have been paid on dividends, only the untaxed part can truly be considered "reinvested"; the part that is taxed has to be made up by a new infusions of cash from the investor. The effect of ignoring this is that his historical comparisons are not terribly meaningful because he is not calculating the returns on true (after tax) contributions to dividend stocks vs. growth stocks. Naturally, if more is contributed to the dividend stocks, there is likely to be more at the end. (BTW, this is basically the same fallacy that sunk the allegedly huge returns of the otherwise delightful "Beardstown Ladies" of yore.) Given that the magnitude of the "advantage" he posits of dividend stocks vs.Read more ›
The book is thorough and comprehensive, but explained in an easy manner. Each chapter ends with a summary which provides a succinct representation of the chapter. A detailed list of references/citations used by the author and a set of appendices with more data analysis is also included, and is certainly a resource for any serious investor. Day traders and speculators may be disappointed with the book, but any long term investor will find this to be a cornerstone of any investment plan. A must have!
Most Recent Customer Reviews
For the retail investor this is absolutely the best book I'm aware of regarding portfolio construction ! Read morePublished 8 months ago by X-NDSN Guy
If you read one book about investments, this should be it. The basic lesson is those that chase the latest growth stock do not do as well. Read morePublished 10 months ago by Gadget Man
Some great information. If you are a dividend growth investor, a copy of this should be on your bookshelf.Published 18 months ago by Brandon
Honestly, I feel that after a single read I probably didn't get as much out of this book as I would like to. I plan to read it again to make sure and absorb the major points. Read morePublished 22 months ago by Katherine Robinson
I already own this book. I bought it for my daughter to learn how to properly invest.Published on August 14, 2014 by Timothy J Farness