- Hardcover: 301 pages
- Publisher: Mcgraw-Hill; 2nd edition (March 1, 1998)
- Language: English
- ISBN-10: 007058043X
- ISBN-13: 978-0070580435
- Product Dimensions: 1.2 x 7.8 x 9.8 inches
- Shipping Weight: 1.8 pounds (View shipping rates and policies)
- Average Customer Review: 170 customer reviews
- Amazon Best Sellers Rank: #2,579,363 in Books (See Top 100 in Books)
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Stocks for the Long Run Hardcover – March 1, 1998
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If anyone told you that investing in the stock market was the safest investment you could make, you might raise an eyebrow. However, if Jeremy Siegel tells you this, prepare to be convinced. Siegel's book, Stocks for the Long Run, is a comprehensive and highly readable history of the stock market that dramatically makes the case for long-term investing in stocks.
In summing up his approach to investing, Siegel writes, "Poor investment strategy, whether it is for lack of diversification, pursuing hot stocks, or attempting to time the market, often stems from the investor's belief that it is necessary to beat the market to do well in the market. Nothing is further from the truth. The principle of this book is that through time the after-inflation returns on a well-diversified portfolio of common stocks have not only exceeded that of fixed income assets but have actually done so with less risk. Which stocks you own is secondary to whether you own stocks, especially if you maintain a balanced portfolio."
Stocks for the Long Run considers subjects as diverse as the history of the various market indices and what makes for a business cycle to contrarian indicators and the utility of 200-day moving averages. If you've just come into investing in the last few years and feel the need for a solid and comprehensive text about the market, Stocks for the Long Run is probably the best primer available. It also works as an excellent reference for seasoned investors and anyone else interested in how the market works. --Harry C. Edwards
From the Back Cover
Praise for Stocks for the Long Run:
"One of the Top 10 business books of the year."Business Week
"One of the 10 best investment books of all time...This is the buy-and-hold bible."James K. Glassman, Nationaly syndicated financial columnist, The Washington Post
"Should command a central place on the desk of any 'amateur' investor or beginning professional."Barron's
"A book brokers may want to send to reluctant investors. Like famed money manager Lynch, Siegel's case for stocks is unbridled and compelling."USA Today
"Siegel has presented a fantastic wealth of stock market data. The book is probably the most complete work on U.S.stock market history. It's a must book for any serious student of the markets."Martin Zweig, Panelist, Wall Street Week
"Stocks for the Long Run is a clearly written, neatly organized, highly persuasive exposition that lifts the veil of mystery from investing. It is a 'good read,' certain to earn a place on the library shelf of every serious investor."John c. Bogle, Father of no-load and index funds, Founder, The Vanguard Group of Investment Companies
"For the information, examples, and exposition of long-term investing in common stocks, Jeremy Siegel's Stocks for the Long Run may find an influence and longevity niche similar to Burton Malkiel's A Random Walk Down Wall Street. It deserves it."Robert H. Stovall, CFA, PResident, Stovall/Twenty First Advisers, Inc
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So, for instance, I needed to know that stocks have never failed to offer a positive real return over any period of seventeen years or more. Long-term bonds, in contrast, since the Civil War have outperformed stocks in just one 30-year period (by a minuscule .05% per year!), as interest rates fell from 16% in late 1981 to 2% in 2011—but the real return on these “safe” investments was negative for the entire post-war period before that, and likely will be for years to come. And Siegel repeatedly makes the point that especially when we think about retirement the only safety that matters is the assurance of rising purchasing-power over spans of decades.
The book is not without its limitations. I don’t think Siegel understands options or other derivatives; his faulty discussion of stock index options in the 4th edition has been abbreviated, but his remaining remarks are misleading at best. Consequently the major new sections in this edition, which deal with the recent financial crisis, while fairly sound (e.g. showing how slight a role Fannie and Freddy played), understate the impact of synthetic credit default swaps, which by the time the fever broke had made the subprime mortgage market five times larger than the mess the bankers and mortgage brokers had created in the first place. Hence next to no one had any idea how immense the problem really was, though a few (see M. Lewis, The Big Short) saw enough to profit hugely.
Other material in Siegel’s 378 pages adequately and sensibly covers major areas of historical interest (the primary stock indices, money, monetary policy and the gold standard), analyzes other financial and economic crises, surveys current issues (the business cycle, market responses to current events) and concerns (the developed world’s retirement “crisis”, on which he is quite optimistic), and I could cavil here and there or suggest other specialized treatments. But what he has to say on these topics is sufficient (and his history of the S&P 500 is excellent) for firmly embedding the three points with which I began, which are points every investor should ponder long and hard.
But how many of us will profit from them? On p. 97 he mentions the allure of “safer” alternatives which do after all outperform stocks, over periods of one or two years, nearly 40% of the time. I don’t know that he sees how deep the pain goes for individuals watching dollars vaporize by the thousands, dollars which a bank account would at least have preserved and guaranteed. Nor, I think, does he see how hard it would be for asset managers to follow his principles when markets soar and “irrational exuberance" reigns triumphant; sticking to a long-term strategy is impossible when benchmark risk means your assets are marching out the door. Siegel’s work will most benefit those who know not just the concepts but themselves. It hurts to play from behind, alone, trusting the odds, trying to trust yourself. Long-term investment is a discipline less of intellect than of temperament and character. But the discipline of study and thought is still part of it, and Siegel’s history and mathematics keep me mindful of what the true odds are. In this and earlier editions, Stocks for the Long Run is one of just six books (cf. my review of M. Mauboussin More Than You Know) which have decisively shaped how I think about what I do.
Now, if you have found yourself up at night, or worse yet, selling, during the latest big market sell off that is currently going on, then yes, the stock market may not be for you. If however, you look at the historical data Jeremy Siegle provides, you may see it as an opportunity. No matter what you decide to do based on your own temperament and time horizon, the information provided in the classic should prove educational.