"Wise Investing Made Simple" -- A Gem

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Taylor Larimore
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"Wise Investing Made Simple" -- A Gem

Post by Taylor Larimore »

"Wise Investing Made Simple" is Larry Swedroe's sixth book. Unlike all the other books in our "Collection of Investment Gems," this one is written in a narrative fashion. One of our Bogleheads wrote this excellent description:

"I've just finished 'Wise Investing Made Simple,' by Larry Swedroe. I found it a very clear and readable distillation of the same kind of wisdom that I obtain from the Bogleheads Forum. I absolutely loved the format. It uses anecdote and analogy to illustrate all-too-common investing foibles."

Excerpts from "Wise Investing Made Simple":

"Despite its obvious importance to finance and investments, our education system almost totally ignores the field of finance and investments"

"We could compare a stockbroker to a bookie. They win whether you win or lose."

"The stockbroker services his clients in the same way that Bonnie and Clyde serviced banks." (Bill Bernstein quote)

"It is estimated that about 80% of all trading is done by large institutions. -- Every time an individual buys a stock he should consider that he is competing with these giant institutional investors that have more resources."

"Study after study demonstrates that the majority of both individual and institutional investors who attempt to beat the market by either picking stocks or timing the market fail miserably."

"One study found that the stocks individual investors buy underperform the market after they buy them, and the stocks they sell outperform after they sell them."

"In addition, they found that those investors who traded the most trailed the market on a risk-adjusted basis by over 10% per annum."

"If you are trying to time the market or pick stocks, you are playing a losing game."

"By investing in passively managed funds and adopting a simple buy, hold, and rebalance strategy, you are guaranteed to -- outperform the majority of professional and individual investors."

"It is not easy to get rich in Las Vegas, or Churchill downs, or at the local Merrill Lynch office." (Paul Samuelson quote)

"Much as you may wish you could know which funds will be hot, you can't--and neither can the legions of advisers and publications that claim they can." (Fortune quote)

"If you believe you or anyone else has a system that can predict the future of the stock market, the joke is on you." (Ralph Wanger quote)

"Today, there are more mutual funds than there are stocks."

"Over the entire decade of the 1970s, 44 Wall Street was the top performing diversified U.S. Stock Fund. -- 44 Wall Street ranked as the single worst performing fund of the 1980s."

"I believe that the search for top performing stock funds is an intellectually discredited exercise.." (Jonathan Clements quote)

"The only logical reason to play the game of active investing is that you place a high entertainment value on the effort."

"You should never take more risk than is appropriate to your personal situation."

"There is nothing new in investing, only the investment history you don't know."

"Never treat the highly unlikely (a long, or even permanent, bear market) as impossible." As evidence, in January 2007, the Nikkei Index was still down almost 60% from the 40,000 level it had hit in 1989."

"One of the funny things about the stock market is that every time one man buys, another sells, and both think they are astute." (Wm Feather quote)

"By continuing to own lots of stock in the same company from which you receive your paycheck you are playing a game of double jeopardy."

"If you are ever tempted to put lots of eggs in one basket, remember that while this is the surest way to make a fortune, it is also the surest way to lose one."

"An investor's chief problem, and even his worst enemy, is likely to be himself." (Benjamin Graham quote)

"It is estimated that the revenues of the institutions that make their living from the capital markets exceeds $150 billion per year. This is the portion of the returns that is removed from your pockets by financial intermediaries."

"If you want to see the greatest threat to your financial future, go home and take a look in the mirror."

"It must be apparent to intelligent investors that if anyone possessed the ability to forecast the immediate trend of stock prices consistently and accurately, he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public."

"You should treat all prognostications about the stock market as nothing more than what I call 'investment graffiti'."

"The winning strategy is to adhire to a well thought-out plan and ignore the noise of the market."

"The next time some guru's forecast tempts you to stray from your well-thought-out investment plan--the prudent action is to ignore them."

"Copious academic research has indicated active management is unlikely to offer persistant outperformance, particularly after accounting for the cost of implementation."

"Cramer and CNBC attempt to make investing entertaining. After all, the goal of any television show is to attract the greatest number of viewers. -- Investing was never meant to be entertaining."

"Indexing and passive investing have the 'disadvantage' of being boring. -- I get excitment from my passion, whitewater rafting."

"We continue to make more money when snoring than when active." (Warren Buffett quote)

"Those that fail to plan, plan to fail."

"Expense ratios are the best predictors of performance--way better than historical returns."

"Wall Street and the financial media need and want to keep alive the myth that active investing is the winning strategy."

"The hard part for most investors is ignoring the noise of the market, the Wall Street Establishment, the media and the emotions caused by all the noise."

"Cancel all subscriptions to mass media investment publications and newsletters, turn off CNBC. By doing so, you are likely to have not only a richer portfolio, but a richer life as well."


More "Investment Gems": http://www.diehards.org/forum/viewtopic.php?t=881

Best wishes.
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Post by woof755 »

Thank you, Taylor. This has sticky potential...and deserves this bump!
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing
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Post by Stickman »

Thanks Taylor. That's a lot of typing! :)
But, I enjoyed reading each of these gems (a second time).
It's a good book.
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Post by Gekko »

great gems. thanks, all.
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Barry Barnitz
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More Gems from Taylor:

Post by Barry Barnitz »


Taylor continues his gems on Wise Investing Made Simpler in the following post:

Wise Investing Made Simpler -- A Gem (Tue Jul 20, 2010)

Additional administrative tasks: Financial Page bogleheads.org. blog; finiki the Canadian wiki; The Bogle Center for Financial Literacy site; La Guía Bogleheads® España site.
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