Good Books On Investing ?

[Gordon Gekko]

@ Gekko

I take it the fees for purchasing blocks of a fund, e.g. broker commissions, are all on top of your own fees ?
If it's say €250 a month over 30 years, how do the fees work out ? Do people get charged 1.5% of €250 per month or what ?

Nope, I would not tolerate broker fees (as I said earlier).

I’m happy to pay an AMC in the knowledge that fully loaded it’s a higher number (i.e. TER, or whatever you’d like to call it).

 

[Sarenco]

Did you miss this bit, Sarenco ?

Nope.

Active fund managers have found it increasingly difficult to generate alpha over recent decades (even before costs). The primary reason for this is that the overwhelming majority of money invested in stocks is now professionally managed. In other words, there is far less dumb money left to exploit.

But, hey, it’s your money...

 

[trajan]

I wonder.
I know that in China it's not odd to find retired grandmother's playing the stock market online.
We aren't as far gone as that yet here but having an old punt on company shares is common enough in the countryside by older guys.
It's hard to know what the many young professionals - especially economists, accountants, mathematicians, etc - are doing privately but I doubt if they are losing money to advisers if they can do a share of the analysis and trading themselves. It may be a risk that they are willing to take.

Anyhow, thanks to all of you who made such interesting and varied suggestions for better alternatives to Jack Bogle's book.
Here's to Jack !

 

[presidenttttt]

I was hoping for a good book recommendation, but looks like you all trashed every recommendation!

 

[trajan]

Read page one again closely. I thumbed up a few of them.
I have no problem with the Taleb collapse-hedge idea either - makes sense after Black Monday, Kobe Earthquake financial aftershock, etc.
But I won't have a recommendation till I read them of course.
Maybe you can pursue reviews/opinions from the recommendations' respective posters ?

 

[presidenttttt]

Ok then try winning the losers game by Charlie Ellis

what you’ll find is that all these books will consistently tell you that what I think you’re trying to do can’t be done

How to Win the Loser's Game: Full Version

A full-length documentary, How to Win the Loser's Game provides ordinary investors with the information they need, and challenges the investing industry to offer consumers a fairer deal.

sensibleinvesting.tv

Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie

Watched this, had actually seen it before. Would like to have seen some more arguments from active fund managers defending their approach. This should be shown to everyone before they leave school though, it is worth more than the 12 or 13 years i spent learning Irish.

 

[presidenttttt]

The Intelligent Investor by Benjamin Graham

seems to be top of numerous investor book lists.

 

[Marc]

Watched this, had actually seen it before. Would like to have seen some more arguments from active fund managers defending their approach. This should be shown to everyone before they leave school though, it is worth more than the 12 or 13 years i spent learning Irish.

Active management jumped on something called “active share” a few years ago in an attempt to rebut the rise of passive investing.

essentially this says that the more your portfolio deviates from an index the more opportunity you have to add value.

whilst it is axiomatic that in order to beat an index one has to hold a portfolio which differs from the index, it’s just as likely that the active managers portfolio will underperform by holding losing stocks as they are to outperform from holding winning stocks.

when fund managers results are analysed in aggregate their results form a standard bell curve but skewed to the left of the index by the aggregate amount of their fees and expenses.

In other words, if you pick a manager at random you should expect that they will underperform the market by the amount of their additional fees.

of course you could be lucky and pick a winning manager but how do you reliably identify in advance which managers will outperform in the future.

there is no reliable way of doing this and therefore the conclusion should be that, yes. some managers will beat the market but no more than you would expect by pure random chance and therefore the rational decision that investors should make is to buy the market via an index fund

 

[bunny_]

The best book on investing? The tax code... know the tax code inside out and you will avoid CGT/IHT/CT where possible... and that's worth more than any book can ever teach you...

Rich Dad, Poor Dad - Tax Free Wealth is the best of a bad lot of books (full of bragging with little detail - mostly because the federal tax code is 2,600 pages in the US much less other states & places around the world) --- if you're a beginner and have got time to spare then it's worth a look to begin with, but then you need to look at the companies act and elsewhere to get down to something worthwhile...

If you are strictly talking an investment book then I would say "The Intelligent Investor" would be the best out of non-index investing...

 

[trajan]

of course you could be lucky and pick a winning manager but how do you reliably identify in advance which managers will outperform in the future.

I suppose you could ask to see historical performance of the fund manager's funds . . . .
But it is most distressing indeed to hear it opined so often that one can't do better than the market.
Because this implies that all the average punter can hope to reap in their pension is ~ 8% compound, i.e. a doubling of funds in 10 years.

 

[jpd]

By definition the market return is what you should expect before deducting costs & fees

Obviously some fund managers will do better than the average, but equally some will do worse than average.

If only you could know which ones will do better before investing

An 8% return (before inflation) is not bad - I'd sign up any day

 

[Marc]

I suppose you could ask to see historical performance of the fund manager's funds . . . .
But it is most distressing indeed to hear it opined so often that one can't do better than the market.
Because this implies that all the average punter can hope to reap in their pension is ~ 8% compound, i.e. a doubling of funds in 10 years.

You can expect to do better than the market but not without assuming more risk