Exposing the lies

Finally, a decent investment book. Half way through and while it’s clear he could have done a 68 page pamphlet as opposed to this 300 page book, what the heck, that’s the publishing business. Swedroe’s premise is a play on, “Wall Street services investors like Bonnie and Clyde serviced banks.” That the only thing actively managed funds are good at is taking your money. That no one has figured out how to guess the random movements of the market yet, and until they do, index funds win hands down.

The other worthwhile tip half way through is the importance of sector/asset diversification. That volatility eats away at returns. Smooth and steady will actually give you a better return even if it shows up a point or two lower on a chart. Raising the Sharpe Ratio smooths out the volatility and increases returns. Plus, the book just reads so nice.

And I almost forgot the coupe de Gracie! Swedroe exposes “chartists/technical analysis” for the poppycock it is! 

Using Vanguard’s funds as an example, a diversified 60/40 portfolio might look like this:

  • VOO S&P 500 index
  • VUG Blue Chip index
  • VBK Small cap growth index
  • VSS International small cap growth index
  • VCSH Short term corporate bond index
  • VGLT Long term government bond index

The four stock funds being 15% each of the portfolio, the two bond funds being 20% each. Speaking of bad investment books, I cross-referenced several “Top 10 List” of the best investment classics, and came up with a list of good ones:

⦁ The Intelligent Investor – Benjamin Graham
⦁ Security Analysis – Benjamin Graham
⦁ Dividend Growth Investing Machine – Andrew PC (?)
⦁ Common Stocks and Uncommon Profits – Phil Fisher
⦁ A Random Walk Down Wall Street – Burton Malkiel
⦁ Market Wizards – Jack Schwager
⦁ The Simple Path to Wealth – JL Collins
⦁ The Four Pillars of Investing – William Bernstein
⦁ The Single Best Investment: Creating Wealth With Dividend Growth – Lowell Miller

Jim Roach

About Iowa Life

Experiencing life in Iowa.
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