With the Stock Market plunging over a thousand points, interest rates going up, and a Recession on the horizon, this is a good time to think about money. William Bernstein, former neurologist and savvy investor, writes: “The name of the game is not to get rich, but rather to avoid dying poor. In fact, if you follow the advice in this book, I can guarantee you that you will not get fabulously wealthy. Rather, I’ve striven to simultaneously maximize your chances of a comfortable retirement and minimize your chances of living out your final years in poverty. I know of no more laudable or worthy investment goal.” (p.193)
Since many of us may have decades of Life ahead of us, making smart moves with our money makes all the difference between a comfy Retirement and Disaster. Bernstein shows how money works and how to hedge against unexpected calamities. I really enjoyed Bernstein’s writing style. Many finance books can be as dry as sand, but The Investor’s Manifesto is lively and clever. Bernstein’s examples are fun reading. If you want to tweak your investment strategy and budget for the long haul, The Investor’s Manifesto is the place to start. Are you ready for the Tough Times ahead? GRADE: A
TABLE OF CONTENTS:
Foreword ix
Preface xiii
Chapter 1 A Brief History of Financial Time 1
In the Beginning 2
Near-Death in Venice 8
The Incredible Shrinking Risk Premium 11
Summary 12
Chapter 2 The Nature of the Beast 13
Of Ravens and Returns 13
History versus Math 18
Mr. Gordon’s Curious Equation 25
Math Detail: The Discounted Dividend Model 29
Home Sweet Home? 35
Adventures in Equity 38
Math Detail: Risk 43
Throwing Dice with God 47
Gene Fama Looks for Angles and Finds None 49
Sandbagged by a Superstar 52
Jack Bogle Outfoxes the Suits 56
It Is Better to Be Lucky Than Smart 63
Bond Funds: A Flatter Playing Field 64
Summary 65
Chapter 3 The Nature of the Portfolio 69
Four Essential Preliminaries 71
The Asset Allocation Two-Step 74
Math Detail: Mean-Variance Analysis 83
With Luck, Zigs, and Zags 84
Chasing Rainbows 88
Summary 93
Chapter 4 The Enemy in the Mirror 95
Inner Demons 97
Behaving Badly 100
Bargain-Basement Psychotherapy 116
Summary 125
Chapter 5 Muggers and Worse 127
The World’s Largest Bad Neighborhood 128
The Fund Funhouse 135
Summary 142
Chapter 6 Building Your Portfolio 143
Financial Planning for a Lifetime: The Basics 143
Saving for Retirement: Nuts and Bolts 145
How to Save: Dollar Cost Averaging and Value Averaging 152
Four Investors, Four Plans 154
The Rebalancing Question 166
Math Detail: Rebalancing, Momentum, and Mean Reversion 169
Teach Your Children Well 172
Summary 174
Chapter 7 The Name of the Game 179
Investment Theory and History: The Short Course 180
The Portfolio Theory of Everything 181
We Have Met the Enemy, and He Is Us 181
Heads I Win, Tails You Lose 182
Fire When Ready 182
The Books You Need . . . Aged Like Fine Wine 185
Notes 188
Acknowledgments 193
About the Author 195
Index 196
More and more—especially with the current administration and current financial environment—it’s almost as if investing for those of us of the 99-percent has become nothing but a huge con game with the hedge fund managers and venture capitalists rubbing their hands with glee as we turn over a portion of our hard-earned funds to an “investment portfolio.” Otoh, a regular savings account pays such craptastic interest, you almost have to put some money somewhere to have any hope of a return. Right now I’d advise people to invest in a really good medical insurance policy if they don’t want to die penniless—getting sick in America today is a surefire way to blow through all of your savings!
Deb, you are so right about the increasing costs of Health Care! So many people have lost their health insurance as Trump and the Republicans try to kill ObamaCare while replacing it…with nothing!
I’ve read a lot about Money and I always meant to try some, but somehow just never got around to it.
Dan, a little financial knowledge goes a long way to protecting your Nest Egg.
Well, some of us have been heeding George’s warnings. Luckily for us, we’re old and in a good enough position not to have to worry about most of this crap. But otherwise, Deb is right.
Jeff, you and Jackie made some smart financial decisions that put you in a Good Place. Many of the teachers who retired when Diane did (15 years ago) are now starting to feel pinched on their fixed incomes.
I know we are putting far too much faith in Merrill Lynch but we have so much else to do daily.
Patti, just make sure Merrill Lynch doesn’t “churn” your investments. Some companies generate profits by doing a lot of needless buying and selling in order to charge transition fees.
I intend to live as long as I have money and no longer!
Bob, sadly, I think a lot of Baby Boomers will outlive their money.