The Successful Investor Today: 14 Simple Truths You Must Know When You Invest

by Larry E. Swedroe

Book Overview

Swedroe offers 14 essential rules for surviving the stock market through "patient" investing--the best way to invest for long-term growth, low taxes, and ultimate wealth.

• Format: Hardcover
• Language: English
• ISBN: 0312309791
• ISBN13: 9780312309794
• Release Date: September 2003
• Publisher: Truman Talley Books
• Length: 336 Pages
• Weight: 1.30 lbs.
• Dimensions: 1.1" x 6.3" x 9.2"

Customer Reviews

Another Swedroe Classic

I was very impressed with this book and give it an A. Swedroe's investment advice is excellent and the writing style is very easy and fun to read. I read all 4 of Larry Swedroe's stock investing books in the last few weeks, and although they are excellent books and I agree with most of his recommendations, he tends to re-use the same information in each book. To keep this book straight in my mind, compared with the other 3 books, this review is structured along his Outline of the book. Truth 1: Active Investing Is a Loser's Game: It Must Be So Larry lays out the case why active investing always loses to passive investing. Truth 2: The Past Performance of an Actively Managed Fund Is a Very Poor Predictor of Its Future Performance He does a good job of citing many studies demonstrating that past performance is not a good predictor of future performance. Truth 3: If Skilled Professionals Don't Succeed, It Is Unlikely That Individual Investors Will Truth 4: The Interests of Wall Street and the Financial Media Are Not Aligned with Those of Investors He points out why passive investing is not promoted by Wall Street and the financial media. Truth 5: Risk and Reward Are Related: Great Companies Provide Low Expected Returns Truth 6: The Price You Pay Matters Truth 7: The Most Likely Way to Achieve Above Average Returns Is to Stop Trying to Beat the Market Truth 8: Buying Individual Stocks and Sector Funds Is Speculating, Not Investing Truth 9: Reversion to the Mean of Earnings Growth Rates Is One of the Most Powerful Forces in the Universe Truth 10: The Forecasts of Market Strategists and Analysts Have No Value, Except as Entertainment Truth 11: Taxes Are Often the Largest Expense Investors Incur Truth 12: Knowledge of Financial History Is Critical to Successful Investing Truth 13: Adding International Assets to a Portfolio Reduces Risk Although I agree with the author's claim that foreign stocks help reduce portfolio risk, I do have trouble believing or following his recommendation of 20 to 40% asset allocation in foreign stocks. I feel more comfortable with a 10 to 20% allocation to foreign stocks. Truth 14: There Is No One Right Portfolio, but There Is One That Is Right for You He points out that investing is not an exact science, and the optimum portfolio is difficult to achieve. Each person must get comfortable with the risks and complexity of their allocations. He also gives a convincing argument for skipping mid-cap stocks in favor of only small and large cap stocks. Conclusion A: The Enron. Debacle: Lessons to Be Learned It was interesting to see how some of the supposedly smartest brains in the investing world loaded up on Enron stock, including the Janus funds. Appendix B: More Investment Truths You. Must Know to Be a Successful Investor Appendix C: Investment Vehicle Recommendations Great list of investment choices to implement you asset allocation plan. D: The Home Financing Decision:To Bor

Another Swedroe Classic

I was very impressed with this book and give it an A. Swedroe's investment advice is excellent and the writing style is very easy and fun to read. I read all 4 of Larry Swedroe's stock investing books in the last few weeks, and although they are excellent books and I agree with most of his recommendations, he tends to re-use the same information in each book. To keep this book straight in my mind, compared with the other 3 books, this review is structured along his Outline of the book. Truth 1: Active Investing Is a Loser's Game: It Must Be So Larry lays out the case why active investing always loses to passive investing. Truth 2: The Past Performance of an Actively Managed Fund Is a Very Poor Predictor of Its Future Performance He does a good job of citing many studies demonstrating that past performance is not a good predictor of future performance. Truth 3: If Skilled Professionals Don't Succeed, It Is Unlikely That Individual Investors Will Truth 4: The Interests of Wall Street and the Financial Media Are Not Aligned with Those of Investors He points out why passive investing is not promoted by Wall Street and the financial media. Truth 5: Risk and Reward Are Related: Great Companies Provide Low Expected Returns Truth 6: The Price You Pay Matters Truth 7: The Most Likely Way to Achieve Above Average Returns Is to Stop Trying to Beat the Market Truth 8: Buying Individual Stocks and Sector Funds Is Speculating, Not Investing Truth 9: Reversion to the Mean of Earnings Growth Rates Is One of the Most Powerful Forces in the Universe Truth 10: The Forecasts of Market Strategists and Analysts Have No Value, Except as Entertainment Truth 11: Taxes Are Often the Largest Expense Investors Incur Truth 12: Knowledge of Financial History Is Critical to Successful Investing Truth 13: Adding International Assets to a Portfolio Reduces Risk Although I agree with the author's claim that foreign stocks help reduce portfolio risk, I do have trouble believing or following his recommendation of 20 to 40% asset allocation in foreign stocks. I feel more comfortable with a 10 to 20% allocation to foreign stocks. Truth 14: There Is No One Right Portfolio, but There Is One That Is Right for You He points out that investing is not an exact science, and the optimum portfolio is difficult to achieve. Each person must get comfortable with the risks and complexity of their allocations. He also gives a convincing argument for skipping mid-cap stocks in favor of only small and large cap stocks. Conclusion A: The Enron. Debacle: Lessons to Be Learned It was interesting to see how some of the supposedly smartest brains in the investing world loaded up on Enron stock, including the Janus funds. Appendix B: More Investment Truths You. Must Know to Be a Successful Investor Appendix C: Investment Vehicle Recommendations Great list of investment choices to implement you asset allocation plan. D: The Home Financing Decision:To Bor

The best investment approach may also be the simplest.

The investing approach espoused by Swedroe is actually among the simplest and least time consuming approaches available - that of passive index investing with occasional portfolio rebalancing. Yet he doesn't recommend it because it is simple, but because the research supports it as the best approach to yield the highest actual returns over time. The caveat "over time" is the key, which is what most people are interested in - not short term run-ups followed by disappointing losses. And "actual returns" since many people fail to consider trading costs, taxes, and other considerations that reduce their returns. One interesting study alluded to in this book and expounded on in his other books relates to the Value Line survey, which demonstrates market-beating returns and is highly rated in the Hulbert newsletter. Yet after considering trading and other costs, the returns underperform the market. Reality often stands in stark contrast to what we want to believe.

No More Gambling

One day in Las Vegas, I realized the best way to make money with gambling is to own the casinos. I never gambled again. Even better, I later realized the best way to make money with stocks is to be a broker, write an investment newsletter or manage a mutual fund. After all, if these guys know so much about investments, why are they hawking their expertise rather than just making a personal killing in the market?After reading "The Successful Investor Today," I realized I was right! The odds are against you as a stock picker or mutual fund investor. Every time you win, you lose. You whet lots of little beaks every day. The behind-the-scene guys take their cut whether you make money or lose money.Fortunately, your odds of winning tilt to your favor when you invest in the planet's commercial future. Larry Swedroe explains how you can do this without whetting the experts' beaks.I've read several investment books and this was by far the best. It makes the most sense and explains why investing is so hard.I wish the book had been a little more specific on how to work out your own allocations and where to buy some of the international investments. I was going to give the book four stars, but the author quickly answered my email questions and I'm in business!

Invest in this book

I am the author of The Unbeatable Market: Taking the Indexing Path to Financial Peace of Mind. My book reaches essentially similar conclusions as does Larry Swedroe's The Successful Investor Today. Through his previous books, articles, and lectures Swedroe has been a tireless and effective advocate for what mountains of evidence proves is a superior way to invest-- passively managed index funds. Wall Street rejects passive management because it's antithetical to its self-interest. Swedroe makes this clear in Truth 4: The Interests of Wall Street and the Financial Media Are Not Aligned With Those of Investors. The hope of beating the market is very alluring for investors. That's why the "14 Simple Truths" of Swedroe's book are so vital for investors to know. Knowledge is the best defense against Wall Street's massive con game. His book is well written, well documented, and highly readable. If you're an investor, do yourself a favor and buy this book.