I couldn't decide between 2 or 3 stars. While I agree with main premise of the book (low cost index funds), it was very repetitive. The style is pleasant and easy to read but saying how you can be a winner, your unfair competitive advantage, the investor's dream team, etc. make it read like the sorts of investment books I avoid. A Random Walk Down Wall Street by Malkiel and other books by Swensen and Tobias present more compelling cases for the same philosophy.

This book was about how to make profit in different ways. The author spoke on finding ways to beat the market. He said how professionals do better off and some aspects than individuals. Next, people who put themselves out their and take risks go further as investors people who don`t they will have a more challenging time in getting that profit. So, you always have to find ways as an investor to make the most profit you can to have good living for yourself.
This book was good because it teaches you an important about making profit. This gives details on how to get around the market. Your not depending on the market you are doing your on thing and being independent as possible. This book will help people who are trying to be investors in life.
I would recommend this book. Lastly, this book would be recommended to the people who are interesting in business and entrepreneurship.

Básicamente este libro lo que hace es recomendar a los inversores en productos financieros a seguir una postura de inversión pasiva invirtiendo en ETFs (Exchange Traded Funds) o Fondos Indexados. Estos fondos no hacen más que replicar cualquier índice de la elección del inversor (Eurostoxx, S&P, Nikkei, Renta Fija, materias primas...). El autor anima al inversor a crear una cartera bien estructurada y diversificada de ETFs de manera que se cubra la totalidad de la economía mundial y dejarla fluctuar en base a una clara política de inversión a Largo Plazo. El autor defiende que (a la larga) esta estrategia es MUCHO más rentable que una estrategia de inversión Activa. En una estrategia de inversión activa, los consultores financieros intentan batir al mercado comprando y vendiendo títulos activamente, sin embargo, raramente lo consiguen. El autor justifica este razonamiento en que (1) el mercado es tan complejo y hay tantos profesionales con tantos recursos y tan bien informados, que es MUY difícil (casi imposible) estar en el cuartil más alto del mercado de forma permanente. Además, las comisiones aplicadas por este tipo de fondos son mucho más altas que las de las ETFs. Si además sumamos la fiscalidad negativa de los fondos y el dinero que nos cobran los asesores activos.... el resultado es que el modelo inversión PASIVA es MUCHO más rentable A LARGO PLAZO (y mucho más tranquilo) que la gestión ACTIVA.
Para conseguir este objetivo hay que aguantar los vaivenes del mercado que tendrá épocas de grandes crisis, pero que en el LARGO PLAZO siempre acaban mitigándose con posteriores subidas. Es MUY importante tener paciencia y sangre fría para aguantar las posiciones en las épocas de crisis.

Winning the Losers Game by Charles D. Ellis is a good book to understand the intricacies in the field of investment. Reading Winning the Loser’s Game significantly improved my understanding of the field of investment. In this article, I am summarizing the major learnings form this book.

In a winner’s game, the outcome is determined by the correct actions of the winner. In a loser’s game, the outcome is determined by the mistakes made by the loser. It’s like professional tennis is a winner’s game. The outcome is determined by the actions of the winner. Amateur tennis is a loser’s game. The outcome is determined by the actions of the losers, who defeat himself.

In order to improve the probability of being a successful investor, it’s important to understand the economics of investment profession. The Fund Manager may be making money for themselves, rather than making money for you. The brokerage firms may be charging outrageous commissions, but it may not be felt as the charges appear small/miniscule in percentage terms but if it is carefully analyzed over a period of time it becomes significant. It’s important to minimize the mistakes/big mistakes as it can result into permanent loss of capital. Without understanding the intricacies of the investment field, it will be difficult to minimize mistakes.

And the best way to minimize the mistakes or play Winners Game rather than Winning the Losers Game is to do passive investment i.e. index investing. It results into Win-Win Game for everybody.

If the taxes, commissions and fees are taken in account, most investment managers are not beating the market, the market is beating them. It’s very difficult to consistently beat the market. This is the scenario in USA, in India things may be currently different. But with the flow of very large funds, it might be the case in India in distant future of 15-20 years.

But still if one wants to beat the market through active investment through mutual fund, it’s important to understand that the size may become enemy of performance in the field of investment. Large funds require more and awesome ideas of investment. Large funds compete to win by investing in large companies that are heavily researched and efficiently priced. Smaller funds have a distinct advantage in the performance, choosing among less heavily researched and less efficiently priced securities. Consistently outperforming the market over a longer and longer period of time in a highly efficient market like USA is extremely difficult even for a professionally acclaimed Fund Manager.

But still if one wants to beat the market by building our own portfolio by directly selecting stocks, as the market of India may not be that highly efficiently priced as compared to USA. There may be lots of opportunities to invest. But to spot the opportunity and have confidence & conviction to invest significantly it’s important to understand the quality/competitive advantage of the business, the capability of the management. The lack of understanding tends to make us too cautious in bear market and too confident in bull markets. Knowledge and understanding of the business is crucial. The winner and losers will be decided by the estimates of future dividends and earnings. It will vary from investor to investor depending upon the understanding & judgement. It will fluctuate due to changes in expectations for long term economic & industry growth, cyclical fluctuations in demand, prices, taxes, discoveries & inventions, competition at home & abroad, and so forth. The longer the future period over which estimates of earnings and dividends are taking into account, the greater the uncertainty that needs to be taken into account. As the holding period over which an investor owns an investment lengthens, the importance of the discount factor decreases if it goes as estimated, and the importance of corporate earnings & paid dividends increases.

The mistakes & risks that need to be minimized are various;

Investing in a stock at too high price

Interest Rate risk if it goes more than anticipated

Business Risk if the company blunders i.e. make wrong acquisitions & mergers, hampering the earnings & profitability of the business

Failure risk of the business, a business may fail completely & file bankruptcy

Warren Buffet rightly said that the field of investment is simple, but it’s not easy. Taking into account all the estimates, minimizing the mistakes & risks is definitely not easy. It requires lots of judgment to improve the probability of being successful in the field of investment.

This author talks a lot about how individual investors can avoid traps and create balanced portfolios.

Pretty solid book about investing. Not as much analysis as I would have liked to see but pretty solid. Excellent point made about the (unreasonably) high fees of actively managed investment funds. At 1% of AUM and a typical 7% annual return, the fees are actually consuming 14% of the total gains at zero risk to the fund manager. Also interesting points made on how timing the market and stock picking are essentially hopeless endeavors. Author advocates strongly for passive broad Index funds to surf the great wave of historical outperformance, and to never waver. In my views, index funds do definitely have a place at the core of an investment portfolio, but should by no means be the only tool in the box.

Oh, and I liked the distinction between the winner's game and the loser's game. Let me quote here at length:

"Dr. Simon Ramo, a scientist and one of the founders of TRW Inc., identified the crucial difference between a winner’s game and a loser’s game in an excellent book on game strategy, Extraordinary Tennis for the Ordinary Tennis Player. Over many years, Ramo observed that tennis is not one game but two: one played by professionals and a very few gifted amateurs, the other played by all the rest of us.

Although players in both games use the same equipment, dress, rules, and scoring, and both conform to the same etiquette and customs, they play two very different games. After extensive statistical analysis, Ramo summed it up this way: Professionals win points; amateurs lose points.

In expert tennis, the ultimate outcome is determined by the actions of the winner. Professional tennis players hit the ball hard with laserlike precision through long and often exciting rallies until one player is able to drive the ball just out of reach or force the other player to make an error. These splendid players seldom make mistakes.

Amateur tennis, Ramo found, is almost entirely different. Amateurs seldom beat their opponents. Instead, they beat themselves. The actual outcome is determined by the loser. Here’s how: brilliant shots, long and exciting rallies, and seemingly miraculous recoveries are few and far between. The ball is all too often hit into the net or out of bounds, and double faults at service are not uncommon. Rather than try to add power to our serve or hit closer to the line to win, we should concentrate on consistently getting the ball back so the other player has every opportunity to make mistakes. The victor in this game of tennis gets a higher score because the opponent is losing even more points."

A good message - for ordinary investors indexing is the only way to go, and portfolio allocation is so important (stocks are often under-weighted, even for older individuals). But the whole thing could have fit into a longer magazine article, and has been spun out to boring levels in the book.

Don't try to beat the market. Stick to indexing.

Bam--that's it. The whole book, more or less. Of course, I already invested this way before reading the book, so I'm not sure what I learned. Perhaps that people my age don't really need to own any bonds. In any case, invest for the long term, even beyond your death (if you want something for your children). And long-term investing means not getting caught up in the ups and downs of the hours or the days or even the months or years. And that means indexing.

Good, but long way of saying: Pick low-cost index funds over other mutual funds to guarantee you're in the top 12.5% of all mutual funds.

Rational approach towards obtaining wealth. Great analysis on investing, debunking the modern myth to "beat the market."

Overall good read. Some parts are contradictory, using past data to justify how past data is unreliable to predict the future. Otherwise, it includes good tips towards making a sound financial plan to obtain wealth using time and compounding.

The best, most simple book I’ve read on investing. Very helpful principles for individuals and for professional managers. (I’m both).

Basically the same message as A Random Walk Down Wall Street except for the writing style is more boring. I recommend Malkiel's book, it's more entertaining and will teach you the same lesson