If only I read this 10 or 15 years ago !

Very similar to Malkiel's book. But I'd prefer A Random Walk Down Wall Street. I also believe it could have been kept shorter. It's a bit too repetitive if you already know the passive investing literature.

Recently, I have been wondering about the deeper insights into investing to see what is beyond trend readings and the rising or falling slopes of stock price graphs. More like, how to understand the market rather than understanding which possible company has potential.

I decided to pick up this book as I knew completely nothing and desired to learn the absolute basics, so I googled something along the lines of, 'books for stock market beginners' and this book arose.

Although it exceeded my expectations, I gave it 4/5 stars instead of 5/5 for exactly that reason. It exceeded my expectations. I thought the book was going to tell me about the bare basics of the market, explain the intricacies of things like what are index funds, mutual funds, ETF's, and the differences between them. But I think they expected the reader to already know that. Even though the author didn't define basic terms, he for sure still had really good points that I never thought of and will stick in my mind.

Maybe its my lack of common knowledge, but I also believe that one book cannot contain all the information you need. I think I have to read more books by different authors about the same topic.

I like the portrail of investing as a "losers game"--not a game that can't be won, but one which is usually decided by the loser faulting rather than the winner exhibiting superior skill or talent (pp. 1-6). Interesting that it hasn't always been this way, though. In the 1960s institutions did only 10 percent of the public trading; now they make 90 percent of all NYSE public trades (pp. 10-11). The advantage the professionals once offered is now gone--not because they "lack skill or diligence", but because the "professional investors are so talented, numerous, and dedicated to their work that as a group they make it very difficult for any one of their number--and virtually impossible for individual investors--to do significantly better than others, particularly in the long run" (p. 189). "Back then", though, "the professionals could and did outperform the amateurs. But that was half a century ago" (p. 11).

The rest of the book was largely uneventful. One bright spot--how much is a 1% fee? It doesn't seem like much, right???

"If a fund manager says the fee is 'only 1 percent,' he or she means 1 percent of assets. But if you get an average rate of return as high as 9 percent, you might say hat the manger's fee is closer to 10 percent. Look still closer, please. You already own all the assets, and you can get 9 percent by investing in low-cost index funds. So the fun manager can only help you by providing incremental returns--after adjusting for risk. Can he or she really increase your returns by 200 basis points? If so, you will be taking all the risk, and the manger's real fee will be 50 percent--50 percent of real value added. if returns are increased by only 100 basis points, the real fee will be 100 percent, and you're still putting up all the money and taking all the risks." (pp. 139-140)

The value in this book is that it presents the arguement that index funds are a better long term investment than actively managed funds, in a clear, concise, easy to read, common sense approach. He explains how over the years, investment managers have turned the "winner's game" into the "loser's game". The major markets have become more efficient as more information is instantly absorbed by teams of highly educated, highly motivated, smart investment professionals. The author argues that over the long term the vast majority of active managers are average because of the high level of competition and anyone doing better than the average is most likely lucky. Picking that "lucky" money manager is exceedingly difficult and the "lucky" money manager often has the majority of their ROI in the early years before other individual investors jump on the bandwagon.

Therefore, the "costs" individuals pay to the invesment professionals in the form of expense rations, is subtracted from their return, making active investment subpar to long term indexing. Index funds offer diversification, low transaction costs from trading, and are better in taxable accounts. Costs matter and the one to one and a half percent difference in index fund vs mutual fund expense rations will add up to a significant amount of money as compound interest works the the individuals advantage over the years.

The statistical evidence and common sense arguements for indexing is what swayed me. Its tough to argue with the numbers. At the end of every chapter an "End Notes" section often has additional reading or explanations, which I found helpful and interesting. The author also highlighted the idea of an individual investmant plan written down so that risks, rewards, time horizons, expectations, etc can be developed. It is on my list of to-dos. I hope anyone who reads my review will read this book because it explains how a disciplined and consistent approach to investing can help people attain their financial goals with enough time.

Full of brief chapters that clearly set out principles for investing. Briefly:

- focus on index funds
- switching your financial manager incurs transactional costs (but if you're using active management, look for the hidden costs)
- at the end of the day, time in market is more important.

There's a lot of stress on market efficiency:

The problem is not that investment research is not done well. The problem is that research is done so very well by so many. Research analysts at major brokerage firms share their information and evaluations almost instantly through global networks with thousands of professional investors who strive to act quickly in anticipation of how others will soon act. As a result, it is very hard to gain and sustain a repetitive useful advantage over all the other investors on stock selection or price discovery.

It's a good introduction for someone who wants to start investing.

While Ellis' book is a classic and it indeed walks you though why trying to stockpick is a loser's game other books such as Ferri's or Bernstein's are more suited if you want actionable advice on how to invest.

There is alot of IPS, investment policy statement recommendations in the book. For some, this may be a tad boring.

Great book on taking the long term, unexciting and rational approach to successful investing through investing in index funds. The author emphasizes the point that although markets, companies and economies change over the years the core principles of investing detailed in this book are timeless in nature.

The language and method of writing was easy to read and understandable as well.

Bought this book as it came up in a search in relation to UK tax (I know...zzzzzzzz), but unfortunately the tax information in here was quite light but the content in relation to investing, creating and managing a diversified portfolio is really good.

As reviewed "A must re-read", I just skimmed through for the first time. Concisely written and the message is crystal clear. A must-have and must-read as highly praised when it comes to investing, along with Intelligent Investor by Ben Grisham, A Random Walk Down Wall Street, etc.

Un buen libro de inversión que te viene a decir que no te pases de listo y quieras ganar más que el mercado, sino que te conformes con los fondos indexados. En mi experiencia como inversor tengo que decir que es un buen consejo que seguí durante varios años que resultaron ser muy buenos.
Otro de los conceptos que explica es el de asignación de activos. Viene a ser que no te tienes que romper la cabeza en cuándo entrar o salir del mercado o en elegir tal o cual fondo, sino que te tienes que romper la cabeza en decidir en qué vas a invertir tus ahorros en función de los riesgos que conllevan, por ejemplo acciones, bonos, deuda pública etc... Y dependiendo de tu horizonte temporal puedes ponderar más o menos los diferentes productos.
Otro detalle que me gustó del libro es el paralelismo que hace con los deportes, cita el golf y el tenis, en el sentido que el jugador profesional juega 'a ganar' y el que mejor juega 'a ganar' es el que gana, mientras que en el deporte aficionado se juega a 'no perder' y el que mejor juega 'a no perder' es el que gana.
Tengo que decir que esto es totalmente cierto en el campo del ajedrez y ojalá que lo hubiera entendido así hace 20 o 30 años.

En resumen un buen libro que da buenos consejos más fáciles de decir que de seguir, como siempre pasa en la vida.

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