by Charles D. Ellis
The original title for my review of this book was: “Deep
thinking, shallow strategy”. After I thought about it for a while, I realized
that the deep thinking part was right, but that calling this book’s strategy
“shallow” was probably not correct. “Boring”? Maybe. “Plain”? Definitely. But
“shallow”? Probably not. See, the only strategy that this book propounds is
buying index funds. That’s it. The plain white toast of the investment world is
this book’s simple strategy for winning the loser’s game, and the author trots
out lots of heavyweight facts and figures in chapter after chapter, with the
bottom line of: you could have done this, and it might have made you rich, or
it might not have, but if you had indexed, you’d be doing okay.
With such a simple concept driving the book, the author
somewhat hedges his bet by spending time and pages convincing the readers that
investing is a loser’s game and always will be. You may believe that, or you
may not, but you’ll find the author’s view compelling if you read the entire
book. More active investors lose money than make money. People get cheated.
People make bad, poorly researched, and outright rash investment decisions. The
only way to win that game is not to play it that way, and index funds are ideal for
playing it the right way. Will your investments go up? Maybe, but you’ll never do much worse (or
much better) than the rest of the market. Maybe you don’t want to be Joe
Average, but I for one don’t want to be Joe Below-average.
I’m a longtime index investor and I’ve done okay. For me,
this book was a lot of “preaching to the choir”, but I still enjoyed it. The
book is well written, well organized, well thought out, and I’ll say it again,
compelling. Some readers may balk at a whole book about an idea as simple as
“buy index funds”, but maybe that’s what it takes to convince you. I recommend
this book to anyone who invests in their future. It can’t hurt you as an
investor, and it might help make you a better (if slightly stodgy) one.
