Winning the Loser's Game

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.