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The 12% Solution
Build long-term wealth in the stock market, while reducing risk and volatility, with a simple ETF strategy that delivers a 12% average annual return.
Former day trader David Alan Carter leads readers through a simple ETF trading strategy that automates decision making, reduces risk and volatility in your portfolio, and produces a 12% average annual return.
A strategy that’s not pie-in-the-sky and not just a bunch of theory, but rather a systematic plan that is backed up with real numbers showing it clearly beating the S&P 500 over time.
A trading strategy that’s understandable, repeatable, that works and works simply.
Anyone can do this. In simple-to-understand language, you’ll discover---- The six ETFs that power the strategy, and why.
-- The simple technique for identifying which of those ETFs to buy, and which to sell. And most importantly, when.
-- How $5,000 can end up $1,000,000 in your retirement portfolio.
-- How to protect your portfolio during market downturns with a simple cash trigger.
-- In short, how to earn an average of 12% annually in the stock market with minimal trading, less volatility, and less risk.
Beat "The Street" in just 20 minutes.
If you have 20 minutes a month and a computer, you can turn any investment amount into a steadily growing compounding machine that will make you the envy of Mad Money’s Jim Cramer and 99% of all mutual fund managers.
Make just 2-4 trades one day a month. The strategy tells you what ETFs to buy and what to sell. That’s it.
Then turn off the computer and go live your life.
Kindle Edition
First published January 1, 2017
853 people are currently reading
348 people want to read
About the author
David Alan Carter
2 books5 followersWith a management background and 20 years of investing experience ranging from mutual funds to options, futures, and high-frequency day trading, David Alan Carter has distilled critical lessons learned into simple, verifiable and repeatable trading strategies that can benefit anyone interested in making money -- and keeping money -- in the stock market.
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Trader
Author, Publisher, former Newspaper Columnist
Bachelor's in Business Management, Oklahoma State University
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Trader
Author, Publisher, former Newspaper Columnist
Bachelor's in Business Management, Oklahoma State University
Ratings & Reviews
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Displaying 1 - 30 of 49 reviews
June 18, 2018
It saves you bucks and time
This book provides a trading strategy easy to implement, with good but reasonable return, and lower risk. Most importantly, the author wrote it for non-professional investors in general, and that saves you a huge amount of time in trials and errors.
This book provides a trading strategy easy to implement, with good but reasonable return, and lower risk. Most importantly, the author wrote it for non-professional investors in general, and that saves you a huge amount of time in trials and errors.
May 4, 2018
Excellent book that explains investing concepts in everyday language including the concepts of hedging, diversification and market cycles. The author makes a great case that not losing money is a fundamental part of making money - this won't work so well in a long bull market but makes up for that bit of lag by not participating in big drops. He also recommends the "go to cash" option for special situations. An easy read that is well worth the the time.
April 12, 2018
New twist on traditional 60/40 portfolio
The author presents his strategy for addressing sequence of returns risk, and admits his driving force was the so-called Great Recession where he apparently lost significantly.
Two observations:
1. While history repeats itself, the past performance is no guarantee of future returns. And certainly 10 years is not even a representative sample of history.
2. It's not what you make, it's what you keep that counts. Author emphasizes several times throughout that he has not taken either brokerage fees or taxes into account.
Nevertheless, the book is interesting.
The author presents his strategy for addressing sequence of returns risk, and admits his driving force was the so-called Great Recession where he apparently lost significantly.
Two observations:
1. While history repeats itself, the past performance is no guarantee of future returns. And certainly 10 years is not even a representative sample of history.
2. It's not what you make, it's what you keep that counts. Author emphasizes several times throughout that he has not taken either brokerage fees or taxes into account.
Nevertheless, the book is interesting.
December 15, 2019
Thinking Outside the Box
This is a short, yet powerful book. The author presents a persuasive argument for “overall simplification” in ones approach to long-term investments. His theory is clearly presented, and the text organized in a logical & coherent manner. I agree with the author that this approach is not infallible. Nevertheless, for the “average” investor it will provide superior results to the frenetic churning seen in most accounts. Extremely well done!!! 5 Stars
This is a short, yet powerful book. The author presents a persuasive argument for “overall simplification” in ones approach to long-term investments. His theory is clearly presented, and the text organized in a logical & coherent manner. I agree with the author that this approach is not infallible. Nevertheless, for the “average” investor it will provide superior results to the frenetic churning seen in most accounts. Extremely well done!!! 5 Stars
February 14, 2020
Great book, the other also has a newsletter in the back of the book, also he runs a website with 4 other strategies I found more appealing and risky with more potential gain. Very cheap too at $15 for all 4, well researched and updated daily. Great book, great website, I even reached out to the author via email and he was prompt to respond back. Get this book and the other strategies for more immediate growth look into options trading :)
September 9, 2019
This book / method seems okay, but I would not trade it without back testing for more than 10 years, that is way to short of a time period. Also, the ETFs selected are pretty narrow- should probably look to gold, real estate etc for real diversification. Otherwise, I like the idea, just not sure it’s achievable with this system and limited back testing.
May 23, 2020
Good read - finally got some consistent strategy to follow for in
Good read - finally got some consistent strategy to follow for investment. I strongly recommend it. I wish I should’ve known before.
Good read - finally got some consistent strategy to follow for investment. I strongly recommend it. I wish I should’ve known before.
September 3, 2020
Well, this book does it as the title implies. Makes you 12% annual return in the stock market tested from 2008-2018. If you want to best understand how, buy the book. That extra 3% a year will compound to over 800k difference in 40 years. So buy the book, and learn how. You’re welcome.
November 28, 2019
As the author makes clear from the very beginning, this strategy isn't for everyone. Big-name investors like Warren Buffet and Charlie Munger, won't be using this strategy. And neither will institutional investors, hedge fund managers, or traders. But if you're looking for a very simple and easy to implement investing strategy that could reasonably yield 12% annual returns without needless complication, then the 12% Solution is certainly worth a look.
For one, the book is exceptionally well-written. And though the author provides plenty of charts, diagrams, and credible backtest results, there is absolutely no fluff. More importantly, it's a very straightforward and doable plan. In a nutshell, you invest 60% of your account (or strategy allocation) into a single stock ETF and 40% into a single bond ETF. The author tells you exactly which ETFs to choose from and how to determine which one to use each month based on a very simple 3-month "lookback" chart. He also shows you when to go to cash.
Could the plan result in losses? Yes. Could the plan result in an increased capital gains tax from selling winning positions? Yes. Welcome to the stock market. But if you're frustrated with the results you're currently getting, or just want a simple way get 12% returns on your investments, you owe it to yourself to at least give this strategy some serious consideration.
For one, the book is exceptionally well-written. And though the author provides plenty of charts, diagrams, and credible backtest results, there is absolutely no fluff. More importantly, it's a very straightforward and doable plan. In a nutshell, you invest 60% of your account (or strategy allocation) into a single stock ETF and 40% into a single bond ETF. The author tells you exactly which ETFs to choose from and how to determine which one to use each month based on a very simple 3-month "lookback" chart. He also shows you when to go to cash.
Could the plan result in losses? Yes. Could the plan result in an increased capital gains tax from selling winning positions? Yes. Welcome to the stock market. But if you're frustrated with the results you're currently getting, or just want a simple way get 12% returns on your investments, you owe it to yourself to at least give this strategy some serious consideration.
June 20, 2021
Limited back test period recommended rebalancing strategy
The good:
Clear language and good supporting charts
Not super geeky
General ideas for limited (monthly) active asset allocation rebalancing are conceptually sound and found in many investing textbooks. The differentiator are the asset class indexed ETFs the author is recommending along with the rebalancing trigger rules.
Recommended rebalancing rules are simple to determine and execute for readers.
The bad:
The implied investment return “sold” on the book cover could be created from any backtested asset allocation strategy anyone with data wants to create. You could create one with 18% or higher returns probably. The total time periods backtested for some of the ETFs was not all that long.
The max one month, three month and year drawdowns being disclosed in the backtested results for each year tested would have been useful.
This book was written to market other services and though that doesn’t mean the advice is bad, just know you are being sold.
The rules to go completely to cash for equity portion of your portfolio is pretty radical.
The author’s decision to only rebalance monthly based on return performance starting at he end of he prior three months is arbitrary and only selected to enable easy implementation, not because it is the optimal rebalancing frequency.
The good:
Clear language and good supporting charts
Not super geeky
General ideas for limited (monthly) active asset allocation rebalancing are conceptually sound and found in many investing textbooks. The differentiator are the asset class indexed ETFs the author is recommending along with the rebalancing trigger rules.
Recommended rebalancing rules are simple to determine and execute for readers.
The bad:
The implied investment return “sold” on the book cover could be created from any backtested asset allocation strategy anyone with data wants to create. You could create one with 18% or higher returns probably. The total time periods backtested for some of the ETFs was not all that long.
The max one month, three month and year drawdowns being disclosed in the backtested results for each year tested would have been useful.
This book was written to market other services and though that doesn’t mean the advice is bad, just know you are being sold.
The rules to go completely to cash for equity portion of your portfolio is pretty radical.
The author’s decision to only rebalance monthly based on return performance starting at he end of he prior three months is arbitrary and only selected to enable easy implementation, not because it is the optimal rebalancing frequency.
April 24, 2021
A short and clear read for the layman like me, offering a simple investing strategy that is easy to implement. Some principles are learned and overall strategies can be adopted from the book.
While the idea of hedging the risk of equity investment with treasury bond ETF seems grounded in economic principle, I cannot say the same for the rest of the strategy. Instead, many strategy components appear to be developed from a 10-year backtesting trial and error. As a result, I am not convinced the equity & bond ETF recommendations are robust over time. Another part that is lacking is not taking short-term capital gains tax into the calculation. While monthly rebalancing appears well-justified, the strategy could also be expensive for someone in a higher income tax bracket. That expensiveness could very well make monthly rebalancing not worth the effort.
While the idea of hedging the risk of equity investment with treasury bond ETF seems grounded in economic principle, I cannot say the same for the rest of the strategy. Instead, many strategy components appear to be developed from a 10-year backtesting trial and error. As a result, I am not convinced the equity & bond ETF recommendations are robust over time. Another part that is lacking is not taking short-term capital gains tax into the calculation. While monthly rebalancing appears well-justified, the strategy could also be expensive for someone in a higher income tax bracket. That expensiveness could very well make monthly rebalancing not worth the effort.
September 19, 2022
Second edition (with a much better looking cover than the one shown here). A nice, quick read. Well-written breakdown of an interesting monthly momentum ETF rotation strategy that still holds up well since the book was published. Backtested well for me on good data and a legit backtesting software, RealTest. I may look to allocate a small chunk of money into this strategy to cut some of the insane volatility of another Nasdaq 100 rotational system I'm trading. Still need to test cash only instead of SHY on the risk-on side, or perhaps replacing SHY with BIL. Would love to find a good alt for JNK on the risk-off side. Fun stuff!
July 1, 2020
Replacing “buy and hold”
I believe that this is my first book review. As I am searching for a replacement for buy and hold and selecting individual stocks I found this book.
I like the strategy and would want a model to account for trading costs and manager fees.
This appears to market to the consumer who wants a somewhat reliable investment strategy in a DIY fashion.
Easy to follow and understand with definitions for industry lingo.
I believe that this is my first book review. As I am searching for a replacement for buy and hold and selecting individual stocks I found this book.
I like the strategy and would want a model to account for trading costs and manager fees.
This appears to market to the consumer who wants a somewhat reliable investment strategy in a DIY fashion.
Easy to follow and understand with definitions for industry lingo.
June 4, 2021
This is market timing
The author does a good job of explaining many of the more commonly used financial terms one may hear when investing. And in fact, many people are turned off from investing by those terms (i.e. what’s a CAGR?). But beyond that, this “solution” is simply market timing. Market timing is less about investing and more about gambling. Do you feel lucky? Well, do you?
The author does a good job of explaining many of the more commonly used financial terms one may hear when investing. And in fact, many people are turned off from investing by those terms (i.e. what’s a CAGR?). But beyond that, this “solution” is simply market timing. Market timing is less about investing and more about gambling. Do you feel lucky? Well, do you?
June 30, 2021
Just finished it. The investing strategy laid out makes sense and doesn't seem to over promise or be too good to be true. There's lots of testing in the book, so I'm excited to try it out. Basically, it's 60% stocks, 40% bonds. Invest in 1 of 4 index funds ETFs based on performance and 1 of 2 bonds index funds. Rotate each month. Cash trigger if trending towards 0% return. I will update my review based on my results.
This entire review has been hidden because of spoilers.
July 27, 2018
Seems like a good strategy
After several years of following investment news letters and online experts, I am starting to think an investment plan like this may make good sense. Easy, cheap, and involving indexing is appealing to me. I am going to give it a try with a portion of my portfolio and see how it goes.
After several years of following investment news letters and online experts, I am starting to think an investment plan like this may make good sense. Easy, cheap, and involving indexing is appealing to me. I am going to give it a try with a portion of my portfolio and see how it goes.
October 18, 2018
Nice mathematics explained in simple and detailed manner.
I was looking for type of model explained in book.Author has in very simple and detailed manner explainec how he wishes to generate alpha with high sharpe ratios. Might not be liked by very high risk investors.Strategy explained needs one day in month for implementation.
I was looking for type of model explained in book.Author has in very simple and detailed manner explainec how he wishes to generate alpha with high sharpe ratios. Might not be liked by very high risk investors.Strategy explained needs one day in month for implementation.
March 27, 2021
Quick read, helps you understand not just how to take advantage of bull markets but also how to protect yourself from bear markets. Probably works best in tax-sheltered accounts as he does not factor in taxes on gains (which the Biden administration wants to double). I think you can use his formula as a good jumping-off point to develop your own strategy.
January 9, 2022
A classic look back solution
Data mine to find something that works and then posit it as the perfect solution. If any meaningful number of people did this, the market would reflect these attitudes, prices would change and the solution would stop working. That should be listed as the first caveat. There are no simple solutions.
Data mine to find something that works and then posit it as the perfect solution. If any meaningful number of people did this, the market would reflect these attitudes, prices would change and the solution would stop working. That should be listed as the first caveat. There are no simple solutions.
April 3, 2019
Straight Forward Approach
This book presents a simple straight forward approach to improve you investing results over buy and hold. Any person with a basic understanding of stock investing will benefit from reading this book.
This book presents a simple straight forward approach to improve you investing results over buy and hold. Any person with a basic understanding of stock investing will benefit from reading this book.
October 7, 2019
Easy, minimal effort strategy to capture 12% annual return.
Easy, repeatable, disciplined approach to capturing market profits without the effort and energy of daily market monitoring. Great starting strategy for anyone.
Easy, repeatable, disciplined approach to capturing market profits without the effort and energy of daily market monitoring. Great starting strategy for anyone.
April 14, 2020
Almost “Investing for Dummies”, but more...
Simply written, well organized. Even if you have a money manager, worth the read. Easy strategy to follow and execute, looking forward to reading more from Mr. Carter.
Simply written, well organized. Even if you have a money manager, worth the read. Easy strategy to follow and execute, looking forward to reading more from Mr. Carter.
June 19, 2020
Very interesting strategy
I just read the book, but the strategy that Dave proposes looks very down to earth and doesn’t promise exaggerated returns. I think it’s a very nice reading and I’ll give it a try to put it into action.
I just read the book, but the strategy that Dave proposes looks very down to earth and doesn’t promise exaggerated returns. I think it’s a very nice reading and I’ll give it a try to put it into action.
July 9, 2020
Excellent book.
Simple and straightforward enough for anyone to understand and execute. Technically sound strategy for those seeking more than index fund returns. Highly recommended!
Simple and straightforward enough for anyone to understand and execute. Technically sound strategy for those seeking more than index fund returns. Highly recommended!
August 30, 2020
I know very little about investing but this book was very digestible and taught me a lot. I don’t know whether I’m going to go ahead and try to implement the 12% solution, but in any case I am a lot smarter now than I was a couple hours ago before I read it.
November 21, 2020
Excellent read. Sound strategy
This tiny book packs a lot of info on it. It is written in plain English yet still intelligently discusses his strategy. Further, I believe the book to be an honest strategy not overly hyped. This is well worth your time and money
This tiny book packs a lot of info on it. It is written in plain English yet still intelligently discusses his strategy. Further, I believe the book to be an honest strategy not overly hyped. This is well worth your time and money
March 22, 2021
I honestly did not love this book. It was okay, but not my cup of tea...
In fairness, the writer does spend a lot of time developing a method for an investor to use. And he uses quite a bit of data. But, again, just was not my thing.
I am going to give the writer another chance by reading his book on individual stocks.
In fairness, the writer does spend a lot of time developing a method for an investor to use. And he uses quite a bit of data. But, again, just was not my thing.
I am going to give the writer another chance by reading his book on individual stocks.
October 6, 2021
Too many disclaimers
Poorly written, pedantic, and difficult to follow and much more impractical to put into practice. You follow the advise of the author at your risk as he disclaims most of his own assertions.
Poorly written, pedantic, and difficult to follow and much more impractical to put into practice. You follow the advise of the author at your risk as he disclaims most of his own assertions.
November 14, 2021
easy to follow
I like the summaries at the end of each chapter. It helps to implement his ideas and you can go back to read the chapter but now I have to read through the whole thing. There’s also Q&A at the end of the book which is really good to address specific questions
I like the summaries at the end of each chapter. It helps to implement his ideas and you can go back to read the chapter but now I have to read through the whole thing. There’s also Q&A at the end of the book which is really good to address specific questions
April 7, 2022
This book is great for beginners in the stock market and investing as it provides a lot of definitions and explanations on how the market works, comparative charts, etc. If you are an advanced investor, this solution may not be for you.
Displaying 1 - 30 of 49 reviews