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Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favor
The Wall Street Journal's investing columnist explains why you're deluded about your personal investing returns.
Garrison Keillor described Lake Wobegon as the town where all the children are above average. Now Spencer Jakab introduces us to Lake Moneybegone, where all the women are wise, all the men are hard-working, and all the investors are below average. It's a big place--almost everyone from teachers to doctors to bankers and even most fund managers live here.
Since leaving his job as a top-rated stock analyst to become an investing columnist, Jakab has watched his readers make the same bad decisions again and again. Jakab looks at all the typical advice, from the clearly risky to the seemingly safe, to show you how various strategies are undermining even the most savvy investor's returns. The paths that lead to a seven figure nest egg are surprisingly few, but he reveals reliable strategies that can multiply a typical retirement saver's nest egg fourfold or more.
Jakab combines wise storytelling with a knack for doing the math on complicated ideas to explain why you shouldn't buy Apple, or care about tomorrow's big IPO, or even try to act on the belief that a recession is around the corner. He also explains why you should never trust a World Cup predicting octopus, and why you shouldn't invest in companies with an X or Z in their names--information more useful than it sounds, and every bit as fun. His core audience? Readers who fall somewhere in the gap between "401(k)s for Dummies" and "Advanced Microeconomics." Whatever your level of expertise, though, a tour of Jakab's Lake Moneybegone will be entertaining and almost certainly profitable too.
Garrison Keillor described Lake Wobegon as the town where all the children are above average. Now Spencer Jakab introduces us to Lake Moneybegone, where all the women are wise, all the men are hard-working, and all the investors are below average. It's a big place--almost everyone from teachers to doctors to bankers and even most fund managers live here.
Since leaving his job as a top-rated stock analyst to become an investing columnist, Jakab has watched his readers make the same bad decisions again and again. Jakab looks at all the typical advice, from the clearly risky to the seemingly safe, to show you how various strategies are undermining even the most savvy investor's returns. The paths that lead to a seven figure nest egg are surprisingly few, but he reveals reliable strategies that can multiply a typical retirement saver's nest egg fourfold or more.
Jakab combines wise storytelling with a knack for doing the math on complicated ideas to explain why you shouldn't buy Apple, or care about tomorrow's big IPO, or even try to act on the belief that a recession is around the corner. He also explains why you should never trust a World Cup predicting octopus, and why you shouldn't invest in companies with an X or Z in their names--information more useful than it sounds, and every bit as fun. His core audience? Readers who fall somewhere in the gap between "401(k)s for Dummies" and "Advanced Microeconomics." Whatever your level of expertise, though, a tour of Jakab's Lake Moneybegone will be entertaining and almost certainly profitable too.
288 pages, Hardcover
First published June 7, 2016
87 people are currently reading
671 people want to read
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Displaying 1 - 30 of 45 reviews
July 15, 2016
Jakab kept saying that he'd have more advice "later in the book" through the first 2/3 of the book. Maybe, in my anticipation, I missed it. I'd recommend the paper or e-book version of the book instead of audio. This will allow you to skip ahead to find the advice "later in the book."
There is nothing new in this book. It is well written and easy to read. He doesn't like Wall Street, mutual funds or financial advisors. As a licensed financial advisor, I disagree with some of his cherry picked statistics.
Basically, spend less than you earn. Invest that savings in small implements over several years. Find the least expensive investment options. Don't chase performance.
Now you don't have to read the book.
There is nothing new in this book. It is well written and easy to read. He doesn't like Wall Street, mutual funds or financial advisors. As a licensed financial advisor, I disagree with some of his cherry picked statistics.
Basically, spend less than you earn. Invest that savings in small implements over several years. Find the least expensive investment options. Don't chase performance.
Now you don't have to read the book.
March 24, 2020
It would be 5* if he wouldn't give the advice at the end.
The whole book is great. It's not as pragmatic as most of investing books - with "do this that way, trust me". Jakab explains everything, with examples and quotes. Many times I was about to google his words (he's bullshiting me, let's try) and on the next page, he gave the example I just googled.
But then, for no reason, he decides to give you 3 ways of finding out great opportunity to invest, mentioning few tickers, and meh I checked them out during this quite bad times, and they are kind of as bad as in many other books.
Must read for any new investor, or as book examples show maybe for every non-professional investor.
The whole book is great. It's not as pragmatic as most of investing books - with "do this that way, trust me". Jakab explains everything, with examples and quotes. Many times I was about to google his words (he's bullshiting me, let's try) and on the next page, he gave the example I just googled.
But then, for no reason, he decides to give you 3 ways of finding out great opportunity to invest, mentioning few tickers, and meh I checked them out during this quite bad times, and they are kind of as bad as in many other books.
Must read for any new investor, or as book examples show maybe for every non-professional investor.
July 24, 2016
Probably one of the most important books on investing that has come out in recent years. A must for anyone like me that tries to beat the market picking stocks; subscribes to newsletters or follows stock analyst recommendations; watches CNBC for anything other than entertainment; spends money on "wealth managers" or financial advisors. These are recipes for what the author calls living in "Lake Moneybegone." Buy low cost index funds; don't listen to the person next to you holding TSLA and FB, and hold your funds through thick and thin. There are a few recommendations for how to invest, but most of the book is telling you why you must stop what you are currently doing. I can vouch for the fact that had I heeded this advice over the last decade, I would probably be twice as wealthy today.
March 7, 2024
Basically says the same thing over and over again: you can't time the market. Thanks, but I learned that in my finance masters program!
May 24, 2022
ReedIII Quick Review: Some good general advice but too much self promotion. Most financial planners consider whole life insurance a bad thing. This book gives examples of how whole life insurance can and should be a primary part of a sound financial plan.
May 4, 2022
This is a useful book if you find "A Random Walk Down Wall Street" a bit out-dated. The author takes every hair-brained idea that seems to be obvious (investment newsletters, subscription tips Web sites like fool.com, TV talking heads, novelty ETFs) and slowly dissects that to show two things:
1) there's a bunch of hidden fees, conflicts of interests, and general incentives to strip investors of value
2) your money would have been better in a low-cost index fund
Overall a book that greatly simplifies investment approach. It drills in a few useful anecdotes:
1) frequent trading (and frequent logins into investment account) negatively impacts the ROI
2) trying to time the market negatively impact the ROI
1) there's a bunch of hidden fees, conflicts of interests, and general incentives to strip investors of value
2) your money would have been better in a low-cost index fund
Overall a book that greatly simplifies investment approach. It drills in a few useful anecdotes:
1) frequent trading (and frequent logins into investment account) negatively impacts the ROI
2) trying to time the market negatively impact the ROI
July 17, 2016
Jakab's book is both entertaining and insightful. It should be, given that he is a poacher turned gamekeeper. After 10 years as an investment banker, he converted to journalism and is one of the best writers for the Wall Street Journal.
If you liked Burton Malkiel's A Random Walk Down Wall Street or James Montier's The Little Book of Behavioral Investing, then you'll love Heads & Tails!
The book focuses on investor psychology. In short, how we trick ourselves into doing silly things with our savings.
So often we hear the advice to (a) stop trying to time the market (b) don't chase bubbles (c) don't get spooked out in a downturn (d) ignore the talking heads on CNBC (e) if it's hot, then not (f) low cost funds outperform (g) complex products are stuffed with fees and hidden risk (h) compounding your returns is the key, not hitting one ball out of the park (i) day trading's bad for you (j) avoid the crowd, and much more. But how often does any investor take this advice?
Reading Heads & Tails, we are treated to entertaining anecdotes and insightful examples that point out exactly how much we hurt our savings. But there's more. Jakab gives us his tool kit. A kit to avoid the many errors that can ruin a retirement fund.
With Heads & Tails, we can all look forward to a brighter investing future. :)
If you liked Burton Malkiel's A Random Walk Down Wall Street or James Montier's The Little Book of Behavioral Investing, then you'll love Heads & Tails!
The book focuses on investor psychology. In short, how we trick ourselves into doing silly things with our savings.
So often we hear the advice to (a) stop trying to time the market (b) don't chase bubbles (c) don't get spooked out in a downturn (d) ignore the talking heads on CNBC (e) if it's hot, then not (f) low cost funds outperform (g) complex products are stuffed with fees and hidden risk (h) compounding your returns is the key, not hitting one ball out of the park (i) day trading's bad for you (j) avoid the crowd, and much more. But how often does any investor take this advice?
Reading Heads & Tails, we are treated to entertaining anecdotes and insightful examples that point out exactly how much we hurt our savings. But there's more. Jakab gives us his tool kit. A kit to avoid the many errors that can ruin a retirement fund.
With Heads & Tails, we can all look forward to a brighter investing future. :)
August 10, 2016
Admittedly, I know nothing about ‘the market’. Like many other people, I trusted my investment rep. to make the best decisions for me. That’s what I’m paying him to do, right? I’ve done nothing but lose money year after year to bad investment decisions and fees.
This book came at just the right time. It is easy to read and understand; no technical jargon. Mr. Jakab uses humor and plenty of examples to explain how the market works and how to make it work for you, what to look out for, and what mistakes to avoid. You need to be in control of your money and tell you rep. what you want. After reading this book, I feel confident enough to know where I want my money to go.
I'd like to thank the author for a copy of the book and the chance to review it through the GoodReads First Reads program. My opinions are my own.
This book came at just the right time. It is easy to read and understand; no technical jargon. Mr. Jakab uses humor and plenty of examples to explain how the market works and how to make it work for you, what to look out for, and what mistakes to avoid. You need to be in control of your money and tell you rep. what you want. After reading this book, I feel confident enough to know where I want my money to go.
I'd like to thank the author for a copy of the book and the chance to review it through the GoodReads First Reads program. My opinions are my own.
January 20, 2018
A solid 5 stars.
A very practical books to help individual investors to get the statically best possible returns by getting the facts right based on lots of research, history examples, and giving advice on what's not to do and what might be helps in the long run.
I enjoy read the book, and love the fact the author did been in the industry rather successfully in the past and now as a journalist been the observer of the industry for a while and it might the the reason the book referenced quite a few references and researches been done which will be much more time consuming if done by the investor themselves if not happens to be working in the related industry themselves.
Good for investors looking for the right mind sets for investment, but there will be no secret source for investment success, especially true for short term return.
A very practical books to help individual investors to get the statically best possible returns by getting the facts right based on lots of research, history examples, and giving advice on what's not to do and what might be helps in the long run.
I enjoy read the book, and love the fact the author did been in the industry rather successfully in the past and now as a journalist been the observer of the industry for a while and it might the the reason the book referenced quite a few references and researches been done which will be much more time consuming if done by the investor themselves if not happens to be working in the related industry themselves.
Good for investors looking for the right mind sets for investment, but there will be no secret source for investment success, especially true for short term return.
September 2, 2016
I do not read investment books. Most, if not all, usually involve a lot of technical language and terms that I do not understand. However Jakab's book was easy to grasp – – it was useful for the novice and for those who have had plenty of investment experience. Listed below are the top five lessons I took from the book:
The more prominent the scary headlines about the market, This smarter it is to commit some more money to stocks.
As for the majority of downturns, the time to sell is never.
The simplest remedy for sleeping well at night is to have a mixture of lower risk assets like bonds along with stocks.
Rule of thumb for stock exposure: 100 minus your age = stock exposure
No matter how much evidence exists that seers do not exist, suckers will pay for the existence of seers.
The more prominent the scary headlines about the market, This smarter it is to commit some more money to stocks.
As for the majority of downturns, the time to sell is never.
The simplest remedy for sleeping well at night is to have a mixture of lower risk assets like bonds along with stocks.
Rule of thumb for stock exposure: 100 minus your age = stock exposure
No matter how much evidence exists that seers do not exist, suckers will pay for the existence of seers.
August 25, 2016
I received this book from Goodreads First Reads in exchange for an honest review...
My first thoughts about this book is: "Nothing new or exciting here". All of the advice that the author did provide (which I found very scarce, by the way) is something that I've already read about, many times over, through skimpy articles online or other financial-investing books. He has a very spend-less, save-more approach throughout the whole book, which got several "well, duh!" out of me.
It is well written and well put together, an easy read, and very simple topics, but overall a mediocre book that disappoints more in the end.
My first thoughts about this book is: "Nothing new or exciting here". All of the advice that the author did provide (which I found very scarce, by the way) is something that I've already read about, many times over, through skimpy articles online or other financial-investing books. He has a very spend-less, save-more approach throughout the whole book, which got several "well, duh!" out of me.
It is well written and well put together, an easy read, and very simple topics, but overall a mediocre book that disappoints more in the end.
January 15, 2018
Spencer is an excellent writer. The material is interesting and he uses many real world examples to illustrate his points. However, it is basically a "what not to do" book. And there are so many investing related things that you shouldn't do. I kept waiting to read about what I should do and the advice was extremely limited. OK so low cost index funds. What about allocation, what about bonds? I was left wanting more.
June 5, 2017
I had a hard time following it.
For example, in the chapter called But Wait, There's More, the author tells that he's going to give us three strategies, but I had a hard time finding them in the text.
A Random Walk Down Wall Street covers much of the same material, but is much easier to follow.
For example, in the chapter called But Wait, There's More, the author tells that he's going to give us three strategies, but I had a hard time finding them in the text.
A Random Walk Down Wall Street covers much of the same material, but is much easier to follow.
May 29, 2017
Book has some very practical advice; however most of it is in the second half so you may want to just start half way through. The first half helps you understand why his advice is sound. The primary advice is that for most people you can just put your money into an all market ETF and then make like Rip Van Winkle until you actually need your money.
May 27, 2017
I won this in a Goodreads giveaway.
Good advice written in plain language. I found that I have been doing a lot of what is advised in here but it was good to read that my in actions aren't slothful but a good idea.
Good advice written in plain language. I found that I have been doing a lot of what is advised in here but it was good to read that my in actions aren't slothful but a good idea.
January 10, 2020
My former colleague Spencer Jakab outlines how to invest in securities (stocks and bonds) and how it can be a no-lose situation even for neophytes. That is, in essence, the pitch of the book and he delivers what's promised in spades. not surprise there, he's super talented.
December 17, 2021
Lovely book
This is the first book I have read on investment and the insights given on the book are very interesting.
I could pace my self to read each chapter in slow and steady pace while taking notes.
Definitely a great read. It has increased my curiosity about investing.
This is the first book I have read on investment and the insights given on the book are very interesting.
I could pace my self to read each chapter in slow and steady pace while taking notes.
Definitely a great read. It has increased my curiosity about investing.
August 1, 2016
Good. Not great. Good though.
August 25, 2016
The author cleanly breaks investing and money management down into terms of probabilities. He writes in very unemotional when words about this too often emotional topic.
August 3, 2016
great book. great insight through all the fluff.
Read
September 7, 2016Good read for the investor hoping to do better than most, where stocks and investing are concerned. Spencer Jakab shows you how to tilt the odds toward your favor.
September 14, 2016
Could have come to the point a lot sooner, and there's not a lot of groundbreaking advice but if you're new to retirement planning, you'll get more from it.
September 26, 2016
Good book and a fast read. Kept my attention and I learned something along the way.
October 11, 2016
Funny, very readable, and important. The author seems like he would be pretty fun to talk with. I hope to be able to make good use of all the advice.
November 6, 2016
Buy low-sell high. Don't be a noob with your investments.
This entire review has been hidden because of spoilers.
December 3, 2016
A worthwhile investing read for a beginner investor, but nothing earth-shattering or particularly noteworthy.
March 27, 2018
It is what it says: how to tilt the odds in your favor of beating the market by a little. There is no way to beat it by a lot regularly.
September 13, 2020
Basically a series of essays on why you should invest in ETFs. But interesting to read.
February 9, 2019
No big revelations or shocking insights in this book. No stock picking either. Just basic, simple, and SOUND long-term investing advice. I enjoyed (most of) it.
My only complaint is it ran a little long. Lots of unnecessary anecdotes and stories I didn't need. Really, the key points in this book could have fit nicely into like a 1 page essay.
My takeaways / (his advice)
- Keep it simple, do as little as possible
- Target market average returns
- Stick with super low cost index funds
- Rebalance once a year, and don't even check your accounts in between
- Never buy any fancy financial products, and never pay any high cost active funds
A bit contradictorily, he also suggested a few ideas to 'slightly beat the market averages'
- Greenblatt's Magic Formula????
- Smart Beta
- Dividend Stocks
You can probably move on from this review now. If his advice sounds fresh or interesting, give the book a full read! If it sounds more like a good reminder of things you already know and believe, good for you! - glad I could save you the 5 hours it would take to read the whole book.
If you're still with me, lets poke around those 'boost your returns ideas' a little more.
Magic Formula. Our author wasn't perfectly clear, but I think he's advocating for this strategy? If you are unfamiliar, there is a website built by succesful investor Joel Greenblatt, which performs a stock screen based on his particular 'quality' and 'value' metrics. The idea is you should randomly buy some of those stocks, hold them for a year, then randomly buy some new ones. Do that for 10 years and you should be beating the market. Jakab reiterates a point Greenblatt makes in his book, this is a hard method to follow! There were be periods of time that these stocks will lose, and most people who tried will cash out and quick. If you don't have the 'jones to stay the course (and most don't) you won't find success.
Smart Beta - I think basically means picking 'modified' index funds. Your typical vanguard index fund is market cap weighted, meaning you own more of the largest stocks. The largest stocks are sometimes the most over valued stocks, so weighting your index differently can give you an edge. There are many different weighting strategies out there, but a simple version would be something like - just buy equal amount of each stock in the index. Jakab points out that Bogle thinks 'smart beta' is a useless gimmick. Personally, I'll side with Bogle on this one, but I'll at least do a little more research into this idea.
Dividends - Not sure why he included this? I guess, historically, groups of companies that pay dividends have out performed the broader indexes? Sounds like a coincidence to me. If you want to buy dividend stocks - go for it!, as long as you aren't chasing yields, I'm sure you'll be fine. I've been down to dabble in a discount aristocrat myself from time to time (cough cough ATT cough cough). But I'm not sure I'd recommend getting this cute with your retirement accounts. I don't see any reason dividend funds should outperform the cheapest index funds long term into the future.
My only complaint is it ran a little long. Lots of unnecessary anecdotes and stories I didn't need. Really, the key points in this book could have fit nicely into like a 1 page essay.
My takeaways / (his advice)
- Keep it simple, do as little as possible
- Target market average returns
- Stick with super low cost index funds
- Rebalance once a year, and don't even check your accounts in between
- Never buy any fancy financial products, and never pay any high cost active funds
A bit contradictorily, he also suggested a few ideas to 'slightly beat the market averages'
- Greenblatt's Magic Formula????
- Smart Beta
- Dividend Stocks
You can probably move on from this review now. If his advice sounds fresh or interesting, give the book a full read! If it sounds more like a good reminder of things you already know and believe, good for you! - glad I could save you the 5 hours it would take to read the whole book.
If you're still with me, lets poke around those 'boost your returns ideas' a little more.
Magic Formula. Our author wasn't perfectly clear, but I think he's advocating for this strategy? If you are unfamiliar, there is a website built by succesful investor Joel Greenblatt, which performs a stock screen based on his particular 'quality' and 'value' metrics. The idea is you should randomly buy some of those stocks, hold them for a year, then randomly buy some new ones. Do that for 10 years and you should be beating the market. Jakab reiterates a point Greenblatt makes in his book, this is a hard method to follow! There were be periods of time that these stocks will lose, and most people who tried will cash out and quick. If you don't have the 'jones to stay the course (and most don't) you won't find success.
Smart Beta - I think basically means picking 'modified' index funds. Your typical vanguard index fund is market cap weighted, meaning you own more of the largest stocks. The largest stocks are sometimes the most over valued stocks, so weighting your index differently can give you an edge. There are many different weighting strategies out there, but a simple version would be something like - just buy equal amount of each stock in the index. Jakab points out that Bogle thinks 'smart beta' is a useless gimmick. Personally, I'll side with Bogle on this one, but I'll at least do a little more research into this idea.
Dividends - Not sure why he included this? I guess, historically, groups of companies that pay dividends have out performed the broader indexes? Sounds like a coincidence to me. If you want to buy dividend stocks - go for it!, as long as you aren't chasing yields, I'm sure you'll be fine. I've been down to dabble in a discount aristocrat myself from time to time (cough cough ATT cough cough). But I'm not sure I'd recommend getting this cute with your retirement accounts. I don't see any reason dividend funds should outperform the cheapest index funds long term into the future.
June 29, 2017
This is a very good book on personal investing. The investment advice is excellent. The writing is clear and accessible. It collects investment advice from many people.
Jakab focuses on the long known but captivating fact that it is possible for an average investor to outperform, not only other average investors, but even professional money mangers, if they invest in a well balanced blend of low cost index funds. This is a movement that started about 50 years ago: Burton Malkiel, A Random Walk Down Wall Street 1973, and John Bogle, first index fund 1975, are two of its founders. Like dieting,the recipe is simple, the execution is not.
Jakab does an excellent job of capturing facts, research and opinions from many sources. For example, when discussing the difficulty of timing the market, Jakab cites research by Putnam Investments. If an investor put $10,000 into a market index fund in 2000 and left it there until 2014, it would have had a value of $22,118. If the investor was not in the market during the 10 biggest up days, it would have had a value of about $11,000 in 2014. So over 14 years, more than 90% of the gain came from 10 days, .3% of the total. This is the kind of fact that makes crystal clear what I already know: I can't time the market.
Jakab also brings his experience as both a stock analyst and an investment journalist to bear. In addition to the many stories about both industries, he brings a very interesting perspective. It's one thing to have Bogle talk up index funds, it's intriguing to have someone who "has been on the other side" for decades do the same.
Things I didn't like about this book. It was too long. As much as I loved some of the research, in general, I thought there was more than needed. After staying on message for 10 chapters, Jakab suggests that: "The formula for success in unlocking extra gains from volatile strategies such as value, fundamental indexing and dividend investing would seem to be remaining oblivious to the markets ups and downs." I agree with the oblivious part, I'm not a fan of throwing in a one chapter teaser on how to "beat the market.' I think this just muddied the water without sufficiently exploring the merits of these approaches.
On the whole well worth the read.
Jakab focuses on the long known but captivating fact that it is possible for an average investor to outperform, not only other average investors, but even professional money mangers, if they invest in a well balanced blend of low cost index funds. This is a movement that started about 50 years ago: Burton Malkiel, A Random Walk Down Wall Street 1973, and John Bogle, first index fund 1975, are two of its founders. Like dieting,the recipe is simple, the execution is not.
Jakab does an excellent job of capturing facts, research and opinions from many sources. For example, when discussing the difficulty of timing the market, Jakab cites research by Putnam Investments. If an investor put $10,000 into a market index fund in 2000 and left it there until 2014, it would have had a value of $22,118. If the investor was not in the market during the 10 biggest up days, it would have had a value of about $11,000 in 2014. So over 14 years, more than 90% of the gain came from 10 days, .3% of the total. This is the kind of fact that makes crystal clear what I already know: I can't time the market.
Jakab also brings his experience as both a stock analyst and an investment journalist to bear. In addition to the many stories about both industries, he brings a very interesting perspective. It's one thing to have Bogle talk up index funds, it's intriguing to have someone who "has been on the other side" for decades do the same.
Things I didn't like about this book. It was too long. As much as I loved some of the research, in general, I thought there was more than needed. After staying on message for 10 chapters, Jakab suggests that: "The formula for success in unlocking extra gains from volatile strategies such as value, fundamental indexing and dividend investing would seem to be remaining oblivious to the markets ups and downs." I agree with the oblivious part, I'm not a fan of throwing in a one chapter teaser on how to "beat the market.' I think this just muddied the water without sufficiently exploring the merits of these approaches.
On the whole well worth the read.
Displaying 1 - 30 of 45 reviews