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The Elements of Investing: Easy Lessons for Every Investor
Praise for THE ELEMENTS OF INVESTING
"A common misperception is that successful investing requires a ton of money, a complicated portfolio, or a detailed understanding of where the markets are headed next. The truth is, sometimes the simplest approach is the toughest to beat. Charley Ellis and Burt Malkiel do a masterful job in The Elements of Investing of laying out clear, simple rules that any investor can follow to grow their wealth over time."
--TIM BUCKLEY, Vanguard Chairman & CEO
"These noted authors have distilled all you need to know about investing into a very small package. The best time to read this book is when you turn eighteen (or maybe thirteen) and every year thereafter."
--HARRY MARKOWITZ, Nobel Laureate in Economics 1990
"Struggling to find money to save? Befuddled by the bewildering array of investment choices? As you venture into the financial markets for the first time, it's helpful to have a trusted guide--and, in Charley Ellis and Burt Malkiel, you have two of the finest."
--JONATHAN CLEMENTS, author of The Little Book of Main Street Money
"No one knows more about investing than Charley Ellis and Burt Malkiel, and no one has written a better investment guide. These are the best basic rules of investing by two of the world's greatest financial thinkers."
--CONSUELO MACK, Anchor and Managing Editor, Consuelo Mack WealthTrack
"A common misperception is that successful investing requires a ton of money, a complicated portfolio, or a detailed understanding of where the markets are headed next. The truth is, sometimes the simplest approach is the toughest to beat. Charley Ellis and Burt Malkiel do a masterful job in The Elements of Investing of laying out clear, simple rules that any investor can follow to grow their wealth over time."
--TIM BUCKLEY, Vanguard Chairman & CEO
"These noted authors have distilled all you need to know about investing into a very small package. The best time to read this book is when you turn eighteen (or maybe thirteen) and every year thereafter."
--HARRY MARKOWITZ, Nobel Laureate in Economics 1990
"Struggling to find money to save? Befuddled by the bewildering array of investment choices? As you venture into the financial markets for the first time, it's helpful to have a trusted guide--and, in Charley Ellis and Burt Malkiel, you have two of the finest."
--JONATHAN CLEMENTS, author of The Little Book of Main Street Money
"No one knows more about investing than Charley Ellis and Burt Malkiel, and no one has written a better investment guide. These are the best basic rules of investing by two of the world's greatest financial thinkers."
--CONSUELO MACK, Anchor and Managing Editor, Consuelo Mack WealthTrack
160 pages, Hardcover
First published December 14, 2009
301 people are currently reading
4190 people want to read
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Displaying 1 - 30 of 270 reviews
August 26, 2017
Even though I agree with most of the advice given in this book, I am giving it low ratings because I had expected more going into this, and was disappointed. Also, it is centred around US so it's more useful for the US citizens. You can finish entire book into few hours and it is still repetitive. This book can be summed up in few sentences and if you need convincing for the advice given below then maybe you should read it -
In order to ensure you have proper funds when you retire follow these simple steps -
>Start saving early because compounding does wonders.
>Never ever use credit card debt.
>Put your retirement savings into low-cost broad-based index funds and you are more likely to enjoy well-above average returns.
>If you must try to beat the market (by picking individual stocks or finding some good mutual funds) then do so only after you have put retirement savings into index funds, just to be safe.
>Don't put all your eggs into one basket. (Diversify)
>Rebalance at the start of every year.
>Avoid all the forecasts.
>Ignore over-optimism and over-pessimism going on in the market, do not let it influence you, and focus on long term goal.
>Technical analysis is bullshit like Astrology.
>Your broker doesn't want to make money for you, but from you. He wants you to act. Do not act.
In order to ensure you have proper funds when you retire follow these simple steps -
>Start saving early because compounding does wonders.
>Never ever use credit card debt.
>Put your retirement savings into low-cost broad-based index funds and you are more likely to enjoy well-above average returns.
>If you must try to beat the market (by picking individual stocks or finding some good mutual funds) then do so only after you have put retirement savings into index funds, just to be safe.
>Don't put all your eggs into one basket. (Diversify)
>Rebalance at the start of every year.
>Avoid all the forecasts.
>Ignore over-optimism and over-pessimism going on in the market, do not let it influence you, and focus on long term goal.
>Technical analysis is bullshit like Astrology.
>Your broker doesn't want to make money for you, but from you. He wants you to act. Do not act.
December 4, 2014
Quick and to the point.
"Best friends of any investor"
-Diversification
-Rebalancing
-Dollar-Cost Averaging
-Indexing
"Best friends of any investor"
-Diversification
-Rebalancing
-Dollar-Cost Averaging
-Indexing
February 14, 2016
This book is intended for those who are new to investing or who have made financial mistakes and are wishing to write those wrongs.
I'm 27 years old, contribute 16% of my paycheck to my 401k (in which my company's match of 3% is also added), take advantage of my company's 6% yearly profit sharing contribution that is directly transferred to my 401k in the beginning of every year, maximize the contributions to my own personal Roth IRA every year and have contributed a considerable amount of my own money to my own personal investment portfolio (day trading, not recommended in this book and not by A Random Walk Down Wall Street).
Now if you counted my company's contributions...by taking advantage of what my company offers I have given my 401k a 9% raise every year (3% company match, 6% profit sharing), and this also decreases my taxable income by reducing the amount of salary bonuses (which you have to pay tax on) and by reducing your take home pay (which is also taxed).
After experiencing the ups and downs of penny stocks I decided that day trading is more of a form of gambling rather than a way to increase one's net worth. For some people it works and for some it doesn't. I tend to be more on the emotional side and it's difficult for me to leave my emotions out of day trading, although I've gotten much better over the last 2 years and still day trade, but hold positions much longer and focus on more known companies rather than penny stocks.
The Elements of Investing teaches you how to invest over the long term. This is not a book on how to beat the stock market and teaches you more on how to build a net worth and to avoid market trends rather than pursue them and take advantage of them.
To summarize the book is basically a guide on how to build net worth without making a lot of decisions by indexing rather than following certain companies or stock symbols.
Malkiel and Ellis have been extremely successful in indexing and building their own specific net worth and are some of the great investment minds of our time.
This book will tell you to:
Save regularly and early
Use your employer's 401K
Set aside cash for emergencies and living expenses
Take advantage of Uncle Sam
Why not to use credit cards
Turn off emotions when investing and to focus on the long term
How to use and why to use low cost index funds
Why most of your stocks should include common stocks, bonds and real estate (your actual home, or investment properties and not necessarily in stocks)
A must read for anyone investing whether a beginner or a pro. Will also remind you why you save and why it is so important to do so early and regularly. Highly recommend!
I'm 27 years old, contribute 16% of my paycheck to my 401k (in which my company's match of 3% is also added), take advantage of my company's 6% yearly profit sharing contribution that is directly transferred to my 401k in the beginning of every year, maximize the contributions to my own personal Roth IRA every year and have contributed a considerable amount of my own money to my own personal investment portfolio (day trading, not recommended in this book and not by A Random Walk Down Wall Street).
Now if you counted my company's contributions...by taking advantage of what my company offers I have given my 401k a 9% raise every year (3% company match, 6% profit sharing), and this also decreases my taxable income by reducing the amount of salary bonuses (which you have to pay tax on) and by reducing your take home pay (which is also taxed).
After experiencing the ups and downs of penny stocks I decided that day trading is more of a form of gambling rather than a way to increase one's net worth. For some people it works and for some it doesn't. I tend to be more on the emotional side and it's difficult for me to leave my emotions out of day trading, although I've gotten much better over the last 2 years and still day trade, but hold positions much longer and focus on more known companies rather than penny stocks.
The Elements of Investing teaches you how to invest over the long term. This is not a book on how to beat the stock market and teaches you more on how to build a net worth and to avoid market trends rather than pursue them and take advantage of them.
To summarize the book is basically a guide on how to build net worth without making a lot of decisions by indexing rather than following certain companies or stock symbols.
Malkiel and Ellis have been extremely successful in indexing and building their own specific net worth and are some of the great investment minds of our time.
This book will tell you to:
Save regularly and early
Use your employer's 401K
Set aside cash for emergencies and living expenses
Take advantage of Uncle Sam
Why not to use credit cards
Turn off emotions when investing and to focus on the long term
How to use and why to use low cost index funds
Why most of your stocks should include common stocks, bonds and real estate (your actual home, or investment properties and not necessarily in stocks)
A must read for anyone investing whether a beginner or a pro. Will also remind you why you save and why it is so important to do so early and regularly. Highly recommend!
October 14, 2015
Vanilla. Max out your 401k. Buy an index fund. Stay out of debt. Could have been written as a pamphlet for your HR department. Boring.
September 15, 2012
If you only read one book, ever, about investing, make it this one. A slender volume, I read it today in one sitting. I picked it up on the recommendation of Bill McNabb, the CEO of Vanguard Group. Anyone who's talked to me for more than 90 seconds about finances knows that I am an unabashed Vanguard fan.
The author Burton Malkiel is most famous for his book "A Random Walk Down Wall Street" which basically posits that asset prices move randomly and defy prediction. I saw him at a conference recently and was wowed.
In "The Elements of Investing" he strives with co-author Charles Ellis to explain investing in a succinct, clear way. The book is modeled after Strunk and White's "The Elements of Style".
This is a gem of a book. It strips away all the noise and nonsense out there about investing and boils it down to a few simple basics. One overriding theme: Buy index funds. Don't try to beat the market. You can't. You will lose a lot of money trying.
Simple. Elegant. Read it and profit.
The author Burton Malkiel is most famous for his book "A Random Walk Down Wall Street" which basically posits that asset prices move randomly and defy prediction. I saw him at a conference recently and was wowed.
In "The Elements of Investing" he strives with co-author Charles Ellis to explain investing in a succinct, clear way. The book is modeled after Strunk and White's "The Elements of Style".
This is a gem of a book. It strips away all the noise and nonsense out there about investing and boils it down to a few simple basics. One overriding theme: Buy index funds. Don't try to beat the market. You can't. You will lose a lot of money trying.
Simple. Elegant. Read it and profit.
December 13, 2020
Not quite what I was expecting, but is solid for anyone that has little grasp of the markets or is new to the world of investing.
It lays out the fundamentals of saving and investing at an early age and charts out comparisons between some different basic long term investment strategies.
*NOT a book for investors looking for short term/hands on investing strategies - book could be titled “how to prepare for retirement”
Encourages broad stroke approach of index funds + diversification + slow and steady dollar cost averaging as a low risk way to accumulate wealth over time.
Not really for people who already know the basics and are looking for more specific market/investment knowledge, this book actually encourages knowing less and keeping it simple. It discourages worrying about picking the right stocks because doing so successfully requires you to beat the pros who have more information than you and trade for a living.
Despite already having heard most of the advice in this book, the fundamentals like diversifying, rebalancing, saving, and regular portfolio/expense management are always good habits to reinforce.
It lays out the fundamentals of saving and investing at an early age and charts out comparisons between some different basic long term investment strategies.
*NOT a book for investors looking for short term/hands on investing strategies - book could be titled “how to prepare for retirement”
Encourages broad stroke approach of index funds + diversification + slow and steady dollar cost averaging as a low risk way to accumulate wealth over time.
Not really for people who already know the basics and are looking for more specific market/investment knowledge, this book actually encourages knowing less and keeping it simple. It discourages worrying about picking the right stocks because doing so successfully requires you to beat the pros who have more information than you and trade for a living.
Despite already having heard most of the advice in this book, the fundamentals like diversifying, rebalancing, saving, and regular portfolio/expense management are always good habits to reinforce.
January 24, 2012
This book is perfect for the person who has no clue. I have just stepped into the investment world myself, and can barely ever get past the first sentence because I don't understand the vocabulary. It is like a whole new language, and this book is the perfect introduction. Everything is explained simply and gives you a basic understanding and a good list of warnings. Once you finish there is a nice list of other books you can read. Every word written in backed up in some way, and if the authors feel bi-est they tell you so and why. Everyone in investing, or thinking about beginning, or wants a basic comprehension to hold up a conversation should read this book.
October 15, 2018
This is a great introductory guide to investing for the most basic investor. I do recommend that you do a little background reading on investment/economic terms just so things will make more sense.
Highly recommended for people in their 20s and 30s.
Highly recommended for people in their 20s and 30s.
August 30, 2020
نکات و توصیههای مربوط به سرمایهگذاری موفق، از همان اولین کتابی که دربارهیشان میخوانید، تکراری و بدیهی به نظر میرسند
April 20, 2018
Very good basic advice on investing: save more, spend less, diversify. Set up in the same format as The Elements of Style, the book provides easy to understand calculations and graphs.
Highly recommended
Highly recommended
December 29, 2009
Xmas 2009 present. This is one of two excellent overviews of investing that were published this year. (The other is The Investor's Manifesto by William Bernstein.) Malkiel is famous (at least in our house) for writing A Random Walk Down Wall Street, and co-author Ellis wrote a book I've been meaning to read, Winning The Loser's Game.
The two of them teamed up to write a simple book on investing, a la Strunk and White's Elements of Style. It's a very simple book that covers a lot of topics succinctly. It can be read in about two hours.
The problem with this book is that the people who would benefit from it will probably never pick it up, unless they get it as a gift. This is the book that people in their 40s and 50s will wish that they had read in their 20s or 30s. People who are already managing their retirement plans well will find nothing new here. And if you having started saving for retirement by 50, forgoing lattes isn't going to prevent you from dying in a government-run nursing home.
The best use of this book would be to buy it for a college graduate and bribe him or her $250 to read it. Stick a print out of Scott Adam's 9 point summary of financial planning in the book for good measure. For someone who has been working for a while unless they are completely clueless about money, The Investor's Manifesto would be a much better choice.
One topic covered in Elements of Investing that isn't covered in most investing books is how to save money. Obviously if you can't save you will have nothing to invest. For comparison, The Investor's Manifesto's covers this topic in just one sentence: "If you cannot defer current consumption you will die poor." (By the way, the best book covering how to save money by reducing spending is Andrew Tobias's The Only Investment Guide You Will Ever Need.)
In one of the later chapters asset allocation recommendations by age are presented. I was very surprised to see the high percentages of equities recommended by Mr. Ellis, especially after the 2008 meltdown. I think percentages that high are only appropriate for people who are very confident in their earning power.
In summary, you will not find better advice more concisely stated but if you are already confident about your retirement plans you will find nothing new here.
The two of them teamed up to write a simple book on investing, a la Strunk and White's Elements of Style. It's a very simple book that covers a lot of topics succinctly. It can be read in about two hours.
The problem with this book is that the people who would benefit from it will probably never pick it up, unless they get it as a gift. This is the book that people in their 40s and 50s will wish that they had read in their 20s or 30s. People who are already managing their retirement plans well will find nothing new here. And if you having started saving for retirement by 50, forgoing lattes isn't going to prevent you from dying in a government-run nursing home.
The best use of this book would be to buy it for a college graduate and bribe him or her $250 to read it. Stick a print out of Scott Adam's 9 point summary of financial planning in the book for good measure. For someone who has been working for a while unless they are completely clueless about money, The Investor's Manifesto would be a much better choice.
One topic covered in Elements of Investing that isn't covered in most investing books is how to save money. Obviously if you can't save you will have nothing to invest. For comparison, The Investor's Manifesto's covers this topic in just one sentence: "If you cannot defer current consumption you will die poor." (By the way, the best book covering how to save money by reducing spending is Andrew Tobias's The Only Investment Guide You Will Ever Need.)
In one of the later chapters asset allocation recommendations by age are presented. I was very surprised to see the high percentages of equities recommended by Mr. Ellis, especially after the 2008 meltdown. I think percentages that high are only appropriate for people who are very confident in their earning power.
In summary, you will not find better advice more concisely stated but if you are already confident about your retirement plans you will find nothing new here.
September 16, 2014
Elements of investing is a straight-to-the-point how-to invest book. In this book, the two authors do their very best in dishing out simple advice to investors. Simple, but not easy. Because while the advices are simple, the execution is anything but.
This is a great book that would be suitable for investors at all stages of their life as well as investing knowledge. If you're just starting out, I think this will be a fantastic book to introduce you on the mental models to have. For more sophisticated investors looking for technical stuffs, this book may be a huge disappointment as it does not go in-depth about the how-to analysis of a company. The P/E, the intrinsic value, the margin of safety and everything else is not mentioned (even once!) in this book. Then again, if readers subscribe to their investing philosophy, then they won't event need to know all that - readers just need to know about total stock market index funds.
I sincerely recommend this book to a just-starting out on your investing journey readers. This will be a good book to have and I believe well-worth re-reading many times over your journey. The good writing is accompanied by well-thought out analysis and useful advice.
This is a great book that would be suitable for investors at all stages of their life as well as investing knowledge. If you're just starting out, I think this will be a fantastic book to introduce you on the mental models to have. For more sophisticated investors looking for technical stuffs, this book may be a huge disappointment as it does not go in-depth about the how-to analysis of a company. The P/E, the intrinsic value, the margin of safety and everything else is not mentioned (even once!) in this book. Then again, if readers subscribe to their investing philosophy, then they won't event need to know all that - readers just need to know about total stock market index funds.
I sincerely recommend this book to a just-starting out on your investing journey readers. This will be a good book to have and I believe well-worth re-reading many times over your journey. The good writing is accompanied by well-thought out analysis and useful advice.
June 3, 2015
Short concise book for beginners. No new information really, but a good read.
April 1, 2025
As someone who knows literally nothing about investing, I found this book to be very helpful for getting myself oriented a bit more. I now feel like I can at least understand what I am looking at when looking at retirement funds. This book also felt very encouraging and the authors write in a way that really makes you feel seen. They mention 5 super simple steps for investing that I'll be sure to keep in mind. Save regularly and start early, use company/government retirement funds, diversify broadly with "total market" index funds and different asset types, rebalance annually to the way that makes you most comfortable, think long term.
January 3, 2020
Overall, a great book on personal finance fundamentals. After an extremely strong start, it loses some organization and becomes repetitive towards the end, but nonetheless I highly recommend it.
July 29, 2023
Excellent starting guidebook. Gives enough information to go out and want to learn more.
November 4, 2023
Simple and straight to the point. Investing strategy that is solid and to be expected.
November 13, 2024
كتاب ممتاز ومفيد لمن يرغبون البداية بخطط الادخار والاستثمار في أسواق المال. بعض التوصيات خاصة بالسوق الأمريكي وأنظمته لكن عموم الكتاب توصيات عامة تصلح للجميع
February 25, 2025
Hält was es verspricht. Simpel aufbereitete Information und Grundlagen zum Anlegen, insbesondere mit Fokus auf Indexfonds.
Für Neulinge meiner Ansicht nach durchaus empfehlenswert!
Für Neulinge meiner Ansicht nach durchaus empfehlenswert!
January 27, 2018
I would give this book 5 stars, but I don't know enough about investing yet to know what's what.
What I do know is that this is the first book not to spoon-feed me "get rich quick" bullshit. The authors approach investing very realistically. If I've learned anything at all it's to:
- Diversify
- Rebalance
- Dollar-cost average, and
- INDEX, INDEX, INDEX, INDEX, INDEX, INDEX, INDEX. FOR THE LOVE OF GOD, INDEX.
What I do know is that this is the first book not to spoon-feed me "get rich quick" bullshit. The authors approach investing very realistically. If I've learned anything at all it's to:
- Diversify
- Rebalance
- Dollar-cost average, and
- INDEX, INDEX, INDEX, INDEX, INDEX, INDEX, INDEX. FOR THE LOVE OF GOD, INDEX.
February 22, 2023
10/10 book. Short. Sweet. Simple. A great book on how to invest for anyone. Emphasis on staying out of debt, investing and time in the market being the 3 pillars of their successful method.
June 9, 2017
Very helpful for one unfamiliar with the investing world. Will probably read again soon.
February 13, 2022
Helpful primer on basic investing strategy. Also I like any homage to The Elements of Style.
April 7, 2021
Why not 5 stars? It is very dedicated to US investors.
February 15, 2019
Simple and straightforward advice on the basics of investing your savings. This book requires 2 hours reading time, and is divided into clear sections on the essential principles of investing.
July 23, 2017
Great for beginners
Open my eyes to a whole different world. I would recommended it for individuals who need a better understanding in investing in your personal wealth. Pay yourself first always.
Open my eyes to a whole different world. I would recommended it for individuals who need a better understanding in investing in your personal wealth. Pay yourself first always.
December 19, 2023
Take note.... Notice that Malkiel really hasn't written another book since 2009?
.......
Amazone
Die Hard Market Efficient Hypothesis That Can't Make Money in Market
Well, Malkiel continue his thesis of MEH, EMT. If you want to invest for financial freedom or get into business of money management you should "browse" this book and also the infamous "Random Walk on Wallstreet" by this guy then study Mr. Warren Buffett, Benjamin Graham, Charlie Munger, Seth Klarman Value Investing or if you are good at technology, you might want to study Ray Dalio, James Harris Simon (Renaissance Technologies) all billionaires but using different way of investment philosophies. But the authors of the book say they do not exists - the reason is - he can't figure it out. So he keep writing books to prove that you can't beat the market.
JVI
[Note: Jim Simons is pretty much a guy who trades a zillion stocks where everything is 0.5% to 2% of his portfolio max, and all he does is quick trades for fast profits, but how his methodology works is by his empire of massively having access to margin, so he's got multiplier effects, buying like 20x the stock that anyone else could buy....
So basically it's massive cash dumps into like 50 small quick profitable trades, and winning 4o or 45 of them, over and over again]
[And well the efficient market hypothesis basically just like to feel value investing will never work out, which only works if investing and analysts have the reliability of a dart board, which might have been true in the days of the vacuum tube television era]
......
I have read previous books by each author, and had really expected more - MUCH MORE.
The salient investing advice in this book could be expressed in a single paragraph.
wannabe
.......
Could be condensed to two or three pages without much loss
it feels padded out
Strunk and White is still the most concise resource for those who want to write effectively, but it's not repetitious, whereas The Elements of Investing elucidates a few simple rules, some of which are so obvious as not to be helpful... and then draws out whole chapters around them.
The book really boils down to this:
1) Use a low-cost index fund weighted towards global markets
2) Use government incentives for saving
3) Keep a diverse portfolio, with bonds as well as stocks
4) Invest for the long term
There's really not much more to it. Given the wealth of investment experience the two authors possess, this appears pretty uninspired.
The other frustrating element is that many private investors are in the game because they like to research companies, pick their own stocks and attempt to beat the market. But the authors say this is a waste of time and you're far better off buying an index fund, which requires almost no skill.
jacr100
......
Don't waste your time and money
Investing is a complicated business, and not for the faint hearted. If you have considered this book because it will reveal previously unknown secrets, then, sorry to disappoint you, it doesn't.
Do yourself a favour, just find an Adviser you can trust, let them advise you on which product wrappers you need and let them help choose the Fund Managers to look after your long term money - they'll pick stocks much more effectively and they'll monitor the perfomance more often and with more expertise than you ever could.
bluefunk
.....
It was a very short book and one slow reader could easily cover it all in 5 minutes.
It brought a few common sense to the table
so it's useful if you have no common sense
As elementary as
- Save More!
- Don't put all your eggs in one basket
- You are dumb and try not to bugger it up
Distilled and concise. Perhaps too much so.
H.H.L.
......
A simplistic approach to long term saving
Burt Malkiel is the household name behind the far better A Random Walk Down Wall Street: A Time-Tested Strategy for Successful Investing, the book that posits the efficiency of the financial markets.
The Elements of Investing, co-written with Vanguard director Charles Ellis, is in essence a Saving For Dummies title. Not about Investing, but about long term Saving. The book is written exclusively for a US audience and practical recommendations (e.g. tax tips, fund selections) are entirely irrelevant to non-US savers.
There's nothing wrong with writing a book about saving, unless you call it a book about investing.
Investing presupposes you intend to take risk in order to make a profit, saving means you try to exclude risk and therefore settle for a lesser return.
Malkiel's proposal is that all should save by investing in low cost broad-based market index funds (or equivalent ETFs) and start doing so early on to benefit from compounding interest.
He also advises practicing dollar cost averaging by regularly saving fixed amounts over long periods of time.
Malkiel does not believe we can outguess any other investor, let alone the market as a whole, in how a stock or even a market is going to perform. There's arguably plenty of academic research to back up the underperformance of fund managers, and Malkiel's advice is therefore not entirely unreasonable.
If you're an investment/finance ignoramus (aren't we all to some extent? OK, I'll hold my hand up to that one), this advice is even very relevant. But, it is less so if you're a more seasoned market observer/participant. Malkiel and Ellis make sweeping judgments pertaining to e.g. charting/technical analysis, but then proceed to lend some credence to behavioural finance. I'd have thought charting is the graphical interpretation of behavioural finance precepts.
Only value investors, spearheaded by Buffett, find some grace in Malkiel's eyes and it is noticeable that he, humbly, puts himself and Ellis in that league.
Another sweeping piece of advice contains the avoidance of credit cards altogether because they cost too much and make you dependent on your lender's repayment terms. That's true, unless you always repay your balance in full in which case a free card means one month's free credit every 12 months of the year. That should be worth something, not?
Finally, there's enough research by McKinlay and other reputed authors to show financial markets are not fully efficient. Some humility would, thus, behove Messrs. Malkiel and Ellis.
All in all, this is an interesting read for your average US citizen having lost his faith in the markets, funds and tipsters alike and seeking a new haven for his hard earned cash. Malkiel points the way to a form of low risk saving. His cost benchmark is that no fund should be charging more than, say, 0.25% in annual management fees which excludes just about every index fund in the UK and Continental Europe.
Why Wiley decided to publish this book in the otherwise excellent series of the "Little Book Big Profits" investment titles is a mystery to me, but the name Malkiel was probably the deciding factor.
James Montier's The Little Book of Behavioral Investing: How Not to be Your Own Worst Enemy (Little Book, Big Profits) is far more deserving with respect to the subject matter tentatively broached by Malkiel.
Kurt Steiner
......
.......
Amazone
Die Hard Market Efficient Hypothesis That Can't Make Money in Market
Well, Malkiel continue his thesis of MEH, EMT. If you want to invest for financial freedom or get into business of money management you should "browse" this book and also the infamous "Random Walk on Wallstreet" by this guy then study Mr. Warren Buffett, Benjamin Graham, Charlie Munger, Seth Klarman Value Investing or if you are good at technology, you might want to study Ray Dalio, James Harris Simon (Renaissance Technologies) all billionaires but using different way of investment philosophies. But the authors of the book say they do not exists - the reason is - he can't figure it out. So he keep writing books to prove that you can't beat the market.
JVI
[Note: Jim Simons is pretty much a guy who trades a zillion stocks where everything is 0.5% to 2% of his portfolio max, and all he does is quick trades for fast profits, but how his methodology works is by his empire of massively having access to margin, so he's got multiplier effects, buying like 20x the stock that anyone else could buy....
So basically it's massive cash dumps into like 50 small quick profitable trades, and winning 4o or 45 of them, over and over again]
[And well the efficient market hypothesis basically just like to feel value investing will never work out, which only works if investing and analysts have the reliability of a dart board, which might have been true in the days of the vacuum tube television era]
......
I have read previous books by each author, and had really expected more - MUCH MORE.
The salient investing advice in this book could be expressed in a single paragraph.
wannabe
.......
Could be condensed to two or three pages without much loss
it feels padded out
Strunk and White is still the most concise resource for those who want to write effectively, but it's not repetitious, whereas The Elements of Investing elucidates a few simple rules, some of which are so obvious as not to be helpful... and then draws out whole chapters around them.
The book really boils down to this:
1) Use a low-cost index fund weighted towards global markets
2) Use government incentives for saving
3) Keep a diverse portfolio, with bonds as well as stocks
4) Invest for the long term
There's really not much more to it. Given the wealth of investment experience the two authors possess, this appears pretty uninspired.
The other frustrating element is that many private investors are in the game because they like to research companies, pick their own stocks and attempt to beat the market. But the authors say this is a waste of time and you're far better off buying an index fund, which requires almost no skill.
jacr100
......
Don't waste your time and money
Investing is a complicated business, and not for the faint hearted. If you have considered this book because it will reveal previously unknown secrets, then, sorry to disappoint you, it doesn't.
Do yourself a favour, just find an Adviser you can trust, let them advise you on which product wrappers you need and let them help choose the Fund Managers to look after your long term money - they'll pick stocks much more effectively and they'll monitor the perfomance more often and with more expertise than you ever could.
bluefunk
.....
It was a very short book and one slow reader could easily cover it all in 5 minutes.
It brought a few common sense to the table
so it's useful if you have no common sense
As elementary as
- Save More!
- Don't put all your eggs in one basket
- You are dumb and try not to bugger it up
Distilled and concise. Perhaps too much so.
H.H.L.
......
A simplistic approach to long term saving
Burt Malkiel is the household name behind the far better A Random Walk Down Wall Street: A Time-Tested Strategy for Successful Investing, the book that posits the efficiency of the financial markets.
The Elements of Investing, co-written with Vanguard director Charles Ellis, is in essence a Saving For Dummies title. Not about Investing, but about long term Saving. The book is written exclusively for a US audience and practical recommendations (e.g. tax tips, fund selections) are entirely irrelevant to non-US savers.
There's nothing wrong with writing a book about saving, unless you call it a book about investing.
Investing presupposes you intend to take risk in order to make a profit, saving means you try to exclude risk and therefore settle for a lesser return.
Malkiel's proposal is that all should save by investing in low cost broad-based market index funds (or equivalent ETFs) and start doing so early on to benefit from compounding interest.
He also advises practicing dollar cost averaging by regularly saving fixed amounts over long periods of time.
Malkiel does not believe we can outguess any other investor, let alone the market as a whole, in how a stock or even a market is going to perform. There's arguably plenty of academic research to back up the underperformance of fund managers, and Malkiel's advice is therefore not entirely unreasonable.
If you're an investment/finance ignoramus (aren't we all to some extent? OK, I'll hold my hand up to that one), this advice is even very relevant. But, it is less so if you're a more seasoned market observer/participant. Malkiel and Ellis make sweeping judgments pertaining to e.g. charting/technical analysis, but then proceed to lend some credence to behavioural finance. I'd have thought charting is the graphical interpretation of behavioural finance precepts.
Only value investors, spearheaded by Buffett, find some grace in Malkiel's eyes and it is noticeable that he, humbly, puts himself and Ellis in that league.
Another sweeping piece of advice contains the avoidance of credit cards altogether because they cost too much and make you dependent on your lender's repayment terms. That's true, unless you always repay your balance in full in which case a free card means one month's free credit every 12 months of the year. That should be worth something, not?
Finally, there's enough research by McKinlay and other reputed authors to show financial markets are not fully efficient. Some humility would, thus, behove Messrs. Malkiel and Ellis.
All in all, this is an interesting read for your average US citizen having lost his faith in the markets, funds and tipsters alike and seeking a new haven for his hard earned cash. Malkiel points the way to a form of low risk saving. His cost benchmark is that no fund should be charging more than, say, 0.25% in annual management fees which excludes just about every index fund in the UK and Continental Europe.
Why Wiley decided to publish this book in the otherwise excellent series of the "Little Book Big Profits" investment titles is a mystery to me, but the name Malkiel was probably the deciding factor.
James Montier's The Little Book of Behavioral Investing: How Not to be Your Own Worst Enemy (Little Book, Big Profits) is far more deserving with respect to the subject matter tentatively broached by Malkiel.
Kurt Steiner
......
March 11, 2012
Malkiel and Ellis combine their investment experience and share the basic "elements" of investing with us, inspired by the same concept Shrunk and White used to streamline key writing principals into the book Elements of Style. Their main concepts are: 1) Save, and save NOW. 2)Index your stocks and bonds (their main theory is that as a long-term investor it's virtually impossible to "beat the market," so buy mostly low-cost index funds instead of large numbers of individual stock shares. 3)Diversify your holdings, particularly between stocks, bonds and real estate, as well as diversifying across markets internationally and spreading your investments out over periods of time (to avoid putting everything in during a particularly high or low market). 4) NEVER carry credit card debt-it puts you in the hole faster than you can make money to get out. 5)Allocate your assets based upon your age and risk tolerance, with more in stocks (vs. bonds) the younger you are. The authors then finish up with specific fund recommendations. This book is the simplest and clearest book on investing I've read yet and I like the "no complications" strategy. The authors weave relevant literary quotes with sound advice, making for a great read (or listen--try the audiobook first, then the hardcopy to follow up on the recommended funds). I highly recommend this book, particularly to those who are just starting to find their way in the investing world!
December 23, 2016
Targets mostly US market, but nevertheless holds sound and simple guidelines.
August 9, 2015
I borrowed this book from the library to get a bare bones understanding of investing. Bare bones instruction was the stated objective of the authors. Mission accomplished. Some of the biggest takeaways: index funds outperform traditional mutual funds for one reason only--low expense ratios. Next, take advantage of tax deductions on investments. For example, the authors say that a person of moderate income (although they don't put a number on moderate) can invest $5,000 in an IRA, deduct every dollar, and if they fall in the 28% tax bracket it'll only cost them $3,600 to do so (once they get $1,400 back from their tax return). They stress staying out of credit card debt--a no brainer--and insist that the reader saves regularly. I also learned about "dollar cost averaging" which is the idea--proven by data--that if you invest a consistent dollar amount on a regular basis, like once a month or every few months, rather than investing a big dollar amount at one time, you end up with a higher return because you, on average, buy more shares when prices are low, and less shares when prices are high.
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