Do you worry that you're not paying enough attention to your investments? Do you feel left out when you hear about the clever things other investors seem to be doing? Relax. You don't have to become an investment genius to protect your savings. Distilling the wisdom of his thirty years' experience into lessons that can be applied in thirty minutes, Harry Browne shows you what you need to know to make your savings and investments safe and profitable, no matter what the economy and the investment markets do. There are no secret trading systems here, no jargon to learn. Instead, Harry Browne teaches you in simple terms to, among other things:
-Build your wealth on your career -Make your own decisions -Build a bulletproof portfolio for protection -Take advantage of tax-reduction plans -Enjoy yourself with a budge for pleasure
This is my new go to book recommendation when people ask me what the first book about investing they should read is.
For one, it is only about 150 pages and it’s a light 150 pages at that so you can get through it in an afternoon.
Second, it gets one very, very important thing right that nearly every investing book gets wrong: it tells you that you won’t get rich investing.
This is not a popular thing for an investing book to do and so few of them do it, but I think it is from this misconception that many of the mistakes new investors make stem.
Browne, correctly in my view, points out that:
"Think about your own occupation, for example. Could someone without your training, your skills, your experience, and your talent outperform you at your job? Of course not.
And yet too-good-to-be-true advertisements invite you— an amateur with no particular education, training, or experience in speculation—to compete, in your spare time, with professionals who have devoted their entire careers to investing, and who continue to eat, breathe, and sleep investing every day."
Most people that make money investing are either professional investors or they are investing in something that they deeply understand.
If someone told me that they had built and sold two skincare brands and were making an investment into a new skincare company, I would sure listen up. It’s totally believable to me that they have some “edge” based on your extensive experience.
If they told me that you were going to start trading options on tech stocks, I would not pay you the slightest bit of attention.
Reality has a surprising amount of detail and smart people get themselves in trouble thinking that being knowledgeable in one area necessarily means they are knowledgeable in everything else (*cough* doctors and lawyers *cough*).
So the first thing Browne gets very right is to focus on making money in your career, the thing which you have spent years working on and where you understand all the little details.
The second thing he gets right is that he starts from a macro framework instead of getting lost in the weeds.
Most investing books are, ultimately, stock-picking books. Now there is nothing wrong with stock picking books, but it’s a very limited toolkit. The U.S. stock market over the past century has been the best performing in the world and still there are three ten-year periods in the U.S. where stocks were flat or down as an asset class.
Browne instead starts by looking at all possible macro economic environments. They fit into four general categories:
"1. Prosperity: A period during which living standards are rising, the economy is growing, business is thriving, interest rates usually are falling, and unemployment is declining.
2. Inflation: A period when consumer prices generally are rising. They might be rising moderately (an inflation rate of 6% or so), rapidly (10% to 20% or so, as in the late 1970s), or at a runaway rate (25% or more).
3. Tight money or recession: A period during which the growth of the supply of money in circulation slows down. This leaves people with less cash than they expected to have, and usually leads to a recession—a period of poor economic conditions.
4. Deflation: The opposite of inflation. Consumer prices decline and the purchasing power value of money grows. In the past, deflation has sometimes triggered a depression—a prolonged period of very bad economic conditions, as in the 1930s"
Browne then identifies which asset classes perform well in each environment:
"Stocks take advantage of prosperity. They tend to do poorly during periods of inflation, deflation, and tight money, but over time those periods don't undo the gains that stocks achieve during periods of prosperity.
Bonds also take advantage of prosperity. In addition, they profit when interest rates collapse during a deflation. You should expect bonds to do poorly during times of inflation and tight money.
Gold not only does well during times of intense inflation, it does very well. In the 1970s, gold rose twenty times over as the inflation rate soared to its peak of 15% in 1980. Gold generally does poorly during times of prosperity, tight money, and deflation.
Cash is most profitable during a period of tight money. Not only is it a liquid asset that can give you purchasing power when your income and investments might be ailing, but the rise in interest rates increases the return on your dollars. Cash also becomes more valuable during a deflation as prices fall. Cash is essentially neutral during a time of prosperity, and it is a loser during times of inflation."
This came to be known as the Permanent Portfolio and is an approach that has produced stock like returns with bond-like risks since the early 1970s.
There are some quibbles I might have with a few of Browne’s details, but he gets the big things right.
So, obviously it took me longer than half an hour to get through this, but that's my own doing - not the book's fault ;>
I found this book very interesting and insightful. It's not really an "ABC" book to financing or anything, and I do think it's probably good to have some idea of economics and financial terms before reading. That said, the book's really pretty easy to follow and understand, and Browne does a good job of explaining concepts in various ways so you'll understand.
Mainly this book talks about ways to invest and protect your money without having to spend sleepless nights worrying about if you've invested in the right something. It outlines how to create a Permanent Portfolio, which should keep steadily growing through all economic swings.
While I can't say I can totally agree with absolutely everything Browne suggests, the majority of it I can. It's best to judge his advice for yourself, but at least he writes and discusses his ideas clearly enough so that you can evaluate it. In short, if you're not too keen on speculating and risking (or even if you are!), this is a great book!
My mom wants me to read this book;> And, I know I probably should. So, I started it today. It's a very short book, so not like it will take too long. And, it's nice to show at least ONE non-fiction book in my 2008 collection.
Short (100pages) and easy read about Permanent portfolio for all-weather conditions.
Make a simple asset allocation. Rebalance each year, or when weights move by 10% points
Uncorrelated assets:
25% stocks. 3 Index funds. They perform when the economy is doing well 25% long-term bonds. 30 year bonds preferably to get exposure to good times and disinflation. 25% gold. Physical gold. Performs best during inflation 25% cash: short term government bills. Best during the time of turmoil.
Permanent portfolio returned c9% pa over 1970-2003
Invest outside our home country to reduce risks, get uncorrelated returns.
This entire review has been hidden because of spoilers.
Took me longer than 30 minutes, but maybe 30 minutes refers to absolutely-focused-zero-distraction reading of the 'rules' (the first half of the book). Many of the investing 'rules' Browne lays out are common sense (and for ones that might not be, his clear explanations make them nearly seem so), but of course, many forget common sense when it comes to investing. A good book to read for conservative investing, i.e. protecting your hard-earned money and keeping slow and steady growth through nearly all economic environments. Less one star for the two incorrect tables in the book.
Harry tells it like it is. Not sexy. Not exciting. Practical and safe. The permanent portfolio is simple and easy to execute. It's actually quite brilliant in its simplicity and stout in its performance. Very much worth a read for any investor sophisticated or not.
Harry Browne provides 17 straightforward and easy-to-understand rules to achieve financial security. All of them can be argued to be based on common sense, but this does not detract from the read, which is refreshing and quick. Following are the rules, with some notes in between:
1.- Build up your asset base from your salary: unless we happen to receive an inheritance or be able to own a family business, most of us follow into this category. Our base salary will first build our investment portfolio, and later on other decisions will follow. 2.- Don’t make the assumption that you will be able to rebuild your wealth. 3.- Understand the difference between investment and speculation: this particularly resonated with me as a particularly meaningful definition to separate investment and speculation:
- When you invest, you accept that you will get the same returns as the other investors within that sector. - When you speculate, you try to “beat the market” and get better returns than other investors when you make forecasts.
I would have added that a long-term binding to a given asset lies probably within the realm of investing as well, but I give Harry a good analogy for the explanation.
4.- Be careful of people who tell you they can make you rich: In this era of Internet gurus selling courses and advice, every investor should be particularly cautious when receiving unsolicited requests from advisors and similar wildlife. Most of the studies around the performance of fonds showcase that no fond has beaten the market for a long period of time, and the results tend to be mostly random. Besides the obvious fact that if somebody could beat the market, that individual would not be selling 100 $ courses 5.- Don’t expect someone to make you wealthy. 6.- Don’t expect to get rich from a trading system. 7.- Only invest your own money: I have been following this advice for a long time, and likely losing some performance due to not investing in time on low fees using leverage. You are choosing peace of mind over quicker and riskier returns (which certainly suits my investment strategy). 8.- Make your own decisions. 9.- Only work with what you know about: connected with 4 and 6, it is not uncommon to receive offers of products that you might not understand from dark characters. If you do not understand something after some research, do not invest into it. 10.- Spread the risks. 11.- Create a robust and secure investment portfolio: Diversifying will protect you from randomness and other risks for your wealth. 12.- Only speculate with money that you can afford to lose. 13.- Keep some savings in other countries. 14.- Benefit from tax cuts. 15.- Ask the right questions. 16.- Enjoy yourself with a pleasure budget. 17.-If in doubt, choose safety.
Harry Browne mention briefly in this book the permanent portfolio, a portfolio designed to protect an investor against any eventuality coming from inflation, deflation or economic recession. Historically, a permanent portfolio has performed better than most benchmarks (bonds, S&P500, etc...) during long periods of time. This portfolio consists of:
- 25% in U.S. stocks, to provide a strong return during times of prosperity. - 25% in long-term U.S. Treasury bonds, which do well during prosperity and during deflation (but which do poorly during other economic cycles). - 25% in cash in order to hedge against periods of "tight money" or recession. In this case, "cash" means U.S.Treasury bills. - 25% in precious metals (gold) in order to provide protection during periods of inflation. Browne recommends gold bullion coins.
The permanent portfolio needs a rebalancing each time one of its components weighs more than 30% or less than 10%. The book is mostly focus on US investment, but you should be able to adapt most of its lessons to your local market.
Interesting, useful, but somewhat dated investment portfolio advice from Harry Browne. I remember reading one of his books in the 80s and I thought at the time that his advice was overly defensive, but worth considering. A fund was established that supposedly followed his precepts, but failed to prove as valuable as his advice would lead one to believe. Despite this I still feel that his caution has a place in today's world (especially pandemic+) though I think the concepts are much more important than the details. Not the first investment book that I would recommend or turn to, but of some worth nonetheless.
Read this after reading Meb Faber's "Global Asset Allocation" book. The writing seems a bit archaic (even though it's not really that old) - but the underlying principle of buying a portfolio of assets that works well in a boom, recession, inflation, depression and credit crunch is priceless. Particularly right now when we seem to have several all together.
Really like the conclusion that the asset mix discovered (25% in each of stocks, bonds, gold and cash) might not be the ultimate best mix - but it was the simplest and easiest to monitor and therefore was more practical than any "improvements" that he tried to add to it
I'm a big fan of Harry Browne's frank tone and no nonsense approach to life. Fail-safe Investing didn't disappoint. Browne outlines a commonsense approach to investing in order to hedge against risk and still provide the upside of investing. The premise is to invest equally in four categories in order to mitigate losses with gains in a variety of financial and economic conditions. I haven't tried the strategy, so can't speak for its results but I found the premise interesting and refreshing.
There was some solid advice in here, but it really only needed a couple of pages to explain the permanent portfolio. Harry Browne has a juvenile, wandering, repetitive style of writing that raises the hairs on the back of my neck. Great information, poor delivery.
I love how he starts out the book by explaining that you shouldn't listen to anyone's schemes. Anyone's except his I guess.
this is one of the few books to "start reading about finances“ that I still helped me to learn something new.
This is a very recommended book, it takes more than 30mins to read but I really like that it goes to the point.
What I liked the most is that it is realistic (one doesn’t get rich by investing), it teaches you the difference between speculating and investing and, the most important, a way to create a bulletproof portfolio that will perform regardless of the economy.
C’est un très bon livre qui permet de se conforter dans ses avis si on en a déjà, soit de bien démarrer dans l’investissement en bourse. Le livre à beau dater de plus de 25 ans il est toujours très actuel et l’auteur américain on peut facilement l’adapter à nos pratiques Française.
Quite a lot of horse sense in this book! Suitable for beginner to intermediate-level investors, particularly if you want to invest competently with a minimum of fuss, worry and fees.
There are two sections: Part I goes over the author's 17 Basic Rules, and Part II g... [see the rest on my book review site.]
It's fairly elementary in its content, laying out 17 rules for investing. If you've not read anything in this area, then give it a go. Otherwise there are better written and more interesting books on the topic available.
I really liked this book. It's not following the growth mindset , but there's no reason that the safe side of investments isn't fun. As wealth management and various other aspects of the subtle art of staying wealthier in the future are presented here!
This should be required reading for everyone. While I don't agree with his portfolio allocation, I do agree with the basic ideas that he lays out. Most people would be best by putting their money in a S&P500 tracking ETF and just forgetting about it.
Definitely ahead of its time. Most of these things have become common sense today, however his arguments for why are very compelling and add weight. Quick, fast, worthwhile just for the tips.
Taking a look to the way the public retirement system is struggling due to the european population ageing, more and more people are looking for new ways of getting better return to their savings and building a new source of income for their future retirement.
If you are one of those people, you should read Harry Browne's investing principles. He is not promising two-digits annual returns from your investments (although the US fund following his asset allocation has got this result in the las 25 years). He just gives you common sense lessons for keeping safe your savings and beat inflation after taxes with low volatility.
To sum up, f you are searching a good book about efficient and safe long-term investing, this is your book.
A quick read about how to invest for the risk-averse. The idea is simple: block some money and diversify how you invest it using stocks, bonds, gold, and cash. Harry tell how futile it is to hope to "beat the market". He prefers to play it safe, and and to create a portfolio that withstands and maybe appreciates whatever situation occurs, inflation, depression, growth, etc.
I know nothing about investment but I think I understood Harry's idea. Althought, I would feel just fine without political comments scattered here and there, overall, I enjoy this short and punchy text about a topic that bores me.
Decent book, a little dated for the Personal MBA IMHO. I think it is a little conservative for a younger person as well. I think the balance of the portfolio assets should change as the person ages..
A must read for anyone that is trying to achieve financial security in a volatile and fundamentally unsound economy. Amazing, down-to-earth advice and a very easy-to-read style. Can't say enough about how good this book is.
Very basic and repetitive. Some good philosophical approaches to investing, but very little useful information for me. It also feels a bit dated with no mention of ETFs or discount brokerage firms.
He makes some worthy points and does so in the simplest possible terms. His approach is probably viable, but I found his rules to be basic and repetitive. Most useful are his rules about building wealth based on a career and about ignoring gurus and salesmen.
17 bite-sized, simple, prudent and basic investment and personal finance rules. Perfect for sharing with my young kids (with a few of my annotations) and compliments more advanced finance/investment philosophy from folks like Kiyosaki, Graham and Buffett.