Rating: 
Summary: Good Introductory Book on Investing...but...
Review: The book is an easy read and can be understood by beginners as well as the experienced. Beware that the author does over state the advantages of indexing and passive investing to some degree--take note of "assumed" realized gain example on page 48--active managed fund of 8% in capital gains vs 1% in passive. If he actually looked at some annual reports of actual mutual funds, the difference between active and passive funds in the tax efficiency area is much less.The author goes on explaining the higher historical returns of smaller companies on page 120. However, it has failed to remind that the much higher trading expense noted on page 94 must be accounted for thus the difference is less than dramatic. The book could have discussed in more detail how the weighting of the funds for proper diversification used on sample portfolios from pages 153-160 was determined. He accused market timers for data mining--back testing for patterns yet these portfolios rely to some degree on value stocks outperforming growth stocks over the long run. The worst criticism is that the book is biased for use of DFA funds--thinly disguised marketing of his own firm who Buckingham Asset Management which is one of the few firms which handles these funds. As noted, these funds are available only through select fee only advisors or through pension funds. What it failed to mention is that most fee only advisors only take clients with at least $100,000 to invest and for those with less than $500,000, the fee is typically 1% per year. This is addition to DFA fund's own expense of about 0.6% making them effectively a loaded fund. I agree DFA funds themselves are very well structured line of products. However, the difference in expense and the seemingly endless addition of new indicies makes me feel that their small edge is getting lost. There's a fairly good debate on indexfunds.com on DFA vs Vanguard which is worth a read before enlisting an expense manager. The author took incredible efforts to discredit professional fund managers for their mediocre performance of expensive active management. Part of the reason was that managers tend to drift away from established styles after being frustrated from recent underperformance. But the author defends fee only advisors that they can add value by making sure you follow your own strategy yet cautions that the investor should retain the last word. The temptation for the advisor to come up with a "better" plan while you're investing in an established strategy exist. The advisor's job is to make sure the investor doesn't make the mistake of drifting in style but also has the opportunity to influence a style drift. All the effort of promoting low cost investing approach seem to have gone to waste the moment the author is subtly pushing fee only advisor. Author attempted to discredit Professor Jeremy Siegel's claim that small cap stocks do not outperform large cap stocks if an 8 year stretch is removed from a 70 year record on page 119. The author used a completely different index than Professor Siegel. It's still debatable whether there was a simple abberation in historical return or not especially considering the added trading cost of smaller companies. The numbers seem to be exagerrated a bit by pulling things out of context so be careful with any numeric claims and draw your own conclusion only after doing more research. Despite these problems with the book, it is a good read. It explains the merits of passive investing, the principals of diversification, why fundamental/technical analysis aren't necessary or may even be counter productive, etc. I highly recommend reading Jeremy Siegel's "Stock for the Long Run."
Rating:
Summary: Good Introductory Book on Investing...but...
Review: The book is an easy read and can be understood by beginners as well as the experienced. Beware that the author does over state the advantages of indexing and passive investing to some degree--take note of "assumed" realized gain example on page 48--active managed fund of 8% in capital gains vs 1% in passive. If he actually looked at some annual reports of actual mutual funds, the difference between active and passive funds in the tax efficiency area is much less. The author goes on explaining the higher historical returns of smaller companies on page 120. However, it has failed to remind that the much higher trading expense noted on page 94 must be accounted for thus the difference is less than dramatic. The book could have discussed in more detail how the weighting of the funds for proper diversification used on sample portfolios from pages 153-160 was determined. He accused market timers for data mining--back testing for patterns yet these portfolios rely to some degree on value stocks outperforming growth stocks over the long run. The worst criticism is that the book is biased for use of DFA funds--thinly disguised marketing of his own firm who Buckingham Asset Management which is one of the few firms which handles these funds. As noted, these funds are available only through select fee only advisors or through pension funds. What it failed to mention is that most fee only advisors only take clients with at least $100,000 to invest and for those with less than $500,000, the fee is typically 1% per year. This is addition to DFA fund's own expense of about 0.6% making them effectively a loaded fund. I agree DFA funds themselves are very well structured line of products. However, the difference in expense and the seemingly endless addition of new indicies makes me feel that their small edge is getting lost. There's a fairly good debate on indexfunds.com on DFA vs Vanguard which is worth a read before enlisting an expense manager. The author took incredible efforts to discredit professional fund managers for their mediocre performance of expensive active management. Part of the reason was that managers tend to drift away from established styles after being frustrated from recent underperformance. But the author defends fee only advisors that they can add value by making sure you follow your own strategy yet cautions that the investor should retain the last word. The temptation for the advisor to come up with a "better" plan while you're investing in an established strategy exist. The advisor's job is to make sure the investor doesn't make the mistake of drifting in style but also has the opportunity to influence a style drift. All the effort of promoting low cost investing approach seem to have gone to waste the moment the author is subtly pushing fee only advisor. Author attempted to discredit Professor Jeremy Siegel's claim that small cap stocks do not outperform large cap stocks if an 8 year stretch is removed from a 70 year record on page 119. The author used a completely different index than Professor Siegel. It's still debatable whether there was a simple abberation in historical return or not especially considering the added trading cost of smaller companies. The numbers seem to be exagerrated a bit by pulling things out of context so be careful with any numeric claims and draw your own conclusion only after doing more research. Despite these problems with the book, it is a good read. It explains the merits of passive investing, the principals of diversification, why fundamental/technical analysis aren't necessary or may even be counter productive, etc. I highly recommend reading Jeremy Siegel's "Stock for the Long Run."
Rating: 
Summary: Better than its title
Review: Very well written and easy to understand. The strategy proposed is not brand new (as he mentions), but clearly not well communicated. Anyone investing (new or experinced) should read as the principles outlined are vital to understand and implement. Although personally, I am not completely convinced the mutual funds are the only way to go as a passive portfolio of similarly balanced, well selected stocks should accomplish the same or possibly better results.
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