Rating: 
Summary: Good, but is the free stuff better?
Review: This book asks where the stock market will be in ten years' time, and how you should invest as a result of that. It's potentially important, because discussion of long-term investment strategy (as opposed to next quarter's earnings) is so rare - yet obviously critical for investors. For that reason, I'm going to write a more detailed review than most of the others you'll find here. I'll summarize Mauldin's key arguments, briefly discuss his recommendations, and finally give you an honest appraisal of whether you should buy the book.SYNOPSIS. In the first half of the book, Mauldin sets out to prove that in ten years' time the US stock market will likely be no higher than it is now, and possibly significantly lower. The stock market's future level will be determined by (a) earnings growth and (b) the value the market places on those earnings (ie. P/E ratios), so Mauldin focuses on these two elements. First, he argues that earnings growth will be disappointing. Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%. Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically. He assembles a battery of arguments to prove his case. Secular bull markets have never started from times when the market's P/E ratio was as high as it is today. The market is currently overvalued according to multiple measures, and will likely revert to its historical mean. The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios. Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market. With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower. If the market will be flat or down over the next decade, how should you invest? That's the subject of the second half of the book. Mauldin recommends that you buy value stocks or a mutual fund run by a value-oriented manager, since value stocks have historically outperformed growth stocks. Stocks that pay dividends are particularly attractive, as a large part of the total return from the stock market has come from dividends. You should also assemble a laddered bond portfolio, buy real estate, and buy gold or gold stocks if you have the expertise. His key recommendation, however, is that you should put your money into hedge funds, since hedge fund results are not dependent on the market rising. HOW CONVINCING IS HE? Mauldin supports his argument that the stock market will stagnate over the next decade with data, academic studies and a reasonable description and rebuttal of opposing viewpoints. He comes unstuck, however, with the practical recommendations in the second half of the book. Three quick examples: (1) The first half of the book suggests there's a reasonable likelihood of deflation. In that case, cash would be a better investment than most of Mauldin's recommendations. (2) If the stock market is really heading down, as Mauldin suggests with his assertion that the market's P/E ratio could go to 10 or below, the best strategy for most investors is simply to buy long-term index put options; but he doesn't mention this. (3) Hedge funds have lousy tax efficiency, so returns for taxable investors would be a lot worse than Mauldin seems to suggest. These points deserve more discussion than this space allows, so I'll address them in more detail (and provide practical alternatives) on the TechUncovered web site. Suffice it to say that despite his honesty, Mauldin's viewpoint is likely skewed by his profession: acting as an introducing broker to hedge funds. SHOULD YOU BUY THE BOOK? Despite these criticisms, Mauldin asks important questions and assembles and summarizes a lot of material. But here's the problem. Much of the content has been reproduced from Mauldin's free emails, which are available on his web site, and some of the key arguments are available for free elsewhere, such as Grantham's letters and Bogle's speeches. (I've provided links to these sources on the TechUncovered web site.) Worse, unlike the emails, the book has been poorly edited. A couple of the chapters are co-written with a colleague, and read like stand-alone hedge-fund marketing material, while others repeat points in earlier chapters. So the book misses the opportunity to integrate the content of the emails into a readable, methodical argument. Whether you decide on the email archive or the book, though, Mauldin is definitely worth reading.
Rating: 
Summary: Best Financial Book of Last 40 Years
Review: This book is simply the best - probably the most enlightening investment book of the past 40 or so years. Mauldin has done an extraordinary amount of research. He pulls off the wraps on the world of investments that the savvy use, but are unknown to the average mortal, such as hedge funds and other alternative investments. I will admit I am biased, as John is one of my advisers - but the bias is due to a very positive experience, and having found no one who is more solidly grounded in how financial investments really work.
Rating:
Summary: Current and Valuable
Review: This book is so interesting and helpful that I'm motivated to read his "recommended" readings at the end of the book. I highly recommend this book to anybody who wants insight into the direction of the stock market and how factors such as demographics, PEs, earnings and others effect the market. The fact that this book was written so recently is the icing on the cake for an investment book. I've recently read a few investment books including Irrational Exuberance, Contrarian Investment Strategies, The Intelligent Investor, and What works on Wall street and I've found this one the best.
Rating: 
Summary: Too Repetitive
Review: This book makes some excellent points about the many ways that so-called investment advisors will use (lies, damn lies and ) statistics to convince you to either buy and hold or buy yesterday's news today - the trouble is that it makes the same points over and over and over and over. For the price, it is not a good investment. John Mauldin writes an excellent weekly column that is free, and I read regularly. So, the overly simplified and repetitive (did I say that already?) nature of this book was really disappointing.
Rating:
Summary: A fountain of objectivity
Review: This book may be only 400 odd pages, but it is so packed with relevant information and cogent thought that you'll need to read it three times to absorb it all. Therefore, I feel safe calling it the new Atlas Shrugged, which if you have read you know is over one thousand pages of compelling capitalist perspective on how American ingenuity is used and abused by the trappings of socialism. John Mauldin (a.k.a. John Galt) exposes the profiteering nature of the emperors of investment punditry and investor manipulation, as Ayn Rand struck against the suicidal human nature of taking from those who have the greatest ability (investors) and giving to those who have the greatest need (financial managers). Enter Bull's Eye Investing, where we find those who have entrusted their hard earned savings poised for pilfering by brokers and advisors who can't see beyond their own commissions to the reality of market and economic cycles. Read this book and recall how many brokers have told you "Hey, I have to make a living too," as they insinuate themselves into your asset management. Praise Mauldin for risking personal excoriation at the greedy hands of his industry for drilling into our heads that when money is involved, truth is the first victim.
Rating:
Summary: Disappointing
Review: This book was very disappointing. While I agree with the author's basic premise that stock returns over the next several years will either be in the single digits or flat, the book is poorly organized. From chapter to chapter the book jumps to different topics which are very loosely tied together. What's worse is that within chapters, the author rattles off different points one after the other. In some ways, the book reads as if the author locked himself in a room for a few days and wrote the book in one sitting from beginning to end.
I disagree with one of the author's main suggestions of investing in hedge funds. I don't think your average investor should even invest in a hedge fund assuming they could qualify. The author notes that through fund of funds, hedge funds may be more readily available to the average investor. This may be true, but the minimum investments are still going to be fairly sizeable (probably $25k+). More importantly, hedge funds are an unregulated industry with few protections for investors, and can have high volatilty given that many managers leverage their investments. Your average investor who will probably need every penny for his/her retirement should not be investing in such a risky forum. Besides there have been recent reports indicating that as the hedge fund industry expands its returns are shrinking and reverting to market returns. Note--This is what happened at Long Term Capital Management. At first, its returns were spectacular, but diminshed over time as other funds and brokerages began copying LTCM's model. Its partners then decided to leverage their investments even more to boost its return, which led to its ultimate collapse when Russia defaulted on its debt. Personally, I think you should turn to other books by Bill Bernstein or Jack Bogle before you read this one.
Rating: 
Summary: great book, but not enough new content
Review: This is a great book, and it really organized Mauldin's thoughts into a neat cohesive form, and gives you a solid plan for dealing with the muddle-through economy. The only major criticism I have is that so much of the material in this book is available in his free weekly column. Indeed, in many passages I got an extreme sense of dejavu.
Rating:
Summary: Great book
Review: This is a great book, though like the review titled "Good, but is the free stuff better?" I noticed that you can get most of the material for free on the web in sometimes more readable form.
Rating:
Summary: Great book
Review: This is a great book, though like the review titled "Good, but is the free stuff better?" I noticed that you can get most of the material for free on the web in sometimes more readable form.
Rating:
Summary: Thoughtful Analysis
Review: This is an excellent book for those who are looking for real direction in deciding how to allocate their portfolios over the upcoming years. Mauldin is neither a raging bull or a perpetual bear. His position about the future direction of markets and the "Muddle Through Econonomy" he expects over the upcoming decade is clear and straight foward and he supports it with an excellent analysis and references to some of today's best investment minds. He has taken a complex subject and organized it in a logical and readable fashion. You may not agree with all of Mauldin's conclusions, but any serious investor should give thoughtful consideration to his analysis and arguements.
|
