A Wealth of Common Sense
Why Simplicity Trumps Complexity in Any Investment Plan
Erschienen am 15. Mai 2015
224 Seiten
978-1-119-02489-7 (ISBN)
Beschreibung
A simple guide to a smarter strategy for the individual investor
A Wealth of Common Sense sheds a refreshing light on investing, and shows you how a simplicity-based framework can lead to better investment decisions. The financial market is a complex system, but that doesn't mean it requires a complex strategy; in fact, this false premise is the driving force behind many investors' market "mistakes." Information is important, but understanding and perspective are the keys to better decision-making. This book describes the proper way to view the markets and your portfolio, and show you the simple strategies that make investing more profitable, less confusing, and less time-consuming. Without the burden of short-term performance benchmarks, individual investors have the advantage of focusing on the long view, and the freedom to construct the kind of portfolio that will serve their investment goals best. This book proves how complex strategies essentially waste these advantages, and provides an alternative game plan for those ready to simplify.
Complexity is often used as a mechanism for talking investors into unnecessary purchases, when all most need is a deeper understanding of conventional options. This book explains which issues you actually should pay attention to, and which ones are simply used for an illusion of intelligence and control.
* Keep up with--or beat--professional money managers
* Exploit stock market volatility to your utmost advantage
* Learn where advisors and consultants fit into smart strategy
* Build a portfolio that makes sense for your particular situation
You don't have to outsmart the market if you can simply outperform it. Cut through the confusion and noise and focus on what actually matters. A Wealth of Common Sense clears the air, and gives you the insight you need to become a smarter, more successful investor.
A Wealth of Common Sense sheds a refreshing light on investing, and shows you how a simplicity-based framework can lead to better investment decisions. The financial market is a complex system, but that doesn't mean it requires a complex strategy; in fact, this false premise is the driving force behind many investors' market "mistakes." Information is important, but understanding and perspective are the keys to better decision-making. This book describes the proper way to view the markets and your portfolio, and show you the simple strategies that make investing more profitable, less confusing, and less time-consuming. Without the burden of short-term performance benchmarks, individual investors have the advantage of focusing on the long view, and the freedom to construct the kind of portfolio that will serve their investment goals best. This book proves how complex strategies essentially waste these advantages, and provides an alternative game plan for those ready to simplify.
Complexity is often used as a mechanism for talking investors into unnecessary purchases, when all most need is a deeper understanding of conventional options. This book explains which issues you actually should pay attention to, and which ones are simply used for an illusion of intelligence and control.
* Keep up with--or beat--professional money managers
* Exploit stock market volatility to your utmost advantage
* Learn where advisors and consultants fit into smart strategy
* Build a portfolio that makes sense for your particular situation
You don't have to outsmart the market if you can simply outperform it. Cut through the confusion and noise and focus on what actually matters. A Wealth of Common Sense clears the air, and gives you the insight you need to become a smarter, more successful investor.
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BEN CARLSON, CFA, has spent his career managing institutional portfolios for endowments, foundations, and pensionplans. He is also the creator and author of the blog A Wealth of Common Sense (awealthofcommonsense.com) and is aYahoo! Finance Contributor.
Inhalt
Introduction: Why Simplicity Is the New Sophistication xi
Chapter 1 The Individual Investor versus the Institutional Investor 1
Institutional versus Individual Investors 5
We're All Human 9
Extra Zeroes 12
Long-Term Thinking 13
Key Takeaways from Chapter 1 16
Notes 16
Chapter 2 Negative Knowledge and the Traits Required to Be a Successful Investor 19
The Biggest Problem of All 25
Traits of a Successful Investor 27
Standing on the Shoulders of Giants 33
Key Takeaways from Chapter 2 38
Notes 38
Chapter 3 Defining Market and Portfolio Risk 41
Volatility: Risk or Opportunity? 48
Understanding Rule Number 1 of Investing 49
The Risk Tolerance Questionnaire 50
Risk versus Uncertainty 52
Risk Aversion 54
The Cycle of Fear and Greed 58
Key Takeaways from Chapter 3 60
Notes 60
Chapter 4 Market Myths and Market History 63
Myth 1: You Have to Time the Market to Earn Respectable Returns 66
Myth 2: You Have to Wait until Things Get Better Before You Invest 67
Myth 3: If Only You Can Time the Next Recession, You Can Time the Stock Market 68
Myth 4: There's a Precise Pattern in Historical Market Cycles 70
Myth 5: Stocks and Bonds Always Move in Different Directions 71
Myth 6: You Need to Use Fancy Black Swan Hedges in a Time of Crisis 73
Myth 7: Stocks Are Riskier Than Bonds 74
Myth 7a: Bonds Are Riskier Than Stocks 75
Myth 8: The 2000s Were a Lost Decade for the Stock Market 76
Myth 9: New All-Time Highs in the Stock Market Mean It's Going to Crash 77
Myth 10: A Yield on an Investment Makes It Safer 78
Myth 11: Commodities Are a Good Long-Term Investment 80
Myth 12: Housing Is a Good Long-Term Investment 81
Myth 13: Investing in the Stock Market Is Like Gambling at a Casino 82
Key Takeaways from Chapter 4 84
Notes 85
Chapter 5 Defining Your Investment Philosophy 87
Degrees of Active and Passive Management 90
The Benefits of Doing Nothing 94
Exercising Your Willpower 96
Simplicity Leads to Purity 98
Defining Yourself as an Investor 99
Key Takeaways from Chapter 5 100
Notes 101
Chapter 6 Behavior on Wall Street 103
Threading the Needle 107
So Never Invest in Active Funds? 112
The Most Important Thing 114
Key Takeaways from Chapter 6 115
Notes 116
Chapter 7 Asset Allocation 119
Asset Allocation Decisions 121
Why Diversification Matters 123
Mean Reversion and Rebalancing 131
Risk Factors, Value Investing, and the Power of Patience 135
The Value Premium 136
The Rise of Smart Beta 138
How to See It Through 143
Key Takeaways from Chapter 7 146
Notes 147
Chapter 8 A Comprehensive Investment Plan 149
Why Do You Need a Plan? 150
The Investment Policy Statement (IPS) 152
Lifecycle Investing 154
Beating the Market 158
Saving Money 159
Taxes and Asset Location 160
Key Takeaways from Chapter 8 161
Notes 161
Chapter 9 Financial Professionals 163
Vetting Your Sources of Financial Advice 166
Outsourcing to a Financial Professional 168
What a Financial Advisor Can Do for You 171
How to Be a Good Client 174
Benchmarking and Ongoing Maintenance 176
Alternatives 177
Key Takeaways from Chapter 9 178
Notes 178
Conclusion 179
Book List 186
Notes 187
About the Author 189
Index 191
Chapter 1 The Individual Investor versus the Institutional Investor 1
Institutional versus Individual Investors 5
We're All Human 9
Extra Zeroes 12
Long-Term Thinking 13
Key Takeaways from Chapter 1 16
Notes 16
Chapter 2 Negative Knowledge and the Traits Required to Be a Successful Investor 19
The Biggest Problem of All 25
Traits of a Successful Investor 27
Standing on the Shoulders of Giants 33
Key Takeaways from Chapter 2 38
Notes 38
Chapter 3 Defining Market and Portfolio Risk 41
Volatility: Risk or Opportunity? 48
Understanding Rule Number 1 of Investing 49
The Risk Tolerance Questionnaire 50
Risk versus Uncertainty 52
Risk Aversion 54
The Cycle of Fear and Greed 58
Key Takeaways from Chapter 3 60
Notes 60
Chapter 4 Market Myths and Market History 63
Myth 1: You Have to Time the Market to Earn Respectable Returns 66
Myth 2: You Have to Wait until Things Get Better Before You Invest 67
Myth 3: If Only You Can Time the Next Recession, You Can Time the Stock Market 68
Myth 4: There's a Precise Pattern in Historical Market Cycles 70
Myth 5: Stocks and Bonds Always Move in Different Directions 71
Myth 6: You Need to Use Fancy Black Swan Hedges in a Time of Crisis 73
Myth 7: Stocks Are Riskier Than Bonds 74
Myth 7a: Bonds Are Riskier Than Stocks 75
Myth 8: The 2000s Were a Lost Decade for the Stock Market 76
Myth 9: New All-Time Highs in the Stock Market Mean It's Going to Crash 77
Myth 10: A Yield on an Investment Makes It Safer 78
Myth 11: Commodities Are a Good Long-Term Investment 80
Myth 12: Housing Is a Good Long-Term Investment 81
Myth 13: Investing in the Stock Market Is Like Gambling at a Casino 82
Key Takeaways from Chapter 4 84
Notes 85
Chapter 5 Defining Your Investment Philosophy 87
Degrees of Active and Passive Management 90
The Benefits of Doing Nothing 94
Exercising Your Willpower 96
Simplicity Leads to Purity 98
Defining Yourself as an Investor 99
Key Takeaways from Chapter 5 100
Notes 101
Chapter 6 Behavior on Wall Street 103
Threading the Needle 107
So Never Invest in Active Funds? 112
The Most Important Thing 114
Key Takeaways from Chapter 6 115
Notes 116
Chapter 7 Asset Allocation 119
Asset Allocation Decisions 121
Why Diversification Matters 123
Mean Reversion and Rebalancing 131
Risk Factors, Value Investing, and the Power of Patience 135
The Value Premium 136
The Rise of Smart Beta 138
How to See It Through 143
Key Takeaways from Chapter 7 146
Notes 147
Chapter 8 A Comprehensive Investment Plan 149
Why Do You Need a Plan? 150
The Investment Policy Statement (IPS) 152
Lifecycle Investing 154
Beating the Market 158
Saving Money 159
Taxes and Asset Location 160
Key Takeaways from Chapter 8 161
Notes 161
Chapter 9 Financial Professionals 163
Vetting Your Sources of Financial Advice 166
Outsourcing to a Financial Professional 168
What a Financial Advisor Can Do for You 171
How to Be a Good Client 174
Benchmarking and Ongoing Maintenance 176
Alternatives 177
Key Takeaways from Chapter 9 178
Notes 178
Conclusion 179
Book List 186
Notes 187
About the Author 189
Index 191
