The Quest for Alpha
The Holy Grail of Investing
Published on 29. December 2010
208 pages
978-1-118-00570-5 (ISBN)
Description
The final word on passive vs. active investing
The debate on active investing-stock picking and markettiming-versus passive investing-markets are highly efficient andalmost impossible to outperform-has raged for decades. Which sideis right? In The Quest for Alpha: The Holy Grail ofInvesting, author Larry E. Swedroe puts an end to the debate,proving once and for all that active investing is likely to provefutile as the associated expenses-costs, fees, and time spentanalyzing individual stocks and the overall market-are likely toexceed any benefits gained. The book
* Presents research, data, and quotations that reveal it'sextremely difficult to outperform the market
* Explains why investors should focus on asset allocation, fundconstruction, costs, tax efficiency, and the building of a globallydiversified portfolio that minimizes, if not eliminates, the takingof idiosyncratic, uncompensated risks
* Other titles by Swedroe: The Only Guide to AlternativeInvestments You'll Ever Need and The Only Guide You'll Ever Needfor the Right Financial Plan
Investors are on a never-ending search for a money manager whowill deliver returns above the appropriate risk-adjusted benchmark,aka the "Holy Grail of Investing." The Quest for Alphademonstrates that it's a loser's game-while it's possible to win,it's so unlikely that you shouldn't try.
Reviews / Votes
"As I noted recently, success in investing is somewhatcounterintuitive, and requires most investors to set aside theirpre-conceived notions of how to build a portfolio that will allowthem to reach their goals. The task is made all the harder becausethe vast majority of the participants in the financial servicesindustry spend hundreds of millions of dollars annually reinforcingthe myth of active management. Fortunately for investors, expertslike Larry Swedroe are hard at work pointing out the fallacies ofthose myths, while also detailing the undeniable logic andmathematics that underpin a passive approach. The Quest forAlpha is a wonderful addition to that effort, and investorswill be well-rewarded by reading it and acting upon itswisdom." -- Nathan Hale, moneywatch.com, March 2011More details
Other editions
Additional editions
Book
02/2011
Bloomberg Press
€26.50
Shipment within 10-20 days
Person
LARRY E. SWEDROE is a principal and the Director of Research for the Buckingham Family of Financial Services, which includes Buckingham Asset Management and BAM Advisor Services. He has also held executive-level positions at Prudential Home Mortgage, Citicorp, and CBS. Swedroe frequently speaks at financial conferences throughout the year and writes the blog "Wise Investing" at CBS MoneyWatch.com.
Content
Acknowledgments.
Introduction.
The Holy Grail.
The Quest Begins.
Chapter 1 Mutual Funds: The Evidence.
When You Wish Upon a Morningstar.
Focus Funds.
Active Management of Bond Funds.
Skill Versus Luck.
Who Carea about the Average Fund?
With Active Managers, How Long Is Long Enough?
Advice from Professional Investors and Academics.
Admissions from Industry Practitioners and the FinancialMedia.
Chapter 2 Pension Plans: The Evidence.
Counterproductive Activity.
The Value of Consultants.
The Performance of Funds Offered by 401(k) Plans.
Fund Selection Skills.
Please Don't Do Something, Stand Still.
Advice from Professional Investors.
Admissions from an Industry Practitioner.
Chapter 3 Hedge Funds: The Evidence.
The Problems With Hedge Funds.
Advice From Professional Investors and Academics.
Chapter 4 Private Equity/Venture Capital: TheEvidence.
Characteristics of Private Equity Returns.
Bias in the Data.
Advice from a Professional Investor.
Chapter 5 Individual Investors: The Evidence.
Investment Returns Versus Investor Returns.
Advice from Professional Investors and Academics.
Admissions from Industry Practitioners and the FinancialMedia.
Chapter 6 Behavioral Finance: The Evidence.
There Is Smoke, But No Fire.
The Tyranny of the Efficient Markets.
Further Evidence.
The Failed Quest.
The Value of Behavioral Finance.
Even Smart People Make Mistakes.
Admissions from Industry Practitioners.
Summary.
Chapter 7 Why Persistent Outperformance is Hard toFind.
The Quest for Alpha Is a Game Played on a Different Field.
Successful Active Management Sows the Seeds of Its OwnDestruction.
Closet Indexing.
Concentration and the Role of Trading Costs.
The Role of Trading Costs.
Drifting Out of Small Caps.
Encore Performances.
Who Gets the Money to Manage?
The Value of Economic and Market Forecasts.
The Value of "Expert" Judgment.
We All Want to Believe.
The Value of Security Analysis.
Buy, Sell or Hold.
The Hurdles Are Getting Higher.
Advice from Professional Investors and Academics.
Admissions From Industry Practitioners and Academics.
Chapter 8 The Prudent Investor Rule.
The Prudent Investor Rule.
The American Law Institute.
The Uniform Prudent Investor Act.
Chapter 9 Whose Interests Do They Have at Heart?
Advice From Professional Investors.
Admissions From Industry Practitioners and Academics.
A Triumph of Hope Over Experience.
The Arithmetic of Active Management.
The Math Is Always the Same.
The Costs of Active Investing.
The Cost of Cash.
An Expensive Quest.
Summary.
Chapter 10 How to Play the Winner's Game.
Indexing Is More Than the S&P 500 Index.
Does Passive Investing Produce Average Returns?
Enough.
Needs Versus Desires.
Pascal's Wager.
Conclusion.
The Yale Endowment Fund.
The Way to Win Is Not to Play.
The Quest for the Holy Grail.
The Winner's Game.
Appendix A Rules of Prudent Investing.
Appendix B Doing It Yourself.
Notes.
Sources of Data.
About the Author.
Index.
