Another book question

[rockrock]

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Ben Graham's "The Intelligent Investor" has a new edition, with commentary added by Jason Zweig and it's only $10.85 on Amazon. This book is one of the best introductions on how to invest in stocks, and Jason's commentary really updates it well.

More detailed information on how to analyse individual stocks and bonds can be found in Graham & Dodd's "Security Analysis", which is the bible for fundamental analysis of a company's true worth. This book is much more expensive, lengthy, difficult to read, etc, but well worth it once you are ready.

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Didn't Graham, later in life, admit that his securities analysis techniques no longer worked -- Too many eyeballs processing the same information.

To outperform, you need either inside information or access to the trading desks at the big brokerage houses.

I prefer to believe this guy who isn't trying to sell me anything and isn't trying to generate a sales commission

Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

Good luck, sounds like you are gonna need it.

[Sniper]

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To outperform, you need either inside information or access to the trading desks at the big brokerage houses.


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Why do you think that access to trading desks is going to help you with long term investments?? Specifically, what information do you think those traders possess that gives them an edge in long term investing? (I will note that knowledge of order flow does give them an advantage in short term trading)

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Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

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Fama is also the director of research of Dimensional Fund Advisors, Inc., an investment advising firm with $69 billion under management Obviously, they have convinced a few people that they can beat the indexes [img]/images/graemlins/wink.gif[/img]

[rockrock]

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[ QUOTE ]
To outperform, you need either inside information or access to the trading desks at the big brokerage houses.


[/ QUOTE ]

Why do you think that access to trading desks is going to help you with long term investments?? Specifically, what information do you think those traders possess that gives them an edge in long term investing? (I will note that knowledge of order flow does give them an advantage in short term trading)

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Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

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Fama is also the director of research of Dimensional Fund Advisors, Inc., an investment advising firm with $69 billion under management Obviously, they have convinced a few people that they can beat the indexes [img]/images/graemlins/wink.gif[/img]

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Straw man!!

DFA website plainly states "Market efficiency is at the core of Dimensional's investment philosophy."

These funds are only available through a network of financial advisors (a discussion for another day) but the funds are all PASSIVELY MANAGED and widely regarded to be the finest mutual funds in the world. Some investors will pay an advisor just to have access to the funds (although its against DFA practices and they will withdraw fund access from advisor if they find out).

Vanguard and some of the ETFs offer similar advantages but DFA are the obligatory shiznit.

More info on what makes them so great here

[DesertCat]

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More info on what makes them so great here

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Merton and Scholes are on the board? After their involvment with the Long Term Capital Management disaster, who would let these academics advise anyone on investing?

[moondogg]

[ QUOTE ]
[ QUOTE ]
Ben Graham's "The Intelligent Investor" has a new edition, with commentary added by Jason Zweig and it's only $10.85 on Amazon. This book is one of the best introductions on how to invest in stocks, and Jason's commentary really updates it well.

More detailed information on how to analyse individual stocks and bonds can be found in Graham & Dodd's "Security Analysis", which is the bible for fundamental analysis of a company's true worth. This book is much more expensive, lengthy, difficult to read, etc, but well worth it once you are ready.

[/ QUOTE ]

Didn't Graham, later in life, admit that his securities analysis techniques no longer worked -- Too many eyeballs processing the same information.

To outperform, you need either inside information or access to the trading desks at the big brokerage houses.

I prefer to believe this guy who isn't trying to sell me anything and isn't trying to generate a sales commission

Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

Good luck, sounds like you are gonna need it.

[/ QUOTE ]

Getting business and investment advice from a Ph.D. is like getting sex advice from a priest.

If these guys say they are not in it for the money, I question their motivation, honesty, and sanity.

[rockrock]

Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.

Basically, the sell-side of Wall Street is a scam.

"Lets take your money and my experience and turn it into my money and your experience" is their mission statement.

Most diehard indexers recommend value and small cap tilt and a big chunk of (half of equities) split in NON-US - i.e. equal weightings of VPL,VGK,EEM/VWO,EFV and VINEX.

Good luck

[DesertCat]

[ QUOTE ]
Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.


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Out of curiosity, how do these academics explain Warren Buffett's track record?

[rockrock]

[ QUOTE ]
[ QUOTE ]
Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.


[/ QUOTE ]

Out of curiosity, how do these academics explain Warren Buffett's track record?

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Sell side Wall street loves buffet because they can point to him and everyone shakes their head up and down, with mouth wide open, believes they can do it.

Well you can't.

He is a business owner and investor that takes an active management role in the his companies.

Buying 10,000 shares of IBM does not make you a business owner.

Check out Effecient Frontier, Random Walk Down Wall Street and The Only Investment Guide you'll ever need if you want irrefutable evidence that active stock picking is a losers game.

Living the lie is more fun than indexing and asset allocation, I agree.

But its still a lie.

[DesertCat]

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Sell side Wall street loves buffet because they can point to him and everyone shakes their head up and down, with mouth wide open, believes they can do it.


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Wall street hates Buffett, because he rarely generates investment banking fees for them.

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He is a business owner and investor that takes an active management role in the his companies.



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He had a twenty year record of crushing the indexes before he bought his first company.

He takes no active role in his wholly owned businesses, the vast majority send him a check on a monthly or quarterly basis. You'd understand how silly this myth is (created I believe by a leading EMT academic), if you knew how few people work at Berkshire Hathaway HQ, and how many subsidaries they have.

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Buying 10,000 shares of IBM does not make you a business owner.


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According to Warren Buffett, it does.

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Check out Effecient Frontier, Random Walk Down Wall Street and The Only Investment Guide you'll ever need if you want irrefutable evidence that active stock picking is a losers game.


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EMT has been effectively been gutted by Buffett himself, in his famous speech "Superinvestors of Graham-and-Doddsvile". You should read this since you are well out of date in your understanding of the acceptance of EMT.

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Living the lie is more fun than indexing and asset allocation, I agree.

But its still a lie.


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The real lie is to rely on thirty year old "theories" that have suffered with time.

There is a great deal of truth in the EMT. Beating the market isn't easy, the market is frequently efficient.

But to say the market is alwasy efficient and can't be beat by stock picking is to ignore the records of dozens of value investors who've done it for decades on end.

The evidence that EMT proponents used was biased and incomplete. Mutual funds don't beat indexes as a group, but mutual funds suffer from extraordinary structural limitations. To beat the market in this structure requires extroardinary skill.

And your central advice is useful. Most investors are better off with index funds, but not because successful stock picking is impossible, but because it's hard.

But you need to stop closing yourself off to new information, and realize there are great long term investors who beat the market, and almost all of them do it the same way Buffett has.

[Peter666]

"You can't and won't win. (winning as defined by beating index)."

If you are intelligent you can and will. How can that be possibly denied when so many have already done it. Do you honestly think a good business with a good product and good advertisement can't make more money than a bad business with a lousy product and bad advertising? This is bizzare.