|Unconventional Success: A Fundamental Approach to Personal Investment
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The bestselling author of Pioneering Portfolio Management, the definitive template for institutional fund management, returns with a book that shows individual investors how to manage their financial assets.
In Unconventional Success, investment legend David F. Swensen offers incontrovertible evidence that the for-profit mutual-fund industry consistently fails the average investor. From excessive management fees to the frequent "churning" of portfolios, the relentless pursuit of profits by mutual-fund management companies harms individual clients. Perhaps most destructive of all are the hidden schemes that limit investor choice and reduce returns, including "pay-to-play" product-placement fees, stale-price trading scams, soft-dollar kickbacks, and 12b-1 distribution charges.
Even if investors manage to emerge unscathed from an encounter with the profit-seeking mutual-fund industry, individuals face the likelihood of self-inflicted pain. The common practice of selling losers and buying winners (and doing both too often) damages portfolio returns and increases tax liabilities, delivering a one-two punch to investor aspirations.
In short: Nearly insurmountable hurdles confront ordinary investors.
Swensen's solution? A contrarian investment alternative that promotes well-diversified, equity-oriented, "market-mimicking" portfolios that reward investors who exhibit the courage to stay the course. Swensen suggests implementing his nonconformist proposal with investor-friendly, not-for-profit investment companies such as Vanguard and TIAA-CREF. By avoiding actively managed funds and employing client-oriented mutual-fund managers, investors create the preconditions for investment success.
Bottom line? Unconventional Success provides the guidance and financial know-how for improving the personal investor's financial future.
Unconventional Success: A Fundamental Approach to Personal Investment This book is a must-read for anyone who is planning to do their own investing whether in a 401k, IRA or taxable account. It gives you a simple but sophisticated approach to allocating your investments among equities (U.S. and foreign), U.S. Treasuries (regular and inflation-protected) and real estate. He shows you how to invest in index mutual funds without paying exorbitant (and unnecessary) investment advisory & management fees. He gives a blisteringly negative review of the mutual fund industry which, based on credible, academic research has failed to beat the market after taking into account the fees charged. The author's "creds" are impeccable as a star investor of one of the largest endowment funds in the U.S. I believe this book is essential reading for any investor. ...more info
- Absolutely the best investment book ever written, BUT....
THIS IS NOT FOR BEGINNERS! Probably not even the average investor. (And this is the simplified version of Mr. Swensen's "Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment"!) It is dull and dry. That is unless, you happen to be a serious investor. In which case it is simply a page turner. As clearly as Mr. Swensen lays out a very compelling approach to investing, the truth is, unless you have passed two or three finance classes with flying colors, the genius will go right over your head.
Is this book for you? Take this quiz.
1) Do you know what bond duration is and its significance when investing?
2) Can you explain how correlations of asset price movements can be used to reduce investment risk?
3) Do you know what a portfolio's turnover rate is?
4) Do you know the difference between market-cap-weighted indices and equal-weight indices?
5) Or, would you be excited in learning why the construction of Russell indices is inferior to those of S&P indices for investment purposes?
If the answer to any of the above is no, then take two finance classes at a local college, AND THEN read this book!!
Else you will be left 1) taking it all as simply a matter of faith, or 2) wishing you had bought Donald Trump's ridiculous "Why We Want You to be Rich".
If you can't do the above, then don't worry about learning how to invest. Just buy mutual funds from AARP (they are excellent and constructed much along the lines described in this book), and spend your time doing something you enjoy. You'll be financially more successful and have more fun!...more info
- Unconventional Success
Its probly due to my ability to understand but it was not real clear. I found it to acadamic and not down to the level of the average engineer/inverstor/self retirement manager. I was looking for more guidance to long term investing for the average home porfolio....more info
- Material, great. Writing, difficult
I read about this author for several years before I got the book.
I've read books on the same topic, but this gives further support for accepted principles. Mr. Swensen gives more insight into the benefits of investing diversification into low cost index mutual funds. He is particularly good at detailing visble and hidden costs that detract from performance while giving practical advice on implementation.
Writers that have mastered their subject, write clearly. I don't understand why the cumbersome writing. Personal style, poor editing, or obscure ethical/legal protection? ...more info
- Outstanding book for the semi-sophisticated investor but not quite everything you need
Written by one of the brightest and most successful money managers, the book has straightforward advice on what assets should makeup a portfolio and what assets (and providers) should be avoided. He definitely picks a few bones with the mutual fund industry which of course has been done before in such books as "The Intelligent Asset Allocator" by Bernstein and "A Random Walk Down Wall Street", corporate governance etc. As mentioned elsewhere he also goes into detail about the importance of rebalancing your portfolio.
1. Gives advice on companies which can be trusted and provide products and investments where the investors objectives are aligned with the products (stocks, etfs, government bonds etc).
2. Lists specific indecies and providers he favors over others. There are tons of etfs out there so it's helpful to see a list he likes. He goes into detail about why some are more efficient then others.
3. Straightforward writing and sections. Easy to skip things you may already know (e.g. most mutual funds should be avoided).
4. Written by someone whe has done this with great success himself.
1. Spends long sections in the book going into perhaps too much detail on specific examples of assets to avoid.
2. Regarding #1, I would have preferred more detail on specific allocations and products he likes and how we should use them best.
3. His own asset allocation at Yale includes a substantially different asset mix but he never gives detail on why Yale buys these things (e.g. Hard Assets) but individuals can or should not.
4. No advice on any sample portfolio.
5. Some mention of DFA would be nice.
In the end, I still prefer William Bernsteins "The Intelligent Asset Allocator" but this book is right up there and is one of the best I have read in years (and I have read most all of them)....more info
- A must read for investors
I spend 45 years in the Wall Street enviroment. the book
sheds a refreshing new look at all investment catagories.
Should be required reading in all Business Schools....more info
- An In-Depth Look for the More-Interested Investor
While this is an excellent book, I knocked off a star for one main reason: I believe it to be a little too advanced to be called "fundamental."
This is the perfect book for a person with two critical attributes:
1) You have already read Burton Malkiel's "A Random Walk Down Wall Street"
2) You are looking to go beyond a employer-sponsored defined contribution plan and would like some help determining who gets your money.
I say read Malkiel first because having an understanding of the Efficient Market Hypothesis will help you get a lot more out of reading this book. While Swensen presents an excellent work, it is a bit dry and academic. If, however, you can commit to reading it carefully, I am confident you will be a better money manager for it.
Since an individual employee has little control over the firm chosen to administer the company 401(k), I believe this book to be less helpful than "A Random Walk" if you are simply seeking guidance for selecting investments in a defined plan. If, however, you are about to open your own IRA or a standard, taxable account, this book will serve as an invaluable guide.
Stick with it, and happy investing!...more info
- useful, but not very functional or substantial
If you've never read Malkiel's Random Walk Down Wall Street, a lot of what Swensen says will be eye-opening. If you have... well, you'll be disappointed. Swensen doesn't back up his statements with enough data to make the book interesting to finance and numbers nerds. Swensen doesn't provide enough step-by-step guidance to make the book functional for people just trying to allocate their assets. There is a lot of useful stuff in here, however, and the author should get credit for trying to share his knowledge....more info
- BUT WILL THIS WORK IN THE COMING FUTURE ECONOMY?
Swensen gives excellent advice such as using Vanguard (as I have for years), and he recommends that individuals play a very active role in their financial future. What concerns me greatly though is that financial counselling books such as this don't say a word about the seemingly inevitable coming massive depression that should arrive around 2010, driven by boomer demographics. I suggest that Swensen's excellent advice be married with this by also reading Arnold's very scary THE GREAT BUST AHEAD and visiting the book's website thegreatbustahead....more info
- bashing utual funds
Good overall critique of the mutual fund industry. He suggests investing in index funds. The problem wirh the S&P 500 is that it gets overweight in particular industries like tech stocks during the 1990's. As a result, when the market tanked, the S&P tanked greater than it should becuase the tech stocks had increased from 10 percent of the index in the early 90's to 32 percent at the end of the 90s.
Also he should have given more examples of mutual fund companies that he believes puts the interest of the consumer first. ...more info
- A superb overview of how, what and where to invest .
A superb overview of how, what and where to invest to ensure that you, and not the investment institutions, profit; with supporting numbers that will convince you of the wisdom of Swensen's investment strategies and give you the confidence to stay the course in bad economic times. A great place to start for young investors. Nevertheless, most people probably won't believe Swinsen's simple advice until later in life when they have made all the mistakes he so well documents....more info
- Unconventional Success-- an opinion
This book is a real contribution to the problem of individual investing. It
requires discipline and patience-- both of which will turn off many
potential users. However, the author is well worth listening to. He has proved his mettle in a superlative way, and has capsulized his advice in a way that can work, but you must do your part, this is not magic or alleged to be.Unconventional Success: A Fundamental Approach to Personal Investment...more info
- Just What the Money Doctor Ordered!
I appreciate this book more than any other financial book I have read in a long time. I should be writing a commission check to David Swensen right now for all of the money mistakes he has prevented me from making in this well written and informative book. Yes, it is a difficult read. It is not "Investing for Dummies" but the chapters are articulate and extremely thorough. ...more info
- It Taught me the questions to ask
Let's face it, I'm a 30 something Stay At Home Mother with two kids, a husband, a mortgage and a dog.
I heard the book referenced on NPR and thought it would be a worthwhile read. Now I'm asking better questions.
Mostly though I found it frighting.
If you'll excuse me I'm going to resume my ostrich pose....more info
- Good Practical Advice
Unconventional Success is well written with logical explantions, good examples and practical advice. The book goes step-by-step through a discussion of recommended types of investments and popular investments that are not receommended, active vs passive investments and market timing. I recommend it for anyone who is interested in investing. It is one of the best investment books I have read. ...more info
- Excellent Book on Mutual Fund and General Investing!
My first 5-star review!
It's not 5-star due to any brilliant writing on David's part, in fact many a reviewer notes how he dryly plods along - even the title is a light rant on how most people would rather fail following convention wisdom instead of succeeding un-conventionally by following a consistent (non-media influenced) financial strategy.
No, this book is a 5-star book because it is one of those few books that may truly, positively impact your financial life.
In it, David describes how greed finds a way as "Wall Street" beats "Main Street" almost every time. He describes how most actively managed mutual funds fail to beat the market and how you can best succeed by constructing a stock oriented, broadly diversified portfolio (Domestic stocks 30%, Foreign stocks 15%, Emerging market equity 5%, Real Estate 20%, US Treasury Bonds 15%, US Treasury Inflation Protected Securities 15%). He then goes on to discuss many related topics such as investor behavior, media and government actions, tax impact, rebalancing, the antics of the investment industry, etc.
This book is not for the faint of heart, but if you put in the effort to finish it, you'll be well rewarded by a solid understanding of the Investment Industry and hopefully you'll walk away with a few action items for your financial future.
- Success The Unconventional Way
David Swensen has done a magnificant service to the individual investor by writing this book. He explains all of the undisclosed charges that are hidden within actively managed mutual funds and gives two examples of not-for-profit mutual fund families who are investor friendly. One happens to be The Vanguard Group with its index funds that he recommends because of their low fees. David Swensen's reputation as a premier money manager is due to his excellent record at Yale managing their endowment for over twenty years with an average return of better than 16 percent. After reading this book you will not want to trust your money to another for-profit mutual fund company but instead invest in index funds or ETFs for the next 20-30 years. As for ETFs, he also explains how most have drifted off course through the years and no longer deliver good value. He suggests sticking with the core ETF's and he explains which ones those are along with their expenses.
I would recommend this book to anyone who values his or her money and wants to retain the most of it when investing it in the "MARKET"....more info
- Assets Not for Asset Allocation
I was fairly impressed with this book. I would give it an A, but the style of writing was painful to read, so I give it a B.
I recently saw several articles about Harvard's endowment manager leaving Harvard to set up his own firm. I was amazed to see how diversified the Harvard fund was in that it included not just stocks and bonds, but many other asset classes:
U.S. equities 15%
Private Equity 13
Hedge Funds 12
U.S. Bonds 11
Foreign Equities 10
Real Estate 10
Inflation-Indexed Bonds 6
Emerging Markets 5
Foreign Bonds 5
Borrowed Money -5
This info came from 12/27/04 Business Week article. The same article said Harvard's endowment fund grew from $4.7B in 1990 to $22.6B in 2005. This sounds impressive until you calculate the compounded return, which is 11.04%. Simply investing in an S&P 500 index fund over the same time period would have given roughly a 10.91% compounded rate of return.
Swensen seems to have followed a similar very diversified approach at Yale.
I really enjoyed the explanation of why certain asset classes should not be included in investor's portfolios.....specifically foreign bonds.
Since I am an avid Index Fund investor, Swensen was preaching to the choir with regards to blasting the "for profit" mutual fund companies. Being a Vanguard investor, I was disappointed to see Vanguard take one hit for following one type of unsavory practice. Compared to the "for profit" mutual fund companies, Vanguard is a shining angel.
The successes of Harvard's and Yale's endowment fund investments are spreading the gospel of the advantages of asset allocation. Gary Brinson's 1986 famous study can be defined as the birth of asset allocation. He found that over 90% of a portfolio's return can be determined by the asset classes used, not what the individual investments were. Brinson's findings have been relatively slow to flow through the investment community and to individual investors. Dial the time clock ahead from 1986 to 2006, and one of Business Week's cover stories seeks to explain why the S&P 500's profits have increased dramatically over the last 5 years, yet the S&P 500 companies have had very little stock price appreciation. One explanation offered is that more and more investors practice asset allocation and choose other investments besides the S&P 500 for their portfolios. The increased demand for other asset classes like foreign stocks, commodities, and gold has subsequently less to a decrease in demand for large cap stocks in the S&P 500.
This book contains excellent information and guidelines for serious investors. It is very dry and boring to read.
All-in-all, a good book for serious investors. I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Index Mutual Funds: How to Simplify Your Life and Beat the Pros, and the Coffeehouse Investor....more info
- Good ideas poorly presented.
This book is essentially an insightful and comprehensive trashing of the business of mutual funds, an accurate assessment of a parasitic industry. The author is clearly very intelligent and extremely knowledgeable and the book contains a great deal of useful information for the investor.
Unfortunately, it is so poorly written that it is almost unreadable. In Swensen's world, the unmodified noun is nearly as rare as an honest mutual fund manager. And why use a single sentence when three will do? Despite aggravating redundancy, his explanations are often murky and a couple of times I resorted to another investment text for clarification.
This author desperately needs a hands-on editor - the writing is so callow that a competent high school English teacher would do. ...more info
- Great info, atrocious writing.
If you want excellent investment advice and are willing to wade through nearly opaque, dense prose loaded with undefined jargon, go for it. I read it, and I'm not sorry. But, it was sure not a pleasant read.
But, for a good laugh, try to imagine this guy making boudoir conversation!
- you can find good investment advice
David Swenson while having done a fantastic job for Yale fails to understad what the individual investor goes through,especially in bear markrts,and in fact there are many financial advisors who have added value to investors portfolios. Do it yourself doesn't work. The late nineties proved that....more info
- Unconventional Success: A Fundamental Approach to Investing
Swensen's text is well developed and demonstrates a reasonable and rational approach to investing. Though not a text for the novice, I found it accessible to the average reader, as I gained familiarity with the language of investing, and intend to follow his advice. ...more info
- Unconventional Success
Good for a general background for a person entering the investment area to save for their retirement. Has a somewhat critical review of Mutual Funds which, in my experience, is an honest review of the excessive fees related to the Mutual Fund investment....more info
- Good Material; Long-Winded
Provides a good assessment of various investment strategies. Definitely not written at the eight-grade reading level! He could cut back on some of his ax-grinding about Wall-street people and mutual funds (although, granted, his points are well-taken) and shorten the book to maybe 30% of its current volume. Not to be too negative, there is good, valuable information to be gained from this book....more info
- Very Good, but Incomplete
While Swensen touches on key issues also raised by others such as Malkiel, Bogle, and Merriman, he adds very good value from insights experienced from his success in growing the Yale endowment portfolio.
He brings a unique and valuable perspective on issues such as: how full service Wall Street firms are out to stiff you; why corporate bonds and foreign bonds don't make sense as core assets; how the Russell 2000 index is fundamentally flawed; why periodic rebalancing is important for long term returns; identifying core asset classes that offer inflation protection.
He doesn't address some key areas for individual investors. Are low-cost bond funds a better choice than laddering given Wall St transaction costs and lack of bond pricing transparency? What weight should be given to value stocks and to small cap / micro cap in his core equity classes? If the Russell 2000 is a poorly constructed index, what is a good alternative? Are Vanguard and TIAA/CREF the only fund games in town? Based on the Yale experience, what is a good withdrawal strategy for the retired investor?
Overall, I found Malkiel (A Random Walk Down Wall Street), Bogle (Bogle on Mutual Funds - New Perspectives for the Intelligent Investor), and Merriman (Live it Up without Outliving Your Money! : 10 Steps to a Perfect Retirement Portfolio) to be better starting points for understanding a fundamental approach to investing; with Swensen adding additional insight in selected areas.
- Unconventional wisdom
This is a breath of fresh air, amidst all the investing books that tout mutual funds or re-asseing your portfolios and looking for successes, this book offers some basic common sense. Learn how to diversify through various assets and then diversify in its sub categories. Learn how to profit take on your successes and re-allocating and balancing your portfolio by looking at value companies with non-performing stock values. Unconventional but wise, Swesen's book is a good buy.
Other investment books to consider:
Investing, Without Losing (ISBN 0978834607 - NOT on amazn on other stores)...more info
- Unconventional Success: A Fundamental Approach to Personal Investment
This book does helps the average investor understand how to invest for retirement without the need of expensive advice from stock brokers or finicial planners. The author covers all types of investment products and a suggested list of mutual funds that have low expence ratios, and have in the past performed close to the average returns of the overall stock market. I read this book initially from the local library and learned so much helpful advice that I decided to buy it from Amazon....more info
- Excellent Ideas but I couldn't finish it
Well, the title says it all. Where was the editor on this? The first rule of writing is always to keep your reader's interest. I think major points of the book could be made less often to reduce repetitiveness. And less written on points that are kind of obvious - like "Taxes impair wealth accumulation." I tried reading just the summaries, but the book is more than just that. I got it out of the library, but I ran out of renewals.
Even so, the ideas are VERY important to consider, so everyone should make an attempt at it....more info
- excellent for the intellectually-oriented investor
Swensen provides a excellent analysis of different asset classes and the roles they play (or fail to play) in diversifying portfolios. For example, he clarifies the different diversifying roles of conventional Treasury bonds and TIPS, and explains why corporate, municipal and foreign bonds cannot be substituted. He also demonstrates the advantages of periodic portfolio rebalancing for the disciplined investor.
In what almost amounts to a book within a book, Swensen forcefully chronicles the failure of the mutual fund industry and its regulators to serve the interests of individual investors. This discussion is a must-read for anyone concerned about the implications of the shift towards investor managed defined contribution pension plans as the primary vehicle for retirement savings.
Swensen has not written a practical how-to guide to personal investing or asset allocation; rather, he argues for an approach to personal investing built around core principles. Intellectually-oriented investors will be well served by this book as preparation for developing a personalized investment program....more info
- Conventional and yet unconventional
I really like this book. It lays out the argument for a diversified portfolio in a way that I have not seen in other similar books. He analyzes each asset class and explains its plusses and minuses. He arrives at the conventional diversified portfolio, but with some unconventional flourishes - for example, no corporate bonds. But the real strength of this book is that the reader will come away with a strong understanding of why each asset class is important to have in a diversified portfolio.
The second half of the book is a diatribe against the mutual fund industry. I found it eye opening.
The book is not technical, but it does assume a certain level of familiarity with the jargon of the investment world. I wouldn't recommend it for a complete beginner, but rather for someone who wants to go a little deeper beyond the usual discussion of asset allocation. ...more info
- It left me hanging
The author makes a compelling case for an alternative investment strategy that really does, as the title suggests,fly in the face of conventional investment wisdom. He does so by methodically working through the range of alternatives available to the personal investor, looking at risk, performance, fees and potential conflicts of interest that work to the detriment of the investor. Conventional wisdom mainstays like mutual funds, corporate bonds, REITS to name a few are tarred and feathered by the author. The remaining investment vehicles, US Government Securities, foreign and domestic index funds form the basis of his portfolio. He also advocates for a nerves of steel ridged adherence to an asset allocation model where you sell winners on the way up and buy losers on the way down to maintain allocation targets. What is missing is a concluding chapter that summarizes his approach and provides an overview of a plan for action. I was left with a feeling of "Where do I go from here?"...more info
- Cookbook for ETF investing
This was a cookbook for investing in Exchange Traded Funds. The book is a bit repeatative but each chapter has a summery to spare you of some repeated details. However, it is hard to refute the logic and thinking behind the recommendations. And, if this is as indisputable as the author claims, it provides a recipe for investment that requires little effort and little cost overhead....more info