From the Bookshelf
“Bad investors think of ways to make money. Good investors think of ways not to lose money. Those 17 words are the most important words any investor can know,” writes Steven Sears. This advice summarizes the message of his new book, “The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails” (John Wiley & Sons, 2012).
Sears covers a broad range of topics, including buy and sell decisions, fees, asset allocation, financial data and regulation. Much of the focus is on behaviors that cause investors to underperform the markets. Though there is plenty of advice on how to succeed, Sears puts a lot of emphasis on what to look out for.
We would have liked to have seen a conclusion that ties together the lessons given throughout the book. But even without this, paying attention to just a few of the book’s lessons may help investors to eliminate errors.
Max Isaacman shares the portfolio strategies used by more than 20 money managers in “Winning With ETF Strategies: Top Asset Managers Share Their Methods for Beating the Market” (FT Press, 2012). Nearly two-thirds of the book is devoted to describing how each manager allocates client portfolios and the role that exchange-traded funds play in those strategies.
Readers looking for specific instruction on selecting an ETF or implementing a strategy may be disappointed. Many of the strategies are based on proprietary analysis or are customized for an investor’s personal financial situation. However, the managers do provide a good overview of what they are doing and why they favor certain ETFs, so there are lessons to be learned.
A valuable part of the book is its discussion of index construction. Isaacman does a great job of explaining the pros and cons of the indexing strategies that ETFs are based upon. This discussion helps readers better understand why seemingly similar funds can have very different returns.