Archive for February, 2011

Book Review: The Investment Answer

February 1, 2011

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[Front Cover of The Investment Answer]

I first read about The Investment Answer by Daniel Goldie, an investment advisor and Gordon Murray, a Wall Street veteran in a New York Times article (see A Dying Banker’s Last Instructions, NY Times, November 26, 2010). The book was billed a sort of investment Last Lecture for Mr. Murray, who was dying from brain tumour. Sadly, just as the book was reprinted for wider release, Mr. Murray passed away.

I ordered the book from Amazon without any expectation of learning something I didn’t know already. After all, when it comes to passive investing, the authors will be preaching to the choir here. But I did want to find out if I can recommend this book to other investors.

The first thing you notice about this book is how thin it is — just 88 pages of generously spaced text. But it is packed with solid advice. The authors recommend that investors make just five decisions:

– Should you DIY or invest with an advisor?
– How should you divide your portfolio between stocks & bonds, small cap & value?
– How should you diversify within portfolio components?
– Active or Passive?
– Rebalancing: how and why?

I was a bit surprised (perhaps it shouldn’t be considering that both authors are associated with Dimensional Fund Advisors) that the authors do not believe a DIY approach is prudent when it comes to investing. They recommend that investors hire independent, fee-only advisors who will act as fiduciaries to their clients.

The book is available on Amazon.ca for $15. Investors of all stripes will find the book interesting and even enriching if they take intelligent action on the five decisions they are faced with. However, I do wish the authors had included a section on further reading for readers interested in an in-depth study of the subject.