Comments on: Book Review: Unconventional Success

By: Beginning Investment Strategies to Consider

Beginning Investment Strategies to Consider — Tue, 15 Sep 2009 13:49:52 +0000

[...] advice from a book and not from yahoos on the internet (why are you reading this blog then? ) Unconventional Success by David Swensen, The Smartest Investment Book You’ll Ever Read by Daniel Solin (allocation [...]

By: Monday LinkStuff

Monday LinkStuff — Mon, 29 Sep 2008 08:59:30 +0000

[...] Capitalist did a great book review of Unconventional Success written by David Swenson who runs the legendary Yale endowment fund. I’m definitely going to be reading this [...]

By: Dividend Growth Investor

Dividend Growth Investor — Thu, 25 Sep 2008 15:18:24 +0000

But isn’t there some controversy about the Yale’s endowment fund being invested mainly in illiquid assets for which a day to day price might be difficult to find.
Also most of those illiquid assets ( like timber) have pretty high entry investment minimums to start with, which are not suitable for the usual middle class investor.

Anyways, buying and holding a diversified portfolio of index funds sounds like a good idea for the long run.

By: Flo

Flo — Wed, 24 Sep 2008 21:50:16 +0000

If you are going to read only one investment book in your entire life, it should be Swensen’s.

But then, my fear is that the people who will invest time & energy to read 500 pages on asset classes, portfolio structure and the many ways retail investors are being separated from their dollars, probably don’t need Swensen’s advice.

For me personally, his book made me realize that it took those 500 pages to give me the deep conviction to follow a passive, “do-nothing” approach. This is probably where most people struggle, because an active approach seems so much “smarter” at first glance.

By: Bob Ross

Bob Ross — Wed, 24 Sep 2008 17:11:55 +0000

I am a stock market book junkie and this is the best of the bunch. It is very well written and gives great insight into the need to index most of your portfolio.

By: Canadian Capitalist

Canadian Capitalist — Wed, 24 Sep 2008 14:30:53 +0000

Rob: Good point and it’s a great idea for a future post.

Andrew: Actually, apparently even Cramer thinks that most individuals should index most of their portfolio (I haven’t read his book but a MoneySense review noted the irony).

Mike: I first read this book when it first came out but I found myself referring it many times that I purchased my own copy.

By: Four Pillars

Four Pillars — Wed, 24 Sep 2008 13:39:08 +0000

Didn’t Cramer say that Lehman was a buy just before it imploded??

CC – thanks for the great review – I will be getting this one out of the library for sure.

Mike

By: Andrew Baechler

Andrew Baechler — Wed, 24 Sep 2008 13:28:46 +0000

When it comes to individual investors, one the things that I find fascinating is that many focus almost exclusively on the returns generated by the great managers of the world (Peter Lynch, Warren Buffett, etc…) and then ignore the actual advice they provide to the average investor.

On numerouse occassions Buffett and Lynch have counselled that individuals should manage their portfolios passively, using low-cost index funds. In fact, Buffett is so confident in the S&P 500 index that he bet $1,000,000 against the founders of Protege Partners that the S&P500 will outperform a fund of hedge funds picked by Protege. More info on the bet is available here:

http://www.pwlcapital.com/Advisor/Ottawa/Andrew-Baechler/Advisor-Insight/Andrew-Baechler/July-2008/Warren-Buffett-likes-the-S-P-500-vs–a-Fund-of-Hed

Rather than follow Buffett and Lynch’s advice, most individual investors instead turn to the Jim Cramer’s of the world in the hope that his short-term “get it now!” advice will earn them above average Lynch and Buffett like returns.

By: Rob

Rob — Wed, 24 Sep 2008 12:54:59 +0000

While the book does critique the vast majority of active management provided to retail investors, Swenson brilliantly outlines outline in one chapter how to “Win the active management game”.

While his a great book for all investors, anyone choosing to forego a passive index investing and instead invest all or a portion of one’s money into actively managed mutual funds (this would not be the CC, of course), would be well advised to read this particular chapter.

I have never read a better summary of the key characteristics required to win with mutual funds. Using his criteria (which applies to about 1% of funds out there), investors can quickly eliminate the vast majority of weak funds out out there and focus firmly on the few good ones.

It may also be worthwhile to show this chapter to your investment advisor (if you use one) and ask him/her to (as objectively as possible) critique the funds he/she has recommended using Swenson’s criteria.