Rational Investing in Irrational Times: How to Avoid the Costly Mistakes Even Smart People Make Today
Swedroe, a principal in the firm of Buckingham Asset Management and author of What Wall Street Doesn't Want You to Know, believes that many investors listen to the "experts" instead of doing their own homework when they're choosing investments. People thus make costly mistakes that could have been avoided if they had understood the rules of investing. According to Swedroe, that means understanding that following the herd (e.g., investing in dot-com or tech stocks) and relying on the experts portfolio or mutual fund managers is not the right strategy for most individual investors. "The only way to take control over the risk and expected returns of a portfolio is to use index funds, ETFs [exchange traded funds], or passively managed funds as the building blocks of a portfolio," he says. Swedroe obviously knows this subject well; the book is full of citations of academic studies related to investor behavior and statistics about stock market performance. He also includes a thorough glossary. However, the title and subtitle are somewhat misleading browsers picking up the book may expect nuggets of practical advice on how to keep their money safe in unpredictable markets and economic downturns. This advice is here, but it's buried among pages of references to studies and statistical data. Swedroe's belief that the investment community misleads the average Joe is appealing. Regrettably, his message is overwhelmed by unnecessary data and references that diminish its usefulness.Copyright 2002 Cahners Business Information, Inc.