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Book Review: Winning the Loser’s Game

winning the losers game

Timeless Strategies for Successful Investing

Charles D. Ellis, the author of this book (in it’s Sixth Edition), has definitely hit the nail on the head with his subtitle.  The strategies outlined in this book are good for any investor in any economic/investing climate.

Time and again throughout the book, Mr. Ellis points out that the real key to investment success has nothing to do with finding the right stock, bond, mutual fund or ETF – and everything to do with developing a sound strategy for investing and sticking to it.

The strategy requires you to develop an understanding of your own personal tolerance for risk and your need for returns.  This can be a difficult undertaking, as it requires the investor to answer difficult questions about what kinds of losses he can stomach with his investments, as well as what sort of return you require for your investments over the long term.  It takes careful planning to develop this strategy – because you have to be truthful with yourself about your own reactions to market losses.  Losing your nerve at the wrong time can derail the process altogether.

Sometimes it is necessary to have help in the process – a financial advisor who is not vested in your investment choices can really help with building the strategy.  Look for a fee-only advisor to help with the process.

Another recommendation made throughout the book is to use indexed mutual funds as the basis for your investments.  As you’ve heard from me before, indexed mutual funds are really the best, smartest option in the marketplace.  Mr. Ellis puts it best with these three bullets, his conclusion to the book:

  • The number of brilliant, hardworking investment professionals is not going to decrease enough to convert investing back into the winner’s game of the 1950’s and 1960’s.
  • The proportion of transactions controlled by institutions – and the splendid professionals who lead them – will not decline.  Investing, therefore, will stay dangerous for the most gifted amateur.
  • Maybe some day so many investors will agree to index that the “last stock pickers standing” will have the field all to themselves.  Maybe.  But that’ll be the day.  So, be sure to call me.  Meanwhile, I’ve got better things to do – and so do you, where we can play to win with both my time and our money.

If all of this sounds eerily familiar, it’s because this is another author who I agree with completely – and I believe this book provides an excellent guide for the average investor.  It’s no wonder that this book has had such a successful run, and this latest edition just carries on the great tradition.  Go get it!

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