Investing Books Debunked

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
DomDangelina
Posts: 180
Joined: Thu Jun 01, 2017 8:50 pm
Location: California refugee

Investing Books Debunked

Post by DomDangelina »

Which investing books did you initially think were great but were then somehow debunked, so to speak? Conversely, which investing books did you initially think were junk but were then somehow proven sound?
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121
User avatar
bertilak
Posts: 10711
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Investing Books Debunked

Post by bertilak »

DomDangelina wrote: Fri Sep 29, 2017 2:00 pm Which investing books did you initially think were great but were then somehow debunked, so to speak? Conversely, which investing books did you initially think were junk but were then somehow proven sound?
How to Make Money in Stocks: A Winning System in Good Times and Bad by William J. O'Neil, or any other book by or about him. His system is massively complex and there is a lot of very expensive help to get you going.I discuss it in an earlier post: viewtopic.php?p=1834764#p1834764.

I just Googled and see there is a CAN-SLIM Masters Program advertised for $6,995. I'll be that spends a lot of time advertising the next level (Doctorate Program?) and the advanced software (with associated subscription) you need to take advantage of what you just "learned."
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Investing Books Debunked

Post by livesoft »

i read my dad's copy of LIchello's "How to Make a $1,000,000 in the Stock Market Automatically" back in the 1970s. I was going to turn my earnings from a minimum wage job into a million dollars. Then I looked at the rate of growth achieved by the trades/methods discussed in the book. Although the actual CAGR was not discussed nor calculated in the book and the numbers looked huge, when I calculated it, the CAGR turned out to be less than about 5%. My savings account was paying almost 10% then, so I actually laughed when I did the math. Of course, I has no historical perspective and I didn't know that 1973-1974 was a pretty bad time for the stock market: https://en.wikipedia.org/wiki/1973%E2%8 ... rket_crash with the DJIA losing about 45% in those two years.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
Taylor Larimore
Posts: 32839
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Re: Investing Books Debunked

Post by Taylor Larimore »

DomDangelina wrote: Fri Sep 29, 2017 2:00 pm Which investing books did you initially think were great but were then somehow debunked, so to speak? Conversely, which investing books did you initially think were junk but were then somehow proven sound?
DomDangelina:

My biggest disappointment was reading "The Intelligent Asset Allocator" by Bill Bernstein. Bill may be the most intelligent person I've ever met, and his first book was way over my head with complex mathematics.

One of the best investing books I ever read was "The Four Pillars of Investing" by Bill Bernstein. In his second book, Bill wrote in the Preface:
Several years ago, I began writing a small book, The Intelligent Asst Allocator; which ultimately became a "successful failure": successful because it attracted positive notice and sold enough copies to please my publisher and myself, and a failure because it did not accomplish its ultimate goal. My aim had been to explain modern portfolio theory, a powerful way of understanding investing, to the general public. What I instead produced was a work comprehensible only to those with a considerable level of mathematical training and skill.
The Kendall edition of Bill's great second book is currently on sale at Amazon.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Topic Author
DomDangelina
Posts: 180
Joined: Thu Jun 01, 2017 8:50 pm
Location: California refugee

Re: Investing Books Debunked

Post by DomDangelina »

Taylor Larimore wrote: Fri Sep 29, 2017 8:55 pm
DomDangelina wrote: Fri Sep 29, 2017 2:00 pm Which investing books did you initially think were great but were then somehow debunked, so to speak? Conversely, which investing books did you initially think were junk but were then somehow proven sound?
DomDangelina:

My biggest disappointment was reading "The Intelligent Asset Allocator" by Bill Bernstein. Bill may be the most intelligent person I've ever met, and his first book was way over my head with complex mathematics.

One of the best investing books I ever read was "The Four Pillars of Investing" by Bill Bernstein. In his second book, Bill wrote in the Preface:
Several years ago, I began writing a small book, The Intelligent Asst Allocator; which ultimately became a "successful failure": successful because it attracted positive notice and sold enough copies to please my publisher and myself, and a failure because it did not accomplish its ultimate goal. My aim had been to explain modern portfolio theory, a powerful way of understanding investing, to the general public. What I instead produced was a work comprehensible only to those with a considerable level of mathematical training and skill.
The Kendall edition of Bill's great second book is currently on sale at Amazon.

Best wishes.
Taylor
hahah..... Very clever post, Mr. Larimore. I salute you!
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121
Nicolas
Posts: 4886
Joined: Wed Aug 22, 2012 7:41 am

Re: Investing Books Debunked

Post by Nicolas »

bertilak wrote: Fri Sep 29, 2017 7:54 pm
DomDangelina wrote: Fri Sep 29, 2017 2:00 pm Which investing books did you initially think were great but were then somehow debunked, so to speak? Conversely, which investing books did you initially think were junk but were then somehow proven sound?
How to Make Money in Stocks: A Winning System in Good Times and Bad by William J. O'Neil, or any other book by or about him. His system is massively complex and there is a lot of very expensive help to get you going.I discuss it in an earlier post: viewtopic.php?p=1834764#p1834764.

I just Googled and see there is a CAN-SLIM Masters Program advertised for $6,995. I'll be that spends a lot of time advertising the next level (Doctorate Program?) and the advanced software (with associated subscription) you need to take advantage of what you just "learned."
I wasted time and money on this system. As you say it was too complicated and I usually bought high and sold low. A few times I made money which was exciting but they were the exceptions. After a while my heart just wasn't in it, so I gave it up. There's a mutual fund that runs on these principles: CAN SLIM Select Growth Fund CANGX. (It doesn't beat the market and has a high ER).
User avatar
White Coat Investor
Posts: 17338
Joined: Fri Mar 02, 2007 8:11 pm
Location: Greatest Snow On Earth

Re: Investing Books Debunked

Post by White Coat Investor »

Rich Dad Poor Dad.

Although I confess I've come to appreciate more of it as an entrepreneur than as a professional/investor.

The Intelligent Investor

It's super interesting until you realize the author's recommendation at the end of his life was "Just buy an index fund."

I've read A LOT of really bad investing books. I don't even know the name of one of the worst of them, but it basically had each chapter written by a different financial advisor, each with his own crazy theory about how to invest....and they were all wrong! It was terrible. Like a bad stock picking internet forum in book form.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
User avatar
stemikger
Posts: 4950
Joined: Thu Apr 08, 2010 5:02 am

Re: Investing Books Debunked

Post by stemikger »

I used to like Suze Orman. Having said that, she lost all credibility in my eyes.

I enjoyed Rich Dad Poor Dad when it came out, but Robert K. turned out to be a big con artist.

I loved Dave Ramsey back in the day and still enjoy the Total Money Makeover, but today I don't agree with not using credit cards if you are responsible with them and I don't agree with his investing advice and the order in which you should pay off your debt. I especially don't like the fact that you stop contributing to your 401K until you are debt free.

David Bach wrote The Automatic Millionaire which I still love, however, after that he jumped the shark putting out books that had nothing much to say. The only other book by him I thought was pretty good was The Automatic Millionaire Homeowner. Start Late Finish Rich was basically The Automatic Millionaire all over again.

Ric Edleman, I used to enjoy Ric, but now I think he is just interested in selling his services. His books look like someone with schizophrenia wrote them. His radio show is the same way. Ric never gets to the point and I'm sure that is intentional.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
sixtyforty
Posts: 656
Joined: Tue Nov 25, 2014 11:22 am
Location: USA

Re: Investing Books Debunked

Post by sixtyforty »

bertilak wrote: Fri Sep 29, 2017 7:54 pm
DomDangelina wrote: Fri Sep 29, 2017 2:00 pm Which investing books did you initially think were great but were then somehow debunked, so to speak? Conversely, which investing books did you initially think were junk but were then somehow proven sound?
How to Make Money in Stocks: A Winning System in Good Times and Bad by William J. O'Neil, or any other book by or about him. His system is massively complex and there is a lot of very expensive help to get you going.I discuss it in an earlier post: viewtopic.php?p=1834764#p1834764.

I just Googled and see there is a CAN-SLIM Masters Program advertised for $6,995. I'll be that spends a lot of time advertising the next level (Doctorate Program?) and the advanced software (with associated subscription) you need to take advantage of what you just "learned."

I spent alot of time on CANSLIM as well and new other people that paid a lot of money to go to those seminars. One person actually went to that $7K program and became "certified". All the people I knew lost money using the system including the "certified" person, and in fact he probably lost the most. The CANSLIM excuse is, and it's clever, if you are losing money using the system then you must not understand it or using it incorrectly. It's never the system's fault. Anyone that lives in the house that Bogle built knows the truth.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci
AlohaJoe
Posts: 6609
Joined: Mon Nov 26, 2007 1:00 pm
Location: Saigon, Vietnam

Re: Investing Books Debunked

Post by AlohaJoe »

I probably wouldn't go so far as saying debunked....but any book that went in strongly for mean-variance optimization hasn't aged that well.

The Little Book that Beat Wall Street. Over at alphaarchitect they say they were never able to recreate the backtests. Plus the mutual funds built in it failed.

How about the Beardstown Ladies book? They turned out not to know how to calculate returns.

A few more recent books haven't been debunked exactly but seemed to come out with poor timing.

High Returns with Low Risk by Van Vliet is a low-volatility book that came out just as that strategy seemed to peak. I haven't checked recently but I think it is down since the book came out.

Dual Momentum is a similar story. The strategy has suffered from whipsawing and hasn't done super great since the book came out, IIRC.
User avatar
bertilak
Posts: 10711
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Investing Books Debunked

Post by bertilak »

sixtyforty wrote: Sat Sep 30, 2017 8:27 am I spent alot of time on CANSLIM as well and new other people that paid a lot of money to go to those seminars. One person actually went to that $7K program and became "certified". All the people I knew lost money using the system including the "certified" person, and in fact he probably lost the most. The CANSLIM excuse is, and it's clever, if you are losing money using the system then you must not understand it or using it incorrectly. It's never the system's fault. Anyone that lives in the house that Bogle built knows the truth.
I touch on that blue part in my linked post. They have another CYA related to that: Any seminar you pay for you can go to as many times as you want so if you are losing money they can just invoke that "doing it incorrectly" excuse and tell you to come back for a free refresher.

I went to the first "real" seminar after the introductory one even though I had a strong suspicion it was all a scam. I only went because they said if you drop out before starting the afternoon session you can get your money back. I dropped out as soon as lunch break started and did get my money back. (It took a while but there was no chicanery nor attempts to lure me back.)

They could have been smarter. They went into sales pitch mode BEFORE lunch which left no doubt about how things were going to go. There is enough depth and breadth and complexity to their system that they could have talked more about it before giving away the game. I was surprised they made this mistake as everything else about this was very slick.

At that "first real seminar" I sat next to a guy who was back for the second (or was it the third) time. He was a true believer. He had all the expensive software (beyond the beginner-level) with the associated expensive subscriptions. He demoed the software for me. It was quite complex, with lots of real-time info and pretty graphs. He could not believe it when I left. He practically begged me to follow through. I don't think he was a plant because he seemed pretty young and naive.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
Nicolas
Posts: 4886
Joined: Wed Aug 22, 2012 7:41 am

Re: Investing Books Debunked

Post by Nicolas »

I never went to a seminar but I did subscribe to IBD and tried to buy the black-bordered IBD 100 (now 50) stocks at their "trigger points". Larry Swedroe weighed in on CAN-SLIM in 2010.
https://www.cbsnews.com/news/dont-confu ... h-outcome/
User avatar
bertilak
Posts: 10711
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Investing Books Debunked

Post by bertilak »

Nicolas wrote: Sat Sep 30, 2017 10:23 am I never went to a seminar but I did subscribe to IBD and tried to buy the black-bordered IBD 100 (now 50) stocks at their "trigger points". Larry Swedroe weighed in on CAN-SLIM in 2010.
https://www.cbsnews.com/news/dont-confu ... h-outcome/
Thanks for the link. I notid two important points:
  1. Implementing a strategy in the real world is more expensive than simulating the strategy.
  2. Despite CAN-SLIM's scientific appearance of looking at characteristics of a company' and ts stock, some of those characteristics are subjective. That is, they are in part characteristics of the one who is looking! I could add they are not all quantifiable.
Both of those leave CYA "outs" for proponents of the method:
  1. You chose an expensive way to implement. (Perhaps you need a more efficient trading platform, or more timely information, or faster reflexes.)
  2. You misjudged some important characteristic. (Perhaps attend a free refresher seminar.)
O'Neil's own attempts (three of them!) to run mutual funds based on CAN-SLIM all failed. That seems to negate those CYYs. Of course O'Neil may have a different definition of success vs. failure.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
Nicolas
Posts: 4886
Joined: Wed Aug 22, 2012 7:41 am

Re: Investing Books Debunked

Post by Nicolas »

bertilak wrote: Sat Sep 30, 2017 11:08 am
Nicolas wrote: Sat Sep 30, 2017 10:23 am I never went to a seminar but I did subscribe to IBD and tried to buy the black-bordered IBD 100 (now 50) stocks at their "trigger points". Larry Swedroe weighed in on CAN-SLIM in 2010.
https://www.cbsnews.com/news/dont-confu ... h-outcome/
Thanks for the link. I notid two important points:
  1. Implementing a strategy in the real world is more expensive than simulating the strategy.
  2. Despite CAN-SLIM's scientific appearance of looking at characteristics of a company' and ts stock, some of those characteristics are subjective. That is, they are in part characteristics of the one who is looking! I could add they are not all quantifiable.
Both of those leave CYA "outs" for proponents of the method:
  1. You chose an expensive way to implement. (Perhaps you need a more efficient trading platform, or more timely information, or faster reflexes.)
  2. You misjudged some important characteristic. (Perhaps attend a free refresher seminar.)
O'Neil's own attempts (three of them!) to run mutual funds based on CAN-SLIM all failed. That seems to negate those CYYs. Of course O'Neil may have a different definition of success vs. failure.
Yes, and regarding the mutual funds, if he couldn't make it work, how are we supposed to do it? :shock:
sixtyforty
Posts: 656
Joined: Tue Nov 25, 2014 11:22 am
Location: USA

Re: Investing Books Debunked

Post by sixtyforty »

bertilak wrote: Sat Sep 30, 2017 11:08 am
Nicolas wrote: Sat Sep 30, 2017 10:23 am I never went to a seminar but I did subscribe to IBD and tried to buy the black-bordered IBD 100 (now 50) stocks at their "trigger points". Larry Swedroe weighed in on CAN-SLIM in 2010.
https://www.cbsnews.com/news/dont-confu ... h-outcome/
Thanks for the link. I notid two important points:
  1. Implementing a strategy in the real world is more expensive than simulating the strategy.
  2. Despite CAN-SLIM's scientific appearance of looking at characteristics of a company' and ts stock, some of those characteristics are subjective. That is, they are in part characteristics of the one who is looking! I could add they are not all quantifiable.
Both of those leave CYA "outs" for proponents of the method:
  1. You chose an expensive way to implement. (Perhaps you need a more efficient trading platform, or more timely information, or faster reflexes.)
  2. You misjudged some important characteristic. (Perhaps attend a free refresher seminar.)
O'Neil's own attempts (three of them!) to run mutual funds based on CAN-SLIM all failed. That seems to negate those CYYs. Of course O'Neil may have a different definition of success vs. failure.

It reminds me of the California Gold Rush in 1848 where people flocked to California from across the US to find gold. Those gold prospectors worked hard, day and night to find their gold. Most found nothing. In the end it was the companies that sold them their tools & their jeans that made the real money. This parallel is alive and well in the financial world.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci
Topic Author
DomDangelina
Posts: 180
Joined: Thu Jun 01, 2017 8:50 pm
Location: California refugee

Re: Investing Books Debunked

Post by DomDangelina »

stemikger wrote: Sat Sep 30, 2017 5:35 am
David Bach wrote The Automatic Millionaire which I still love
Have you seen the expanded and updated edition of this book?

https://www.amazon.com/Automatic-Millio ... 834&sr=1-1

I wonder if he ruined it.
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121
User avatar
stemikger
Posts: 4950
Joined: Thu Apr 08, 2010 5:02 am

Re: Investing Books Debunked

Post by stemikger »

DomDangelina wrote: Sat Sep 30, 2017 3:21 pm
stemikger wrote: Sat Sep 30, 2017 5:35 am
David Bach wrote The Automatic Millionaire which I still love
Have you seen the expanded and updated edition of this book?

https://www.amazon.com/Automatic-Millio ... 834&sr=1-1

I wonder if he ruined it.
I did and he added very little. I will check it out again to make sure I didn't miss anything.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
pascalwager
Posts: 2311
Joined: Mon Oct 31, 2011 8:36 pm

Re: Investing Books Debunked

Post by pascalwager »

I've retired all of my books. Too much about making bets, acknowledged and unacknowledged.

If Vanguard produced the world bond/stock index fund (WBS) with differing bond/stock ratios for various investor ages, etc., then you'd only need a book if you also had taxable accounts as the WBS wouldn't be tax efficient. This book would mainly provide usable portfolio examples to address the differential taxation.
VT 60% / VFSUX 20% / TIPS 20%
User avatar
k66
Posts: 504
Joined: Sat Oct 27, 2012 1:36 pm

Re: Investing Books Debunked

Post by k66 »

Ahh, the Turtles!

I read two books from Curtis Faith (an original Turtle) "Way of the Turtle" and "Inside the Mind of the Turtles".

I also read "the Complete Turtle Trader", by Michael Covel, a Turtle follower who chronicled the in-programme and post-programme history of several Turtles (including Mr. Faith).

All of these books were very interesting but essentially, in my mind, the "Turtle" methodology/rules won't be able replicate the fantastic returns that Rich Dennis & Bill Eckhardt were able to accumulate (and variously lose) over time. I think some of it is the fact that, now that the rules are known, there are counter-rules at play to deflate the potential, but more importantly that the rules probably never worked as supremely as they were first believed.

The movie "Trading Places" was much more entertaining though...
LOSER of the Boglehead Contest 2015 | lang may yer lum reek
Stryker
Posts: 406
Joined: Tue Nov 24, 2009 5:13 am
Location: Canada

Re: Investing Books Debunked

Post by Stryker »

White Coat Investor wrote: Sat Sep 30, 2017 12:09 am
The Intelligent Investor

It's super interesting until you realize the author's recommendation at the end of his life was "Just buy an index fund."
I think if you go back to at least the early 60's, Ben Graham at least tried to give a big hint as to how investors might replicate one, but the first actual index fund didn't appear until over a decade later.
User avatar
Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: Investing Books Debunked

Post by Earl Lemongrab »

Stryker wrote: Tue Oct 03, 2017 1:46 pm I think if you go back to at least the early 60's, Ben Graham at least tried to give a big hint as to how investors might replicate one, but the first actual index fund didn't appear until over a decade later.
The funny thing is that you could probably do that fairly effectively these days if you wanted. Equity trades are cheap, or even free (100/month at Merrill Edge with 100k). It's easy to get the index compositions and devise your own plan to sample. Of course, you can just buy the index cheaply so there's no reason.
User avatar
White Coat Investor
Posts: 17338
Joined: Fri Mar 02, 2007 8:11 pm
Location: Greatest Snow On Earth

Re: Investing Books Debunked

Post by White Coat Investor »

Stryker wrote: Tue Oct 03, 2017 1:46 pm
White Coat Investor wrote: Sat Sep 30, 2017 12:09 am
The Intelligent Investor

It's super interesting until you realize the author's recommendation at the end of his life was "Just buy an index fund."
I think if you go back to at least the early 60's, Ben Graham at least tried to give a big hint as to how investors might replicate one, but the first actual index fund didn't appear until over a decade later.
http://jasonzweig.com/would-benjamin-gr ... dex-funds/
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Stryker
Posts: 406
Joined: Tue Nov 24, 2009 5:13 am
Location: Canada

Re: Investing Books Debunked

Post by Stryker »

White Coat Investor wrote: Tue Oct 10, 2017 12:45 am
Stryker wrote: Tue Oct 03, 2017 1:46 pm
White Coat Investor wrote: Sat Sep 30, 2017 12:09 am
The Intelligent Investor

It's super interesting until you realize the author's recommendation at the end of his life was "Just buy an index fund."
I think if you go back to at least the early 60's, Ben Graham at least tried to give a big hint as to how investors might replicate one, but the first actual index fund didn't appear until over a decade later.
http://jasonzweig.com/would-benjamin-gr ... dex-funds/
Thanks for the link above. I found it very interesting.

In my original post, I was actually referring to Benjamin Graham's 1963 speech in San Francisco.

http://jasonzweig.com/a-rediscovered-ma ... in-graham/

"I think the third and most important reason why the investor should not be led to emphasize his selection of individual stocks, and to neglect the general level of the stock market, is the fact that there is no indication that the investor can do better than the market averages by making his own selections or by taking expert advice.

The outstanding support for that pessimistic statement is found in the record of the investment funds, which represent a combination of about the best financial brains in the country, and a tremendous expenditure of money, time, and carefully directed effort. The record shows that the funds have had great difficulty as a whole in equaling the performance of the 30 stocks in the Dow Jones Industrial Average or the Standard & Poor’s 500-Stock Index.

If an investor had been able, by some rough across-the-board diversification, to make up a portfolio approximating these averages, he would have had every reason to expect about as good results as were shown by the very intelligent and careful stock selections by the investment-fund managers. But the great justification for the mutual funds is that very few investors actually do follow such a sound and simple policy."
harvestbook
Posts: 871
Joined: Sat Mar 18, 2017 7:12 pm

Re: Investing Books Debunked

Post by harvestbook »

I can't remember which "millionaire" book it was but the central thesis was "pay yourself first, even if you have to stiff all the people you owe money to."

The best book was Zweig's "Your Money and Your Brain." That's where I learned that I couldn't control the market but I could control my inherent stupidity a little.
I'm not smart enough to know, and I can't afford to guess.
User avatar
Taylor Larimore
Posts: 32839
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Benjamin Graham's forgotten speech.

Post by Taylor Larimore »

Bogleheads:

If you have the time and want to read one of the best speeches about investing, I highly recommend Mr. Graham's forgotten speech about investing. By learning what worked in Mr. Graham's day, and knowing that it still works today, we can learn the eternal truths for successful investing.

A Rediscovered Masterpiece by Benjamin Graham

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Post Reply