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Posted February 2, 2003
A Well Disguised Marketing Ploy!
I agree with Bill Schledwitz's comments. The author did do a good job at presenting many different topics. However, a well informed investor will pickup on the subtle push toward DFA funds. DFA funds are sold only through pension plans and through fee only advisor. What wasn't mentioned in the book: The typical minimum investment to hire a fee only advisor is $100,000. A typical fee for investment of less than $500,000 is 1%/year in addition to the 0.6% fee charged by a typical DFA fund. Interesting...DFA funds are legally marketed as no-load funds yet the total charges are similar to loaded funds. I do agree that DFA funds are somewhat different from ordinary index funds but I seriously doubt it is worth more than 1.35%/year in additional expense over Vanguard's index funds. But the author did use a rather limited time frame (something like 5 years) to defend the merits of using DFA funds over index funds for his asset allocation methods. Why didn't he use 60+ years? Finally, the defense for tax efficiency of passive funds was rather week--it didn't use any real historic numbers--anyone who has researched several annual reports will know his numbers are way off. The reality is that passive investing isn't that much more tax efficient than active management. There even was an attempt to discredit the esteemed Professor Jeremy Siegel on the small cap outperformance anomoly theory. The author's defense was a recap using a decile company size as a bases of comparison over the same periods discussed by Dr. Siegel. What the author failed to do is to include a realistic cost comparison of these smaller companies--the final result would be closer to Siegel's finding. Even then, one could continue to argue that small company stock will outperform larger ones over longer periods of time but the numbers are actually much closer than what is suggested in this book. When reading this book or any other books on investing, note the time frame being used as a defense for the theory. Retest the theory at different time frame to verify its validity. Allow for some statisical noise. Then draw your own conclusions. I highly recommend those reading this book to also read Jeremy Siegel's "Stocks for the Long Run."Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted January 12, 2001
THIS will be the LAST book about mutual funds you need to read!
If you enjoy spending lots of time researching mutual funds and being charged high costs (compared to index funds)to own them...and love to get stressed out chasing last years winners, then I strongly suggest NOT reading this book. This book contains compelling arguments on why investing in 'index funds' is really all you need to know about investing. I've read many books on mutual funds, especially index mutual funds, and this book, without a doubt, is the superior writing. And, although the author is passionate in his effort to educate, the content is straight-forward and easy to understand and relate to. Holding a master's degree in economics is not necessary to appreciate this 'no-brainer method of investing' the author conveys to the reader. I've read the book twice as well as given it as gifts! Again, there are many books on the subject of 'Index Mutual Funds', and believe me, this one is by far the best. This was the first book on index funds that I bought/read and subsequently purchased several more before I realized that I wasn`t going to find another book as good as this one.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.