You can beat the market by avoiding risk-averse, career-protecting investment managers and index-based strategies that are perfectly satisfied with mediocrity. Fact is, as indexing and quasi-indexing have become more prevalent, the dangers of these strategies have become more pronounced: a bias toward overvalued, overgrown, large-cap stocks likely to hit long periods of underperformance. But there’s good news: If you’re willing to invest a bit more of your own time, you have a much better chance of beating the ...
You can beat the market by avoiding risk-averse, career-protecting investment managers and index-based strategies that are perfectly satisfied with mediocrity. Fact is, as indexing and quasi-indexing have become more prevalent, the dangers of these strategies have become more pronounced: a bias toward overvalued, overgrown, large-cap stocks likely to hit long periods of underperformance. But there’s good news: If you’re willing to invest a bit more of your own time, you have a much better chance of beating the pros than they want you to think. In Beating the Indexes, leading trader and Minyanville columnist Bill Feingold shows you how to systematically exploit the biases and mediocrity of index investors, and continuously make winning investments. Writing for individual investors as well as professional advisors and money managers, Feingold introduces a more profitable set of investing strategies based on convertible bonds and related alternative investments. In this surprisingly readable (even fun to read) book, each chapter exposes one index investing myth – and presents a powerful strategy for beating investors who still buy into it. If you’re tired of minimal returns that disappear with the slightest market volatility, this is the book you’ve been searching for.
Bill Feingold began his Wall Street career in 1985 as a corporate-finance analyst with Dillon Read after graduating from Yale, summa cum laude, Phi Beta Kappa in economics. Bill received Yale's Hadley Prize for being the top graduating social sciences major. He earned his MBA in 1991 with distinction in finance from the Wharton School.
Bill is a portfolio manager in the New York office of Wellesley Investment Advisors (WIA), a leading manager of convertible bonds headquartered in Wellesley, Massachusetts. WIA manages $1.2 billion for individual and institutional investors and is the advisor for the Miller Convertible Fund (MCFAX).
Previously, Bill served as Managing Director and Convertible Strategist at BTIG LLC in New York, having also traded convertibles for the firm. Bill was previously responsible for managing a portfolio of convertible securities at Goldman Sachs.
Between Goldman Sachs and BTIG, Bill contributed regularly to the financial education Web site Minyanville and published his first book, 2009's The Undoing of Cowardice. Before that, he was the senior partner and co-manager of the FrontPoint Convertible Arbitrage Fund from 2003 to 2005. From 2000 to 2003, Bill co-managed the Clinton Riverside Convertible Fund, during most of which time the Fund grew substantially and was one of the top performers in its strategy.
Between FrontPoint and Goldman Sachs, Bill served as a consultant to Schaeffer's Investment Research, a firm founded in 1981 and dedicated to the individual investor, with a focus on option-based strategies. Bill created the Advanced Trading Center at Schaeffer's, designed for clients looking to expand their investment toolkits with advanced option strategies, convertible bonds, and other techniques. In the fall of 1999 and 2000, Bill co-taught the acclaimed Yale seminar "Market Psychology and the Truth About Derivatives." Bill's objective with the seminar was to provide liberal-arts students likely headed for policy-making careers the skills necessary to get behind the financial headlines and understand the real issues for themselves.
Bill is also the author of The Undoing of Cowardice (2009), in which he argues that too many institutional investors focus excessively on matching one another’s performance to protect their own careers at the expense of their clients.
A native of New York City, Bill was raised in Berkeley, California. He lives in Westchester County, New York, with his wife, two daughters, and two cats.
Part I: Our Flawed Institutions
Chapter 1 Indexing and Its Discontents 7
Chapter 2 The Individual’s Edge 25
Chapter 3 Delusions and Illusions: Chasing Performance in Our Lost Decade 43
Chapter 4 A Change is Gonna Come 51
Part II: Convertibles, a Better Solution
Chapter 5 The Very Basics 61
Chapter 6 Reminiscences of a Convertible Operator 69
Chapter 7 A Quick Review and Quiz 121
Chapter 8 Enough Already…How Do Convertibles Actually Work? 145
Chapter 9 What to Look for in a Convertible 177
Chapter 10 Convertibles For… 201
I. Individual Investors 201
II. Financial Advisors 213
III. Nontraditional Institutional Investors 217
IV. Corporate Financial Officers 231
V. Students 249
Chapter 11 Introduction to Advanced Topics 257
Suggestions for Further Reading 285