Customer Review

Reviewed in Canada 🇨🇦 on January 14, 2020
In the first few chapters I nearly stopped reading this book. It starts out with some generic advice and typical investment industry nonsense, like saying investors who only get market returns have failed (if doing better than 90% of people is failing...) or active managers who stay out of a bull market will have smaller losses in a downturn (no, just no, this doesn't happen).

But then it actually got better. The book mixes general commentary with bits from letters going back several decades.

Some of the commentary does actually go deeper than the platitudes and give you useful reference points. For example one part shows how investors may stretch the limits of risk in unusual assets even while they are avoiding the stock market, so you won't see a general euphoria. Another idea in the book that I realized some time ago but almost no one says is that investors commonly think higher risk investments will deliver higher returns, but if that was true they wouldn't actually be higher risk. Sometimes you just lose.

The parts from past letters are interesting because you can compare the way of thinking with what was happening at the time. Some show timing that's too good to be true, like a letter in October 2008 that said it was a good time to buy. Others are a bit early, like other letters from 2004 - 2006 that call out excessive risk in the market. All of them are interesting because we know what ended up happening.

It would have been even better to see specific instances from past letters that turned out to be wrong. There is some discussion about how the right call may have the wrong result and vice versa, and the book doesn't really go to great lengths to make it seem like Marks is always right, but there could be good lessons in showing more of the other side.

To the uninformed investor this book could deliver the wrong lessons, or a false sense of certainty about the future. It does warn against that, but that warning is more likely to be received in the right way if you have read a lot about investing already. And the basic lessons are repeated in hundreds of other books.

If you have that frame of reference you should know to question everything you read, no matter who it comes from (Warren Buffett's annual letters have very few flaws, but this is not on the same level). From that perspective, if you're willing to read through some material that is a waste of time, there are some valuable reminders in here that will make you question your thinking in a good way.

Those are good enough to give it 4 stars, even though it can be misleading to beginners and slow for more experienced readers. It could have been written better for one of those audiences instead of falling in the middle and serving both poorly. It is unfortunately easy to take the wrong lessons from the book.
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