Excellent Personal Investment Strategies#
The most important thing in investment is to ensure the safety of one's funds. When investing, the most important thing to consider is the safety of one's funds. If the original funds are lost, where will the profits come from?
People who have been in the stock market for several years can be said to have their own secret book of cheats. It depends on how you apply your own cheats. Stock speculation is like art creation, it requires talent. There are no fixed rules, and it is often unpredictable.
The purpose of this book is to encourage readers to practice. You don't need to constantly read books on financial investment. You need to have a balance between input and output. Take the knowledge points in the book and apply them in real life. Only then can these knowledge points truly belong to you.
The biggest impression this book gave me was the theory of cycles. This is not the first time I have come across the concept of cycles. The author uses a pendulum to metaphorically describe this concept. The two endpoints are extreme situations, and the cycle moves back and forth between the two endpoints. Livermore said that gold is there, you just need to take it at the right time; Buffett uses baseball to metaphorize cycles; the author of the "Crazy Chaining Theory" says that the stock market is an ATM machine, and you should withdraw money when the time is right. You can't mess with this market frequently, you must patiently wait for its movement. Taoguba also has senior predecessors who have carefully explained the importance of cycles. The market has no rules, but people have emotions, so the market has cycles that are not simply repeated.
In fact, the theory of cycles is very interesting. The Yin and Yang of Chinese Taoism is actually an explanation of cycles. Everything has Yin and Yang, and it cycles endlessly. The cycle will not stop, and trends will not always go in one direction. The next turning point will come sooner or later. The market will never close. The important thing is to survive in this market for a long time. In the climax of the cycle, rising and making profits are high probability events, with high returns and low risks, just like the general rising market at the beginning of the year, almost any stock you buy will go up. In the decline and starting phase of the cycle, it is a chaotic and high-risk low-return stage. As long as we patiently wait for the good stage in the cycle and hold on firmly until the end of the market, it is a high probability profitable operation.
Content Summary#
In the book "Unconventional Success," legendary figure in the investment industry David F. Swensen provides unquestionable evidence that the profitable fund industry has consistently disappointed ordinary investors. From high management fees to frequent trading of investment portfolios, fund management companies' relentless pursuit of profits has harmed individual clients. Even if investors can survive in the battle with profit-chasing mutual funds, individual investors may still feel pain. The common practice of chasing highs and selling lows (often both at the same time) damages the returns of investment portfolios and increases tax burdens. This is a double blow to investors. In short, the obstacles faced by ordinary investors are almost insurmountable. What is Swensen's solution? It is a contrarian investment strategy - choosing diversified, stock-oriented, "market-mimicking" investment portfolios. Investors who have the courage to stick with this strategy will be rewarded. Swensen's investment advice goes against tradition. He recommends choosing non-profit investment companies that are friendly to investors. By avoiding actively managed funds and choosing mutual fund managers who prioritize their clients' interests, investors create the conditions for investment success. So, what are the key points of "Unconventional Success: The Best Personal Investment Methods"?
This book provides guidance and financial expertise for individual investors, making their current and future financial journeys smoother!
Author Introduction#
David F. Swensen, Yale University's Chief Investment Officer, is a genius in the investment industry. Barton Biggs, former investment strategist at Morgan Stanley, called him the "philosopher prince" in a profession full of self-promotion and paranoia. He manages over $14 billion in donated assets for Yale University and has achieved an annual return rate of 16.1% over the past 20 years, which is unmatched among institutional investors.
David F. Swensen
David F. Swensen
Mr. Swensen is a trustee of the Teachers Insurance and Annuity Association (TIAA), the Carnegie Institution of Washington, and the Brookings Institution. He is also the financial director of the Johns Hopkins University Board of Trustees. At Yale University, he is a member of Berkeley College and one of the partners of the Elizabethan Club. He is also a member of the International Financial Center. Mr. Swensen teaches at Yale College and the Yale School of Management. He has published the best-selling book "Pioneering Portfolio Management".
Further Reading:#
In recent years, there have been many Chinese books on debunking investment scams or exposing dark practices. However, the most recommended one is David Swensen's "Unconventional Success: The Best Personal Investment Methods".
The name David Swensen has been mentioned before in the book "Yale Endowment: The Unconventional Path". He is the helmsman of Yale's $19.3 billion endowment fund and has achieved remarkable performance. He is regarded as one of the greatest investors of our time. This identity determines that David Swensen's views have considerable authority and learning value. More importantly, David Swensen manages an endowment fund that is unrelated to ordinary investors, unlike mutual funds or hedge funds. There is no conflict of interest, so he can objectively evaluate related products and even criticize them without reservation. Considering that this master of investment is content with a modest annual salary of over $1 million at Yale, his moral standards are much higher than those greedy guys on Wall Street. So, even from these three points alone, as a book to guard against scams, this book has great value.
Although this book is titled "The Best Personal Investment Methods," it is not well-written in this aspect. It does not provide easily referenceable models. However, it is absolutely accurate in pointing out what is not a good investment method. One important analysis approach of David Swensen is to abandon appearances and directly question whether the interests of financial product managers and consumers are aligned. This is used to analyze and judge the hidden dangers and scams in different financial products.
Mutual fund companies use various tricks to disguise poor performance, and the most extreme way is to merge poorly performing funds into other funds to make them disappear. There are also some less noticeable manipulation methods. When large mutual fund companies want to highlight certain funds, they always choose the best-performing funds and never mention the poorly performing ones.
The company has found a creative way to address the problems caused by the data of poor performance in the past three years. In the annual report for 20xx, the space originally used to report the 3-year returns was changed to emphasize the 5-year returns. The annual return rate of growth-oriented funds in the past 5 years is 2.1%, which is much better than the annual return rate of -26.8% during the 3-year bear market period.
The performance of mutual funds is generally 2.1% lower than the average level of the market (measured by Vanguard 500 Index Funds) each year. The annual average difference in 20xx was 4.2%, and the annual average difference in 20xx was 3.5%, which is more disappointing and makes investors' hopes even more elusive.
In 20xx, management fees accounted for about 1.5% of the capital, commissions consumed 0.25%, and market impact took away 0.6%. Overall, 2.35% of the assets disappeared from the accounts of active investors.
Acquisition funds with assets over $1 billion created an annual return rate of 6.0%, lower than the 11.5% annual return rate of the entire merger industry and the 12.2% annual return rate of the S&P 500. In contrast, funds with assets less than $1 billion had much higher annual returns, reaching 17.8%. However, it needs to be noted that this book is not written in a simple manner, and the translation is also poor, so reading it is not as enjoyable as the introductory books recommended earlier. Of course, in the field of investment, the saying "no pain, no gain" is true. Reading only "beginner books" will not make significant progress. For masters like Swensen, even if the book is a bit obscure, it is worth pondering carefully. It is even more cost-effective if it can help you avoid losses caused by investment traps.