Wealth of Common Sense

A simple guide to a smarter strategy for the individual
investor

A Wealth of Common Sense sheds a refreshing light on
investing, and shows you how a simplicity-based framework can lead
to better investment decisions. The financial market is a complex
system, but that doesn't mean it requires a complex strategy; in
fact, this false premise is the driving force behind many
investors' market "mistakes." Information is important, but
understanding and perspective are the keys to better
decision-making. This book describes the proper way to view the
markets and your portfolio, and show you the simple strategies that
make investing more profitable, less confusing, and less
time-consuming. Without the burden of short-term performance
benchmarks, individual investors have the advantage of focusing on
the long view, and the freedom to construct the kind of portfolio
that will serve their investment goals best. This book proves how
complex strategies essentially waste these advantages, and provides
an alternative game plan for those ready to simplify.

Complexity is often used as a mechanism for talking investors
into unnecessary purchases, when all most need is a deeper
understanding of conventional options. This book explains which
issues you actually should pay attention to, and which ones are
simply used for an illusion of intelligence and control.

• Keep up with--or beat--professional money
  managers

• Exploit stock market volatility to your utmost advantage

• Learn where advisors and consultants fit into smart
  strategy

• Build a portfolio that makes sense for your particular
  situation

You don't have to outsmart the market if you can simply
outperform it. Cut through the confusion and noise and focus on
what actually matters. A Wealth of Common Sense clears the
air, and gives you the insight you need to become a smarter, more
successful investor.

Auteur

BEN CARLSON, CFA, has spent his career managing institutional portfolios for endowments, foundations, and pension plans. He is also the creator and author of the blog A Wealth of Common Sense (awealthofcommonsense.com) and is a Yahoo! Finance Contributor.

Texte du rabat
PRAISE FOR
A WEALTH OF COMMON SENSE "The content of this book lives up to the title. Ben Carlson has mastered the art of exposing the few big topics that matter most to investors, leaving out the complicated—but often unnecessary—topics found in other investment books. Any investor, from a beginner to a professional, can learn a tremendous amount from A Wealth of Common Sense."
—Morgan Housel, columnist for The Motley Fool and the Wall Street Journal "Through hard work Ben Carlson has rapidly established himself as one of the nation's premier investment bloggers. In his new book, A Wealth of Common Sense, Carlson cements his position as a prudent and practical voice for the individual investor."
—Tadas Viskanta, founder and editor of Abnormal Returns and author of Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere "Ben Carlson seemingly came out of nowhere and took the financial commentariat by storm with his straightforward, insightful blog posts. True investing wisdom—born out of experience and success—cannot be faked; it must be earned. This is precisely the type of wisdom that comes oozing out of every chapter in A Wealth Of Common Sense."
—Downtown Josh Brown, author of the bestselling book Backstage Wall Street and The Reformed Broker blog, star of CNBC's The Halftime Report, YOUR NO-NONSENSE GUIDE TO COMMON SENSE INVESTING Cut through the confusion and noise and focus on what actually matters. A Wealth of Common Sense clears the air and gives you the insight you need to become a smarter, more successful investor. Complexity is often used as a mechanism for talking investors into unnecessary purchases, when all most need is a deeper understanding of conventional options. This book explains which issues are important—and which are not. Take a look inside for guidance on how to:

• Keep up with—or beat—professional money managers
• Exploit stock market volatility to your utmost advantage
• Learn where advisors and consultants fit into a smart strategy
• Build a portfolio that makes sense for your particular situation

Résumé
A simple guide to a smarter strategy for the individual investor A Wealth of Common Sense sheds a refreshing light on investing, and shows you how a simplicity-based framework can lead to better investment decisions. The financial market is a complex system, but that doesn't mean it requires a complex strategy; in fact, this false premise is the driving force behind many investors' market "mistakes." Information is important, but understanding and perspective are the keys to better decision-making. This book describes the proper way to view the markets and your portfolio, and show you the simple strategies that make investing more profitable, less confusing, and less time-consuming. Without the burden of short-term performance benchmarks, individual investors have the advantage of focusing on the long view, and the freedom to construct the kind of portfolio that will serve their investment goals best. This book proves how complex strategies essentially waste these advantages, and provides an alternative game plan for those ready to simplify.

Complexity is often used as a mechanism for talking investors into unnecessary purchases, when all most need is a deeper understanding of conventional options. This book explains which issues you actually should pay attention to, and which ones are simply used for an illusion of intelligence and control.

• Keep up withor beatprofessional money managers
• Exploit stock market volatility to your utmost advantage
• Learn where advisors and consultants fit into smart strategy
• Build a portfolio that makes sense for your particular situation
  You don't have to outsmart the market if you can simply outperform it. Cut through the confusion and noise and focus on what actually matters. A Wealth of Common Sense clears the air, and gives you the insight you need to become a smarter, more successful investor.

Contenu
Introduction: Why Simplicity Is the New Sophistication xi Chapter 1 The Individual Investor versus the Institutional Investor 1

Institutional versus Individual Investors 5

We're All Human 9

Extra Zeroes 12

Long-Term Thinking 13

Key Takeaways from Chapter 1 16

Notes 16

Chapter 2 Negative Knowledge and the Traits Required to Be a Successful Investor 19

The Biggest Problem of All 25

Traits of a Successful Investor 27

Standing on the Shoulders of Giants 33

Key Takeaways from Chapter 2 38

Notes 38

Chapter 3 Defining Market and Portfolio Risk 41

Volatility: Risk or Opportunity? 48

Understanding Rule Number 1 of Investing 49

The Risk Tolerance Questionnaire 50

Risk versus Uncertainty 52

Risk Aversion 54

The Cycle of Fear and Greed 58

Key Takeaways from Chapter 3 60

Notes 60

Chapter 4 Market Myths and Market History 63

Myth 1: You Have to Time the Market to Earn Respectable Returns 66

Myth 2: You Have to Wait until Things Get Better Before You Invest 67

Myth 3: If Only You Can Time the Next Recession, You Can Time the Stock Market 68

Myth 4: There's a Precise Pattern in Historical Market Cycles 70

Myth 5: Stocks and Bonds Always Move in Different Directions 71

Myth 6: You Need to Use Fancy Black Swan Hedges in a Time of Crisis 73

Myth 7: Stocks Are Riskier Than Bonds 74

Myth 7a: Bonds Are Riskier Than Stocks 75

Myth 8: The 2000s Were a Lost Decade for the Stock Market 76

Myth 9: New All-Time Highs in the Stock Market M…