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highly recommended |
Easy to Read! Insightful! Will make you a better investor! 
After reading the Future for Investors, I realized I used to think about stocks in the wrong way. I was always trying to find the "next big thing". Siegel does a superb job showing why this kind of thinking, the growth trap as he calls it, causes so many investors to go down the wrong path. Who would have guessed that China, having the fastest economic growth in the world, would have the worst stock returns? I now have such a better understanding of what stocks I should be looking to buy. The book is easy to read, enjoyable, and full of invaluable insights that will make anyone from the novice to the expert a better investor.
Great Book
Having minimal investment experience, this book was recommended to me as a way to get started. Unlike the many other books about investment strategy that have left me unsatisfied and confused, Siegel's new book made me confident in my ability to make smart decisions, and how to guage whether they are actually the best choices. Cheers to Jeremy Siegel for breaking complicated financial theory into terms that even I can understand and with which I can feel comfortable!
It's Still "Stocks for the Long Run"
The Future for Investors is Jeremy Siegel's sequel to his popular Stocks for the Long Run. Overall, he makes the same point in his new book as he did in the last one: Over long periods of time, stocks have outperformed other liquid forms of investment such as bonds, bills, cash, and gold. While reaching this same conclusion, The Future for Investors does offer some new or revised insights that make it well worth reading. Some highlights include the following:
1. Since its inception in 1957, the S&P500 index has underperformed the price movements of those of its original 500 firms that still exist as independent companies. The price movements of the new firms added to the index have underperformed those of the originals even though the new firms have often had higher earnings growth rates.
2. Selecting stocks for growth alone often results in paying too much for a stock. While Siegel doesn't spell it out, he seems to be advocating something akin to a PE-to-Growth (PEG) or similar ratio. (Comment: I personally go one step beyond PEG and use PE-to-Growth-to-Uncertainty-in-Growth by dividing the conventional PEG ratio by the standard deviation of the earnings per share growth rate.) He does advocate several strategies based on the selection of low priced/high yield stocks, similar to and including the popular Dogs of the Dow strategy.
3. Dividends count in many ways. Most of the recent cases of managers cooking the books to overstate earnings occurred in firms that did not pay cash dividends, since dividends are much harder to fake than earnings. The payment of a steady or increasing cash dividend offers another measure of safety in buying a stock. The recent reduction in the double taxation of dividends makes them much more attractive. Finally, reinvesting dividends is analogous to dollar cost averaging, causing the investor to buy more shares when the price is lower had fewer shares when the price is higher. Over time, this reinvestment will pay off handsomely.
4. Much has been written about the aging of the baby boomers and what will happen when they retire. The worst case scenarios describe their departure from the workforce as resulting in (1) no one to produce the goods and services they want to buy in retirement and (2) no one to buy the stocks and bonds that they need to sell to finance buying those goods and services. Siegel is an optimist; I share his optimism and hope we are correct. Looking at the developing world, he sees an inverse demographic pattern: Lots of young people and fewer old people. If the developing world develops rapidly and broadly enough, those young people will be able to (1) produce the goods and services sought by the boomers and (2) invest in their own retirements by buying the investment the boomers must sell.
5. To participate in (and to support) this optimistic outcome, Siegel advises investing as much as 40% of one's portfolio in non-US securities. Selecting and buying foreign stocks is even harder than selecting and buying US stocks, so here Siegel puts a lot of emphasis on mutual funds and exchange traded funds tied to various world indices.
Must read book for investors
Professor Siegel is back with another master piece. I thoroughly enjoyed his first book "Stocks for the Long Run" and highly recommend this book as well. It is a must read book on investment.
reviews: 1, 2, 3, 4, 5, 6, 7, page 8, 9
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based on 42 reviews
