Monday, November 15, 2010

Thoughts on Malkiel & Ellis's Elements of Investing [[* malkiel0mg *]]

In relation to:
The Elements of Investing
Burton G. Malkiel
Charles D. Ellis

Some tidbits that I found interesting:

* The book has some interesting stats - people taller 6 ft make $5k more than those shorter and the rates on term life insurance have fallen ~50% in the last few years.

* Book describes the first speculative bubble as tulips in Holland in the 1630s.

* The book strongly advocates diversified indexes, including those with foreign stocks. It also plugs bond indexes, particularly those for shorter term bonds, and whole US market indexes.

* The book indicates that apx 2/3 of funds did worse than the market index. Why isn't this 50 pct as one would think this a zero sum game? The answer is fees. Also note that failed funds aren't usually included in the averages.

* The authors advice is unfortunately rather colored by their association with Vanguard. They disclose this but still end up plugging Vanguard funds.