Excellent Personal Investment Strategies#
The most important thing about investing is to ensure the safety of your funds. When investing, the safety of your funds should be your top concern. If you lose your original capital, where will the profits come from?
For those who have been in the stock market for several years, it can be said that everyone has their own secret book of cheats. It depends on how you apply your own cheats. Stock speculation is like art creation, it requires talent, and there are no fixed rules. 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 is the theory of cycles. This is not the first time I have encountered 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 Kuaichan theory says that the stock market is an ATM machine, you should withdraw money when the time is right, you can't constantly mess with the market, 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 and desires, so the market has cycles that are not simply repetitive.
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 the trend will not always be one-way. 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 rise. 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.
Summary#
In the book "Unconventional Success," legendary figure in the investment industry, David F. Swensen, provides undeniable evidence that the profitable fund industry has consistently disappointed ordinary investors. From high management fees to frequent trading in investment portfolios, fund management companies' relentless pursuit of profit has harmed individual clients. Even if investors can survive the battle with profit-seeking mutual funds unscathed, 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, equity-oriented, "market-mimicking" investment portfolios. Investors who have the courage to stick with this strategy will reap rewards. 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 selecting mutual fund managers who prioritize the interests of clients, investors create the conditions for investment success. So, what are the key points of "Unconventional Success: The Best Personal Investment Methods"?
The book provides guidance and financial expertise for individual investors, making their current and future financial journeys smoother!
About the Author#
David Swensen, the investment director of Yale University, is a genius in the investment industry. Barton Biggs, the 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 serves as a trustee for the Teachers Insurance and Annuity Association (TIAA), the Carnegie Institution of Washington, and the Brookings Institution. He is also the financial steward 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 Eliza Self 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 exposing scams or revealing the dark side of certain industries. However, the most recommended one is David Swensen's "Unconventional Success: The Best Personal Investment Methods".
David Swensen's name has been mentioned before in the book "Yale's Endowment: The Unconventional Path". He is the helm of Yale's $19.3 billion endowment fund and has achieved outstanding performance, making him 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 willing to accept a modest annual salary of just over one million dollars at Yale, his moral standards are much higher than those greedy guys on Wall Street. Therefore, even from these three points of view, as an anti-scam book, this book has great value.
Although the subtitle of this book is "The Best Personal Investment Methods," it is not well-written in this regard and does not provide easily referable models. However, it is absolutely accurate in pointing out what is not a good investment method. One important analytical 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 of 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 of 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 general mutual funds is 2.1% lower than the average level of the market (measured by Vanguard 500 Index Funds) each year. The annual average difference in 20xx is 4.2%, and the annual average difference in 20xx is 3.5%, which is even 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's 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 worthwhile if it can help you avoid losses caused by investment traps.