Favorite Updated DIY/Passive Investment Books?

[Midpack]

While most sound investing advice might be timeless, anyone else curious why there hasn’t been a truly noteworthy new DIY/Passive Investing book written in a decade(s)? Most of the great investing books were written 10-20 years ago, Bogle, Bernstein, Tobias, Ferri, Swedroe, YMOYL, TMND, and nothing new since other than mild updates to books written long ago. Again, I know sound investing hasn’t been turned on it’s head, but the outlook for fixed income and cash equivalents don’t match the assumptions from those earlier books. Hard to believe there are no new worthwhile insights? Where’s the Four Pillar of Investing of today? Bernsteins efforts since aren’t the same…

https://www.bogleheads.org/wiki/Book_recommendations_and_reviews

 

[OldShooter]

Why? Hard to say. We have 50 years of data and books that all lead to the one conclusion. Maybe the Famas, Bernsteins, and Malkiels are just worn out from arguing with the hucksters.

That said, Charles Ellis has a fresh revision of "Winning the Loser's Game" published in May of this year. It feels to me like a complete rewrite, but I am too lazy to find my previous copy and actually compare. Definitely worth a read.

Totally nonresponsive to your question I have only recently discovered David Swensen's (https://en.wikipedia.org/wiki/David_F._Swensen) "Unconventional Success" published in 2005. In it he peels the passive onion a bit and explains, for example, why the Russell 1000 and the Russell 2000 are badly constructed indexes that result in high cost to investors and low tax efficiency. He doesn't just pick on Russell, though. Many snipes at specific ETFs, too, like: "HOLDRs, a brainchild of Merrill Lynch ... Ill conceived as a series of concentrated sector portfolios, HOLDRs allows Merrill Lynch's clients to make inappropriately risky bets." The layer of onion just under Malkiel and Ellis is quite interesting and the analysis is not dated even though some of the examples and numbers might be.

 

[mrfeh]

Well, even if there were a new book to read, I wouldn't purchase it.

Everything one needs to know is online. And up to date.

 

[ERD50]

....

Totally nonresponsive to your question I have only recently discovered David Swensen's (https://en.wikipedia.org/wiki/David_F._Swensen) "Unconventional Success" published in 2005. In it he peels the passive onion a bit and explains, for example, why the Russell 1000 and the Russell 2000 are badly constructed indexes that result in high cost to investors and low tax efficiency. He doesn't just pick on Russell, though. Many snipes at specific ETFs, too, ....

Which funds/ETFs does he think are best?


-ERD50

 

[VanWinkle]

True investing for the long term is boring. If you want success, make it a patient march to financial freedom by sticking with a sound plan with minimal expenses and maximum contributions to accounts. Diversify investments into diversified accounts(tax free, tax deferred, and taxable). There is only so many ways you can write a book based on what works in the investment world. Lower yields doesn't change how you invest, but it may change your allocation to reach goals.

I also like to read books that confirm my own ideas, but a book that challenges the same ideas would be welcome.

VW

 

[Car-Guy]

While most sound investing advice might be timeless, anyone else curious why there hasn’t been a truly noteworthy new DIY/Passive Investing book written in a decade(s)?



Hard to believe there are no new worthwhile insights?

Honestly, IMO, you can say the same thing about investment forums... Not much new "strategically", same questions and answers over and over again disguised with creative wording.

 

[Midpack]

Honestly, IMO, you can say the same thing about investment forums... Not much new "strategically", same questions and answers over and over again disguised with creative wording.

At least in my serious investing lifetime (30+ years), aren’t we in somewhat uncharted territory with fixed income and cash?

 

[VanWinkle]

Aren’t we in somewhat uncharted territory with fixed income and cash?

You could say the same thing about the yields(dividends) of the S&P 500
compared to the past. The yields of fixed income are lower than the past, but the instruments are the same ones we loved at 3-4% yield. I don't think that changes how to invest, but maybe changes how we allocate or spend. Stocks are for return, bonds are for safety.

 

[Jerry1]

Aren’t we in somewhat uncharted territory with fixed income and cash?

This is my feeling. Maybe I’m too simplistic, but it used to feel like if stocks went down, bonds went up and vise versa. Now, I look at my portfolio and have a hard time understanding what’s happening. The interest rate environment is definitely different than anything I think we’ve ever seen and if there ever was a connection between the innate value of the company and stock price, it seems to be gone now. Maybe not book worthy, but a couple well thought out professional papers on the current environment would be appreciated.

 

[Car-Guy]

At least in my serious investing lifetime (30+ years), aren’t we in somewhat uncharted territory with fixed income and cash?

Yep, and I'd like to see some new (good) ideas.

 

[pb4uski]

At least in my serious investing lifetime (30+ years), aren’t we in somewhat uncharted territory with fixed income and cash?

This is my feeling. Maybe I’m too simplistic, but it used to feel like if stocks went down, bonds went up and vise versa. Now, I look at my portfolio and have a hard time understanding what’s happening. The interest rate environment is definitely different than anything I think we’ve ever seen and if there ever was a connection between the innate value of the company and stock price, it seems to be gone now. Maybe not book worthy, but a couple well thought out professional papers on the current environment would be appreciated.

Yes, the disconnect between expected cash flows and equity prices is why I am in capital preservation mode and have less equities than ever in my adult life... the stock market looks more speculative than ever to me.... I do have some long SPY LEAP call options and some other low vol equity ETFs.

That, and the apparent lack of negative correlation between stocks and bonds compared to yesteryear is concerning as well... I'm not confident that if stocks zig that bonds will zag or vice versa.

And fixed income is challenging as well, though I've come to like preferred stocks... especially from investment grade issuers... the incremental yield over bonds from the same issuer seem attractive compared to the incremental risks. I am a little concerned about interest rate risk with the preferreds but they don't seem to be as interest sensitive as bonds but I don't really understand why.

 

[kevink]

At least in my serious investing lifetime (30+ years), aren’t we in somewhat uncharted territory with fixed income and cash?

Sure seems like it to me too. The only respected investment writer I've seen address the topic is Jonathan Clements. Here's one of several insightful posts from him about it during the past couple of years:

https://humbledollar.com/2020/06/farewell-yield/

As I recall his personal choices (obviously not blanket recommendations) include holding a "barbell" of short-term Treasuries and VTIP as his only bonds (and expecting no return from them), making sure to be fully globally-diversified with his substantial-for-his-age (~75% @ ~60) equity holdings and buying a series of single-premium immediate annuities over the next decade to provide an income floor before finally taking SS at 70.

Would sure love to see Dr. Bernstein in particular weigh in on options in what is apparently our new normal of negative real returns on all fixed income options other than iBonds and sky-high equity valuations.

 

[Markola]

The only passive, boring way out of the anemic domestic outlook that I can see is to stay diversified internationally. I’d read a good, new book about that, though this Charles Schwab paper makes the fundamental case well.

https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters

 

[OldShooter]

Which funds/ETFs does he think are best?

Well, he is more about cost than about fund-picking. Especially market impact costs when large funds must trade due to stocks coming and going from an underlying index. So probably "best" = lowest cost = total market where the fund manager doesn't have to dance to someone else's tune.

Some interesting tidbits, too; Swensen says Bill Miller's fame (https://en.wikipedia.org/wiki/Bill_Miller_(investor)) for beating the S&P came partially because Miller was comparing himself to the sticker price of the S&P and not to total return.

...I also like to read books that confirm my own ideas, but a book that challenges the same ideas would be welcome.

Agreed, but my spin is that these are the books and studies that shaped my ideas, so I am enthusiastic about updates that may teach me more. But I am as greedy as the next guy, so challengers/better ideas are always welcome. Unfortunately there don't seem to be any. Or at least any that I have discovered.

Yep, and I'd like to see some new (good) ideas.

They way most of us got where we are, believing that the future is unpredictable and random, pretty much logically precludes the existence of any ideas that will let us reliably capitalize on the future. But nothing says that we can't play defense. As the behavioral finance people point out, evolution has bred us for this. Humans are risk averse to a large degree. We don't gamble with food we need to stay alive.

The only passive, boring way out of the anemic domestic outlook that I can see is to stay diversified internationally ...

Well certainly inductive reasoning, based on history leads us there and that is the tack that DW and I have taken too. But there is always Taleb's turkey: https://www.businessinsider.com/nassim-talebs-black-swan-thanksgiving-turkey-2014-11 Inductive reasoning doesn't guarantee anything.

Certainly there is another big dip coming. That has been true for the entire history of investing. There is always a big dip coming. If we are especially fearful, then I think @pb4's approach is a good one. Nothing really new there but definitely (as the missile guys say) a carefully layered defense.

Nassim Taleb argues for "antifragile" strategies like a barbell portfolio. (https://www.amazon.com/Antifragile-Things-That-Disorder-Incerto/dp/0812979680) I think I'll have to read that book a couple more times before I start to "get it" in the sense of developing antifragile strategies myself but the idea is certainly attractive.

 

[kevink]

The only passive, boring way out of the anemic domestic outlook that I can see is to stay diversified internationally. I’d read a good, new book about that, though this Charles Schwab paper makes the fundamental case well.

https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters

Well this excellent 3 part series by Siamond of Bogleheads fame isn't exactly a book, but it's a pretty good substitute for one:

https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-1/

IMHO by the time you get done with Part3 you've seen compelling evidence for both "no one knows nuthin'" about the future and having a healthy allocation to global stocks with (for U.S investors) some home-country bias.

 

[Closet_Gamer]

At least in my serious investing lifetime (30+ years), aren’t we in somewhat uncharted territory with fixed income and cash?

100%. We've never seen negative absolute yields on government debt. We've never seen the Fed become such a buyer of assets. We've never seen government stimulus of this level.

I think we've had some other threads on this topic. Fixed income is almost by definition the greater fool theory at this point...and yet, no better ideas other than sticking to an AA and riding it out.

You can go to cash but then we're back to market timing...or something akin to it.

I have thought about putting a floor under the yield I will accept for any investment other than cash. Though then I'd just be pumping risk into the AA and putting my cash in between the inflation monster and the Fed's decision to raise rates for however long that takes.

I've also thought about using options more aggressively for any number of objectives...but then I'm back to market timing...with leverage! Woohoo!

 

[pb4uski]

I'm not sure if using options has to be market timing. I own some long-term SPY LEAPS (Dec 2023) that I bought slightly in the money that I'll get the appreciation of SPY.... I won't get dividends but I will get fixed income on the difference between what \\i would have invested if I was long SPY and what I paid for the LEAPs. I view the net of the two as similar to being long on SPY.

 

[Closet_Gamer]

I'm not sure if using options has to be market timing. I own some long-term SPY LEAPS (Dec 2023) that I bought slightly in the money that I'll get the appreciation of SPY.... I won't get dividends but I will get fixed income on the difference between what \\i would have invested if I was long SPY and what I paid for the LEAPs. I view the net of the two as similar to being long on SPY.

Totally fair point.

I was thinking of things I've considered like using options to hedge inflation or bet against the stock/bond market in anticipation of interest rate hikes.

Thanks.

 

[Midpack]

Well this excellent 3 part series by Siamond of Bogleheads fame isn't exactly a book, but it's a pretty good substitute for one:

https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-1/

IMHO by the time you get done with Part3 you've seen compelling evidence for both "no one knows nuthin'" about the future and having a healthy allocation to global stocks with (for U.S investors) some home-country bias.

That’s pretty much where my AA is (sig line below, with 1/3rd international), way more defensive than I’d hoped, but seems appropriate with asset classes as they are…

 

[Markola]

Well this excellent 3 part series by Siamond of Bogleheads fame isn't exactly a book, but it's a pretty good substitute for one:



https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-1/



IMHO by the time you get done with Part3 you've seen compelling evidence for both "no one knows nuthin'" about the future and having a healthy allocation to global stocks with (for U.S investors) some home-country bias.

Thanks. I made my way through it and was pleased to see that our portfolio is allocated as his data advises.

 

[OldShooter]

... I was thinking of things I've considered like using options to ... bet against the stock/bond market ...

Taleb isn't real forthcoming about his option strategies but his general idea seems to buy options that are well out of the money, expecting to see most of them expire worthless while waiting to catch a big win that more than wipes out the losses. Of course intrinsic to that strategy is an assumption that those long options are inefficiently priced. That's not a game that I have any interest in playing, but Black-Scholes is based on a Gaussian market assumption, not the fat tails of the real world, so Taleb's logic makes sense. I'm not sure what his long-term public performance looks like but he has seen some hedge fund wins. https://www.marketwatch.com/story/b...acing-a-huge-amount-of-uncertainty-2020-06-26

 

[P.S.]

Midpack, to answer your original question- not sure.
The older I get, the more understanding of human nature I have, the better understanding I have of the tenets of investing.

Today though, the economic climate is very different than 15, 25, or 30y ago, no?
Lots of QE, external factors like climate agenda imposed on growing and developing world population, blockchain.
It’s comforting to think one can 3-fund-and-be-done for life, or as one Boglehead poster says, VTI and set, huh? Except that, I don’t know if that will prove true. Maybe in 20y, it will be proven so, and then… wouldn’t that be amazing?! Very few constants in the universe: gravity, sun rises in the east, 3 fund portfolio (!)

Lately, I have been finding Twitter to be useful. The time it takes for info & knowledge to filter through a publisher and make it to ink on paper, a lot of relevance is lost. Or maybe I’m talking more trading, than investing. Anyways, Twitter, which was first really useful to me in Jan 2020, provides me a good insight into the financial bowels and thinking of voices from all over the world. Lots of talk about 10Y, RRP, energy, CLO’s, etc. You can really hear someone’s voice and peek into their mind. And what they don’t say, or don’t respond.

Another example, OldShooter, you like Taleb @nntaleb. Here is a direct quote from him, and no /s modifier:
“The only place where you can find North Atlantic people doing nothing is the American South.“
Yikes. Has he even visited research triangle, Houston? Or a local diner during b-fast rush hour?

 

[OldShooter]

... Another example, OldShooter, you like Taleb @nntaleb. Here is a direct quote from him, and no /s modifier:
“The only place where you can find North Atlantic people doing nothing is the American South.“
Yikes. Has he even visited research triangle, Houston? Or a local diner during b-fast rush hour?

And your point is? That he's not perfect? Actually he can be quite a raving lunatic as well as an embarrasing slinger of gratuitous insults. But none of that means that some of his ideas can't be insightful and, maybe even useful.

I've read that Aristotle believed that women had more teeth than men. Apparently he never checked. But his thoughts remain useful to this day. (Not that I am equating Taleb with Aristotle. )

 

[P.S.]

Haha. No man, or woman, is perfect.
Again, I appreciate understanding the way someone’s mind works. Gives me perspective on their perspective, and insight into their insight.

And Aristotle was correct. Do you not remember girls in middle school?

 

[OldShooter]

... And Aristotle was correct. ...

My complete knowledge on the subject: https://southairdriesmiles.ca/do-men-have-more-teeth-than-women/