FREE NEWSLETTER
LOOKING FORWARD TO some downtime over the holidays? Below are some favorite new personal finance books and articles to consider for your reading list.
A Richer Retirement by William Bengen – Back in the 1990s, financial planner William Bengen developed what’s come to be known as the 4% rule. It’s a framework to help retirees determine a sustainable portfolio withdrawal rate. This year, Bengen updated and expanded his research. The most compelling addition: Bengen addresses the question of asset allocation. In one volume, we now have a guide to both building and withdrawing from a portfolio.
How to Retire by Christine Benz – This book is an eminently useful field guide to every aspect of retirement. Where should you live? How should you think about healthcare? How should you structure your time? These questions, and many more, are answered by the group of experts that Morningstar’s Christine Benz assembled for How to Retire. If you’re approaching—or even thinking about—retirement, this book will be an excellent companion.
The Trick to Enjoying a Vacation (and Investing Successfully) by Mike Piper – Historian Charles Kindleberger observed that, “there is nothing as disturbing to one’s well-being and judgment as to see a friend get rich.” The reality is that there will always be someone who bought Nvidia or some other high-flying investment and can’t wait to tell you about it. To combat this dynamic, author Mike Piper offers a helpful perspective: In building a portfolio, he says, “no matter what you pick, there’s going to be countless other options that would have been better.” But, Piper says, “as long as your original decision was reasonably well informed, it’s not helpful to spend a bunch of time looking at other allocations, other mutual funds, or other individual stocks that you could have selected instead.” Not only could that lead to regret, Piper says, but it could lead to performance chasing.
Oddball Funds Gave Investors Fits by Jeff Ptak – One of the more amusing facts about Wall Street is that there are far more mutual funds and ETFs than there are stocks. The result: There’s no shortage of unusual strategies vying for our attention. Morningstar’s Jeff Ptak asks the obvious question: Are these witch’s brews worth investing in? You can probably guess the answer. In related research, Ptak looked at so-called thematic funds, where the results were similar.
Rebuffed: A Closer Look at Options-Based Strategies by Cliff Asness – Investment manager Cliff Asness and a colleague looked at a breed of funds that gained popularity this year: buffer funds, also known as defined-outcome funds. Their conclusion was blunt: These funds are “a failure for investors lured in by the overpromise of magical equity returns without equity risk and then overcharged for the pleasure.”
The Complexities of Moving Toward Simplicity by Allan Roth – What if you already have an oddball fund in your portfolio? Should you simply sell it? “Simplicity is a virtue,” financial planner Allan Roth argues, “but not always easy.” In part, that’s because of tax constraints. And certain investments are so complex that it’s hard to know how to evaluate them. “Analyzing a permanent insurance product makes rocket science look simple.” Roth walks through his framework for evaluating whether to hold or to sell various types of investments.
Mutual Fund Skill by Javier Vidal-García and Marta Vidal – We’ve all seen the research: Actively-managed funds, on average, lag their index-based peers. An interesting question, though, is why that’s the case. To be sure, cost is a factor. But how should we think about investment managers’ stock-picking skills? This study’s finding: Fund managers actually do a reasonably good job at picking stocks. When it comes to timing decisions, though, fund managers struggle. Stock-pickers, in other words, are good at picking stocks but not very good at deciding when to buy or sell them.
How Not to Invest by Barry Ritholtz – How Not to Invest offers investors a cautionary tale—many of them, in fact. Bad actors like Charles Ponzi and Bernie Madoff are well known. The reality, though, is that they represent just one of the many types of financial risk investors encounter. To help us navigate the “bad ideas, bad numbers and bad behavior” that pervade the world of investing, How Not to Invest is a very useful, and also very entertaining, guide.
Is it a Bubble? by Howard Marks – Investor and author Howard Marks compares today’s market to past market bubbles and delivers this characteristically even-keeled conclusion: “Since no one can say definitively whether this is a bubble, I’d advise that no one should go all-in without acknowledging that they face the risk of ruin if things go badly. But by the same token, no one should stay all-out and risk missing out on one of the great technological steps forward. A moderate position, applied with selectivity and prudence, seems like the best approach.” I find this sentiment very useful. At times like this, when valuations are high, a good approach is to be prudent but not to panic.
Trillion Dollar Market Caps: Fairy Tale Pricing or Great Businesses? (video) by Aswath Damodaran – NYU professor Aswath Damodaran is the author of a thousand-page book titled Investment Valuation and offers his own perspective on the AI economy, digging deep into the numbers. I recommend this video not because I think everyday investors should be analyzing stocks but because I think work like Damodaran’s should get more attention. Instead of hand-waving and story-telling, Damodoran focuses on facts and logic. That can help investors remain balanced in their thinking.
Should You Build a TIPS Ladder in Retirement? (video) by Rob Berger – In 2022, when inflation surged, investors were disappointed to see their inflation-linked bonds lose money. Vanguard’s popular Inflation-Protected Securities Fund (ticker: VAIPX) saw shares sink nearly 12% that year. It was not what people expected, and that led many to question the wisdom of holding TIPS. In this video, investment educator Rob Berger clearly explains how TIPS work, then looks at the difference between TIPS funds and individual TIPS bonds.
Should You Just Buy Stocks Until You Die? by Jason Zweig – Over time, stocks have handily outperformed bonds. Everybody knows that. So if you’re in your working years, with no near-term withdrawal needs, does that mean you should hold only stocks in your portfolio? Zweig discusses new research which makes precisely that argument. But he goes on to offer investors this clear-eyed advice: “You can’t just take an analysis of the past, no matter how careful it is, and assume you can extrapolate it into the future…Let’s say the odds that stocks will outperform bonds in the future—if, but only if, the future resembles the past—are something like five out of six. As investing author William Bernstein points out, ‘That is also how often you win at Russian roulette.’”
Farewell Friends by Jonathan Clements – The world lost a kind and decent person this year when Jonathan Clements died at age 62. He was a friend and a mentor to his many followers and was endlessly generous with his time and his wisdom. In this article, published posthumously, Jonathan talks about his family, life and career. His parting words: “I faced the final months not with sorrow, but with great gratitude. I had spent almost my entire adult life doing what I love and surrounded by those that I love. Who could ask for more?”
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam’s Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
I take issue with the Rebuffed article. Want to see a study of how buffer ETF’s do compared to Bond funds. IF one puts their Bond allocation into Buffer etf’s, they will get some protection from Stocks going down, yet participate in upside greater than bond returns. PBJA is up 10.2% ytd, while providing a 20% downside protection buffer to the sp500. I am happy with that return compared to bonds or cd’s or tips.
Thanks for this list. I found Rob Berger’s discussion of TIPS ladders useful.
Thank you Adam for the list.
I watched the Damodaran’s video. It has a very nice framework for a logical basis for valuation and the overall context. He has done a wonderful job of explaining this.
Thanks Adam for these great books and articles. My biggest lifetime moment was from Vanguard and Jack Bogle, where S&P index investing was the way to go. I checked my actual gains buying and selling stocks over the previous 10 years, and I did NOT beat the S&P. Then Bogle went on to say something like over a 10 year horizon only 10% or so Finance brokerages beat the S&P 500! Guess what, I started moving all my 50 stocks to the S&P and right now am down to about 10 stocks, and those are mostly the MAG 7. Thanks Jack Bogle.
I like to reread Buffet’s annual letters to Berkshire shareholders every few years. My key takeaway: Here’s a super smart guy who did very, very well, but made some mistakes along the way, which he shares in the letters. If you’re in the market, you’re going to make mistakes.
A book I like that’s off the radar is How To Get Rich and Stay Rich by Fred J. Young. Out of print but available used. I visited with Fred once and he told me he had some regular contact with Warren back in late 1950s and early 1960s. I asked Fred if he invested with Warren and he said, “No, I thought I was smarter than him.” He smiled as he said it.
Thank you for taking the time to put this list together Adam.
I’m starting to think the secret to financial success is writing a book telling others how to reach financial success. 🙂
I often wonder the level of success these authors/experts have achieved.
I wonder that too, Dick. And also would like to see CNBC pundits’ true return performance published :).