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Unconventional Success: A Fundamental Approach to Personal Investment

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The bestselling author of Pioneering Portfolio Management , the definitive template for institutional fund management, returns with a book that shows individual investors how to manage their financial assets.

In Unconventional Success , investment legend David F. Swensen offers incontrovertible evidence that the for-profit mutual fund industry consistently fails the average investor. From excessive management fees to the frequent "churning" of portfolios, the relentless pursuit of profits by mutual fund management companies harms individual clients. Perhaps most destructive of all are the hidden schemes that limit investor choice and reduce returns, including "pay-to-play" product-placement fees, stale-price trading scams, soft-dollar kickbacks, and 12b-1 distribution charges.

Even if investors manage to emerge unscathed from an encounter with the profit-seeking mutual fund industry, individuals face the likelihood of self-inflicted pain. The common practice of selling losers and buying winners (and doing both too often) damages portfolio returns and increases tax liabilities, delivering a one-two punch to investor aspirations.

In Nearly insurmountable hurdles confront ordinary investors.

Swensen's solution? A contrarian investment alternative that promotes well-diversified, equity-oriented, "market-mimicking" portfolios that reward investors who exhibit the courage to stay the course. Swensen suggests implementing his nonconformist proposal with investor-friendly, not-for-profit investment companies such as Vanguard and TIAA-CREF. By avoiding actively managed funds and employing client-oriented mutual fund managers, investors create the preconditions for investment success.

Bottom line? Unconventional Success provides the guidance and financial know-how for improving the personal investor's financial future.

403 pages, Hardcover

First published August 2, 2005

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About the author

David F. Swensen

10 books111 followers
David F. Swensen (born 1954) has been the Chief Investment Officer at Yale University since 1985. He is responsible for managing and investing the University's endowment assets and investment funds, which total $23.9 billion. Realizing an average annual return of 11.8 percent on his investments over the ten years to 2009, Swensen's consistent track record has attracted the notice of Wall Street portfolio managers. He is notable for inventing The Yale Model which is an application of modern portfolio theory. Swensen was listed third on aiCIO's 2012, a list of the 100 most influential institutional investors worldwide

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Displaying 1 - 30 of 92 reviews
Profile Image for Krenzel.
34 reviews21 followers
December 11, 2008
"Unconventional Success: A Fundamental Approach to Personal Investment," written by David Swensen, who has had great results as the chief investment officer of Yale University, puts forth a simple premise for investors: that they do the best when they construct portfolios that are equity-oriented, broadly diversified, and managed by not-profit companies (Vanguard and TIAA-CREF). Probably, most of Swensen’s readers already understand this unconventional wisdom, but for the 90% of others still getting ripped off by mutual fund companies and brokers, unfortunately they aren’t likely to read this book and, because the book reads like a college textbook, even if they started reading it they wouldn’t be likely to finish. Still, while Swensen’s book has a well-worn thesis, it provides some valuable insights for investors looking to craft a passive investment strategy.

The most interesting part of Swensen’s book is his discussion of six core assets everyone should own: domestic equity, foreign developed equity, emerging market equity, real estate, U.S. Treasury bonds, and Treasury Inflation-Protected Securities (TIPS). Using an equity orientation and the rule of diversification – that no asset class should comprise more than 30 percent of the portfolio – Swensen suggests a generic portfolio including 30 percent domestic equity, 15 percent foreign developed equity, 5 percent emerging market equity, 20 percent real estate, and 15 percent each of U.S. Treasury bonds and TIPS. While this allocation is actually pretty conventional based on what I have read in other passive investing books, "Unconventional Success" includes the best explanation of REITs as a core asset class that I have read. Basically, he says they add diversification by incorporating both bond-like elements, as real estate companies collect rent payments, and stock-like elements, as real estate prices climb or fall like the stock market. While I would not be comfortable with the 20 percent allocation included in Swensen’s generic portfolio, he is also careful to point out that personal preferences play a critical role in portfolio construction, as investors will only stick to portfolios they understand and are comfortable with, so I don’t feel quite as bad about not having a large allocation of REITS.

Swensen’s generic portfolio is also interesting for the asset classes he leaves out, including corporate bonds and foreign bonds, which are usually included in investing books as a good source of diversification. According to Swensen, corporate bonds provide no useful diversification benefit and investors should be wary that their interests – getting high returns – are not aligned with corporations’ interests in selling the bonds, as companies are trying to secure financing at the lowest price possible. Discussing foreign bonds, Swensen says that investors get sufficient foreign exchange exposure through owning foreign equity and finds that these bonds are not useful diversification tools for investors. The other thing I found interesting is that Swensen leaves mutual funds with a value tilt out of his core asset classes, but he never discusses why or even mentions value funds. I have read elsewhere that, by keeping each fund at less than 30 percent of the total allocation, he is staying away from overweighting, so a value tilt isn’t as important, but I would be interested in reading more from Swensen on this topic, as William Bernstein, another very credible investing guru, seems to strongly advocate going with a value tilt. In any case, while I believe I will stick to a value tilt, I found Swensen’s arguments against corporate and foreign bonds very convincing and incentive enough to leave Vanguard’s Total Bond Market Fund and instead go with the individual Treasury and TIPS funds.

One other strong point included in "Unconventional Success" typically appears in other passive investing books, but Swensen’s arguments for rebalancing are particularly well stated. Swensen says the most frequent form of market timing occurs in the form of investors failing to rebalance, which results in overweighting recent strong performers and underweighting recent weak performers. Because asset classes tend to revert to the mean, it is best to have a systematic rebalancing plan in place to avoid this indirect form of market timing. Prior to reading this book, I knew I was supposed to rebalance but hadn’t been as rigid about it as I should be.

Overall, "Unconventional Success" is a tough book to get through, but in the end it is a worthwhile read. While readers may get tired of the endless examples of failings on the part of the mutual fund industry, and may already have come to the conclusion that passive indexing with Vanguard is the way to go, "Unconventional Success" is successful in advancing the idea that there is a conflict of interest between mutual fund companies, who seek high fees, and investors, who seek low costs. In the end, this idea doesn’t just apply to your investment strategy (active vs. passive), but which company you invest with, and what types of asset classes you are investing in. It is not enough to just invest with an index fund or invest with Vanguard, because even index funds can charge high fees and even Vanguard has shortcomings. While the author may get redundant, he succeeds in driving home this point home that, as investors, we have to be careful to ensure we are investing in assets and companies that align with our own interests, and the best way to do this is with not-for-profit organizations in certain core asset classes.
Profile Image for Jeff Garrison.
498 reviews14 followers
February 23, 2016
Sitting on a board for a private foundation, I have heard the name David Swensen mentioned over and over from our investment advisors. Swensen is the Chief Investment Officer for Yale University and has attracted the attention of the investment world for his stellar results in that position. His 2000 book, Pioneering Portfolio Management, is a classic guide for foundation portfolio management. When I learned that a revised version of Pioneering Portfolio Management was being written and scheduled to be released in early in 2009, I decided to read his book for personal investment that was published just three years ago. I started this book in mid-September, when things look shaky on the Dow but hadn’t yet gotten down-right depressing. As I read, the market started to react erratic and I, along with everyone else, saw investments drop like lead sinkers. I’ve wondered what Swensen would say about the current turmoil in the market, but I feel he would stand by much of what he’s written.

Unconventional Success is not an “investment how-to book.†There are no “stock tips†here, only warnings. There’s no discussion on building a portfolio or any of those silly charts as to what might happen if we place a hypothetical $100 a month into investments for 40 years. Instead, Swensen takes a more academic approach. The first two parts of the book (roughly the first half) deals with investment theory. Swensen covers asset allocation and market timing. This section was well written and explores the various options for investing and provides a good introduction into the various forms of securities available. Swensen, like most investment gurus, is in favor of well diversified portfolios, where each asset class is large enough to matter but small enough that it mitigates risk. He illustrates a well diversified portfolio with the following targets:

Domestic equity.................................30%
Foreign Developed equity ...............15%
Emerging Market equity................... 5%
Real Estate ........................................20%
U.S. Treasury Bonds........................15%
US TIPS.............................................15%

Swensen prefers bonds back by the federal government and stays away from corporate bonds and foreign debt. Corporate paper limits one’s potential gain. If interest rates fall, corporations can refinance, calling the higher interest bonds and reissuing lower interest bonds, if rates rise, you’re stuck with a lower interest rates. Foreign debt is often risky, especially in countries where the government is shaky. Swensen splits his fixed assets between regular treasury bonds and Tips (Inflation protected bonds). There are some REITS (real estate investment trusts) that he likes for real estate investment component, but he’s also critical of many of them due to their fee structures. He sees REITS as long-term investments (and certainly those who have invested in REITS several years ago will have to take a real long term outlook before they can recoup their investment).

Swensen also sees stocks as a long term investment, although he warns not to be too sentimental over particular companies that you want sell when you need to rebalance. He realizes that most individuals have a hard time investing in individual companies. Traditionally, the rule has been it takes at least 30 different stocks, diversified in various sectors of the economy, to reduce risk. Swensen suggests it may even require 50 different stocks and agrees that the average individual doesn’t have time to make such selections. The alternative, the Mutual Fund Industry, is also flawed and Swensen attacks the industry throughout this book. He’s especially hard on mutual funds that are publically held, seeing a conflict of interest between the fund’s shareholders and the fund’s investors. He examines the various fee structures for funds and is critical of the ways they’ve developed hidden fees to transfer value from the investor to the fund managers and owners. He explores taxes on mutual funds and how when someone else sells their portion of the fund, it creates tax liabilities for all the fund owners. In the whole mutual fund industry, he only identifies three funds favorably. TIAA-CREF (Teachers Insurance and Annuity Association and College Retirement Equities Fund) is a non-profit fund set up for educators. Swensen does admit a conflict of interest with his approval of TIAA-CREF (he’s on their board). He has mostly favorable things to say about Vanguard Funds (it's non-profit) and a Longleaf Partners, a small fund that's mostly closed to new investors. Over all, Swensen prefers index funds (lower fees and lower turn-over of stocks which means less taxes). He also suggests there are some benefits for ETFS (Exchange Traded Funds), but admits that there is already signs of companies marketing EFTS with unfair fee structures.

Swensen warns against the practice of active management funds which try to beat the market, acknowledging that for every win, someone has to lose. Instead of trying to beat the market, he advocates maintaining a close what on ones asset allocations and frequently rebalancing. Yale’s foundation rebalances daily (which he admits is not possible for the individual investor). If the equity market rises, they sell and move it into fixed income. If the markets are down, they bring more money into equities. Such a strategy has enabled Yale to comfortably out perform the market in the long run, while avoiding the extreme highs and lows.

This book has political implication. He suggests that schemes like privatizing social security would be a windfall for the mutual fund industry and would not serve the individual investor. This industry has already received a windfall in most companies shifting from a defined pension plan to a self-directed plan, such as with the 401/403 programs. As an investment guru, he is highly attuned to investment schemes where the fund’s interest is not always aligned with the investor (such as mutual fund companies wooing companies for 401 accounts). Furthermore, he’s also critical of companies like Morningstar, that’s supposed to provide non-biased ratings of funds but often fail to serve the public. (Although he doesn’t address this, this critique seems right on in our recent market turmoil, where bonds had high ratings but were stuffed with subprime mortgages).

I don’t recommend this book if you are looking to start investing. But if you want a deeper understanding of the investment industry, I would recommend this book. He seems to go overboard selling the idea that he mutual fund industry fails to serve the individual investor. Reading all the details of tax implications (which if you’re in an IRA or 401/403 you don’t have to worry about) and of fees (which gets us all), is tiring, but also enlightening. I look forward to reading his updated Pioneer Portfolio Management when it comes out in January.
Profile Image for Eduardo Rosas.
15 reviews68 followers
February 19, 2020
Information packed, but a rather unnecessary book for the conventional investor. I’d recommend reading John C. Bogle’s The Little Book of Common Sense Investing instead.
Profile Image for Ryan Boyce.
21 reviews
August 5, 2022
Words fail me. I have had a bookmark in this book for what feels like decades, but unlike some books, I have been unable to forget about it. It didn't take me forever to read it because I never read it either, no no no. I would pick up this book, read about 10 pages, lose the will to live, and then put it down for another month until I could bring myself back to it. I started bringing only this book with me when I travelled in the hopes that boredom would force me to read and make progress in it. That worked a little bit. The only reason that I actually managed to finish this book, is that I forced myself to look over all the words in it through syrupy eyes. How can I describe reading this book? Reading Unconventional Success is like kind of like reading through all the infinite digits of pi and trying to find your phone number. It's kind of like reading the Quran after taking a few semesters of Arabic in college. I wish I could bring myself to give this book one star.

Despite my utter hatred for this book, it deserves a five star rating. Hidden somewhere between a paragraph of humorless prose and table number eleven-teen, Unconventional Success contains the recipe of a safe, and successful portfolio that a reasonably competent adult without a background in finance can manage on their own in their free time. The portfolio advice alone is enough to merit slogging through the book, but Swensen also marks just about every pitfall that an individual investor can fall into in excruciating detail. Someone who had more patience could put down this book equipped with all of the knowledge that they need to not get played by the well-financed Wall Street types. Unfortunately, I do not have a lot of patience for financial bull crap.

Dad warned me about this one. He told me that it would be dry and technical, and he told me not to read it until I'd read a number of the other books on his list. I'll be honest. If I hadn't recently read The Richest Man in Babylon, or if I hadn't read Dave Ramsay's Total Money Makeover, I would have read all the ways that mutual fund managers can waste my money and I would have concluded that it's better to take my money and bury it in a hole than to invest it. For me, building my first portfolio will absolutely require the persistence to not give up when it seems like Wall Street only exists to separate me from my money, but also the caution to recognize that Wall Street mostly exists to separate me from my money. I know that I will need to reread Unconventional Success in the future when I have a better understanding of the market and when I have more patience, but in the meantime I will copy the main ideas here to spare myself from having to open back up that dusty old tome.

1. The "Core" asset classes are as follows: domestic equity (mutual funds traded in the U.S.), foreign developed equity (mutual funds traded in Europe and Japan), emerging market equity, real estate, U.S. Treasury bonds, U.S. Treasury inflation protected securities. See page 34 for possible division of resources. Think of equities as stocks. They are high risk, but also high reward. Equities should make up the majority of the portfolio, thus driving up positive returns. Other asset classes exist to diversify holdings and thus reduce the overall risk. As you get older, and thus can tolerate less financial risk, the portion of the portfolio allocated to equities should shift to safer investments like bonds. Any investment not listed is considered a "non-core" asset class and should not constitute a significant portion of your portfolio.

2. Market timing is stupid. Don't try to play the day trader. Active management is stupid. The less you think about your portfolio in any given day, the better off you'll be. The only exception is for rebalancing. As holdings in your portfolio increase in value, they will shift the balance of the portfolio. For instance, if the stock market has a good year, then domestic equities may shift from 30% to 35% of your portfolio. The principal of rebalancing means setting a percentage goal, and then making whatever trades are necessary to maintain it. In the above example, that means selling some mutual funds and buying some real estate or something to maintain the desired ratios. This is a good way to buy low and sell high without thinking about it much.

3. When you think equities, think "passively managed index fund with very low fees". It's no secret that David Swensen is a fan of Vanguard. While not all S&P 500s are created equal, some of those funds are good too. The vast vast majority of mutual funds, however, are shady and don't manage to outperform the market anyway, so why bother?

For the absolute wealth of indispensable knowledge contained in Unconventional Success, I give it five stars. For the number of headaches that it gave me, I give it one star. Since I can't give it both, I give it three.
November 19, 2010
The first half of the book was great for asset allocation tips, clearly delineating various asset classes as to risk exposure and historical return characteristics. The second half quickly descended into a rant against the mutual fund industry. While some points here had validity, Swensen continuously engaged in quite a bit of vitriol and sarcastic commentary following his more academic reporting of his and other's MF analyses--quite unprofessional.

There are a few items of reasoning that did not seem to make sense. For example, one of his premises is that fund size (Assets Under Management) is the enemy of performance. One might reasonably assume that this would apply only to actively managed funds and not to index funds for obvious reasons. However, my experience has been that generally the greater assets under management accumulated by a mutual fund, the greater the difficulty in deploying those funds effectively, and thus the outlet is to buy large cap companies, which in turn realistically would engender a more index-like return (minus fees and expenses, of course). Let's then look at the contrary, or a smaller fund size. His argument in the book is that security selection is almost always a detriment to portfolio performance, as Swensen claims that managers cannot consistently select companies that will outperform the market at large. Thus, it would seem that the smaller the fund size, the more concentrated bets the manager would be able to make, and thus the likelihood of below average returns would increase. this does not even take into account the lack of economies of scale for administrative and trading expenses forgone by small fund size. So, there is a bit of an apparent contradiction of premises among a few of the arguments presented. One of the most interesting facets is a chapter entitled "Winning the Active Management Game", which does nothing but provide a case-in-point example of a fund management company doing it "the right way". Coincidentally, the funds performances are quite good, beating the associated benchmarks by hundreds of basis points over 10 and 20 year time-frames. I'm wondering a) how much did Swensen get paid to sell this fund manager in his book, and b) why select a fund company that both does it the right way and vastly outperform, if your agenda is to bash mutual funds and active management? Not only does Swensen bash active security selection, he also bashes active asset allocation, preferring that investors take historical returns and risk profiles of various asset classes as a strong indication of future dynamics. A prime example of how this will absolutely NOT be true are Fixed Income. As one may know, bond prices move inversely to prevailing interest rates; further, interest rates have just completed the greatest plummet in market history, with 10 year treasury yields falling from 14.5 in the 1980s to a measily 2.8% today, with a long term average of 4.6% and a median of 3.8%. It would be patently foolish to believe that total returns on bonds will be anywhere near what they have been during this 30-year time-frame.

The dichotomy continues for anyone familiar with Swensen's annual yale endowment reports, where he constantly credits "superior active management" to the fund's excess returns over market benchmarks. For one that does not believe in active management, he and his cohort at the Yale Endowment appear to be doing a fine job of "actively managing" their funds.

The takeaway invariably is that asset allocation and asset class risk exposure matter, and that Swensen would recommend low-cost index funds or well-constructed ETF vehicles for market exposure. Ultimately, I don't believe one will go wrong following this advice--especially on the asset allocation and selection basis--but I do believe that using superior managers, whether through mutual fund vehicles or not, may provide better risk adjusted returns than their index counterparts.

I recommend the individual investor read the first half of the book, glean some asset allocation advice from a superior endowment manager, and leave the second-half for the birds.
Profile Image for Song.
269 reviews501 followers
June 26, 2017
The author may be a good fund manager and an experienced investor. The book was written poorly. He loved to use the academic language, such as very long sentences, indirect descriptions and iteration of the same meaning for many times. The book is not attractive for reading. It's hard for me to follow the author's ideas and I lost my patience in some chapters when the author dedicated a few pages to repeat one same idea back and forth.

It's not a total waste to read the book though because the author really had the insights about asset management and fund investment pitfalls to avoid. But the book is really dry to read and difficult to comprehend.
Profile Image for Donald.
110 reviews300 followers
May 16, 2020
This is only slightly dated and the rage that Swensen feels towards the actually existing finance industry comes across pretty clear. The thrust of the book is that rational investing (for most people) requires a small set of tightly-held principles and a good ability to ignore the large number of voices that will try to tempt you away from what you know is right. I am always terrified at how many 'common sense' opinions about finance are flatly wrong and that the industry is quick to cash in on those misconceptions.
Profile Image for Terry Koressel.
287 reviews24 followers
January 18, 2020
I struggled with the rating of Unconventional Success. On the one hand, David Swensen is as brilliant and knowledgeable as his reputation suggests. And he really does bring an unconventional allocation approach to individual investing: 30% domestic equities; 15% foreign equities; 5% emerging market equities; 20% REITS (or other real estate); 15% Treasuries; and 15% TIPS. Very similar to Ray Dalio's risk parity allocation recommendation for individuals. David Swensen strongly encourages low-fee, passive indexes, particularly those managed by the non-profits Vanguard and TIAA-CREF. He also provides excellent insight into the disadvantages endured by individual investors when investing in mutual funds, corporate bonds and other conventional vehicles due to their misalignment with investor interests. All of this information was valuable. On the other hand, Mr. Swensen spent an inordinate amount of time "bashing" the mutual fund industry. It needs bashing, but I'd bet 60% of this long book centered on this single topic. He could have conveyed the same information with the same passion in a fourth of the allocated book space and, thereby, created a far more engaging, high-impact read. Bottom line: A 5-star book on information; a 2-star on writing style.
Profile Image for Jason Dang.
40 reviews4 followers
April 29, 2018
Pretty long, drawn-out, and dated. Much respect to the author who is one of the best modern-day investors but I feel this book was better articulated in say John Bogles Common Sense on Mutual Funds. I suppose if one is really detail oriented and theoretical, this would be a great book but in that case, he has a more quantitative book 'Pioneering Portfolio Management' which seems to receive rave reviews. This book was designed for the mass market but even as a financial hobbyist (this is waning given my realization that to manage sums of less than 8 figures, you can (and should use) lazy portfolios (and this book seems to advocate that as well). The portfolio posited in this book backtests really well and is theoretically sound (backed by the few hundred pages in this book).

US equity: 30%
Foreign developed equity: 15%
Emerging market equity: 5%
US REITS: 20%
US Treasury bonds: 15%
US TIPS: 15%

He did host a guest lecture at Yale which is definitely worth listening to...
Profile Image for Valeria.
43 reviews2 followers
December 31, 2022
This book definitely does not live up to its title “a fundamental approach to personal investment”. It is not written in an attractive way for most people, especially for those who do not have basic investment understanding. I have taken some financial classes before, but I still find this book too academic to read. For me, financial stuff can be boring. This book is even more boring and drier than I expected. I ended up reading all the chapter summaries to avoid the terrible experience of reading the undigestible sentences with a somewhat perverse writing style. For those who already learned finance, I believe you probably already knew 90% of the information in this book. And for those who don’t even know some basic financial concepts, I suggest you seek for more enjoyable options.
444 reviews2 followers
February 4, 2009
By the guy who runs Yale's endowment fund. Talks about how individuals should not invest their money. Makes a lot of interesting points, but is a bit argumentative, and not very understanding about trade-offs between spending all your time worrying about it, and paying others to take care of things. Doesn't do a very good job of saying what you *should* do. Not a great writer--a bit repetitive. Doesn't come across (to me) as one being objective about presenting his numbers. I will change my thinking in investing, at least some.
Profile Image for Shishir.
422 reviews
March 2, 2019
A great guide for portfolio management using index based (or ETFs) low cost tools instead of Mutual funds; Also advises against the glamour of Hedge funds VC's and such non core Asset classes. Explains the down sides to timing and chasing returns and clarifies the value of contrarian rebalancing. Warns against the new fad of managed ETFs
Profile Image for Thammarith.
3 reviews
March 28, 2022
An OK book on investment

It's way too long for a book. It gives you a great details of each security types but the examples are much outdated. Basically, invest in an index fund (S&P500/Wiltshire 5000), REIT, bond & TIPs; rebalance; most active management is bad.
Profile Image for Karsten W..
30 reviews2 followers
May 14, 2017
Swensen argues that there are basically three sources of returns: asset allocation (which market(s) do you choose? Bonds, stocks, real estate?), market timing (when to sell and when to buy) and security selection (after you chose your market(s), which stocks, bonds, etc. do you pick?). The book is structured by this argument.

I skipped large portions of the book as I realized that I want to look at different markets as Swensen. I am more interested in the token economy than the "core asset classes" he suggests, also his critique on mutual funds was not interesting to me because I do not plan to invest there.

However, I liked the way Swensen substantiates his claims. His book has some careful selected and compiled tables that actually show that his points are not some sort of gut feeling. That is something I did not see that often in Personal Finance literature.

What I remember from this book is: Market Timing is hard. Portfolio Rebalancing (for example, pick ten stocks with the highest estimated Sharpe ratio on regular intervals) may work, performance chasing most likely not. At least my investment strategy should benchmark against a strategy that does very little market timing.


Profile Image for William.
72 reviews3 followers
December 30, 2019
Reading about personal finance, especially investing, can be a confusing but necessary experience. There is just so many ways that how we invest impacts how our investments perform. Swensen's book is important because it offers rational for how invest and a very in depth description of what to avoid.

Some of his writing bogs down a bit mainly because of the financial vocabulary and phrases. Generally, I found it helpful and worth it as part of my larger effort to inform myself on investing. This might be one to set aside if this is your first personal finance book and then later pick up once you have more fluency with how financial people speak. One place to start could be NPR's Life Kit series podcast. They are free and have a series just on money, with episodes specifically relating to investment. That is actually where I found out about this book and might be a good resource to listen to prior to buying this book.
Profile Image for Manfred Lange.
13 reviews
April 23, 2021
Recommended for investors with a long-term view

This book is worth the time reading it for all investors that take a long-term view. Swenson goes through the asset classes that are available and offers his perspective on which ones are suitable for a private investor backed up by sufficient data. Although at times a bit lengthy and too detailed it should be on the standard reading list before making decisions on which asset classes to consider. Understanding and considering the content will help avoiding costly mistakes.

The book is written from the US American perspective. People from other places can still derive sufficient value from the content as the basic principles apply universally. The only parts that don't work elsewhere are where US tax rules play a critical role.
Profile Image for Jackson Petty.
6 reviews
March 30, 2020
A comprehensive overview of the challenges and opportunities facing the every-day investor. Excellent survey of the strategies investors can employ to achieve good results and the perils of active management, market timing, and for-profit funds. Falls short on two accounts; first, much of the language is inaccessible to readers who are not already comfortable with nuanced financial topics which combines with dry prose to make for a slightly difficult read; second, the text takes positions on defined-benefit plans which seem unjustified, or at least unexplained in the text. Would be interested to see an update reflecting the Financial Crisis and the current market correction.
Profile Image for Eduard Tsech.
7 reviews8 followers
May 15, 2020
Too much bashing of mutual funds to my taste, but otherwise a good read.

The author proposes following globally diversified portfolio:
30% US stock market
20% REITs
15% Int. Developed stock market
5% Emerging stock markets
15% Bonds
15% TIPS

In the book, he thoroughly describes the reasons behind owning each of these asset classes.
Such a portfolio has some properties of an all-weather portfolio which will shine not only in prosperity environment with normal/lower inflation but also protects you from high inflation due to holding TIPS and REITs.
34 reviews
April 22, 2023
This is an outstanding book, which helps explain David Swensen’s success as it’s CIO since 1985. However, the important message could be easily lost on the reader. Replicating with David Swensen did at Yale is nearly impossible for almost all institutional investors, much less individual investors. The best approach for most is to set a stable target allocation, use index funds, and let the capital do the work for you. There’s only a small subset of people on this planet who are capable of beating market, and the odds are overwhelming that you were not one of them..
12 reviews
November 12, 2021
The core of the book is super helpful given the counterintuitive realities of effective investing. Unfortunately, the author's writing style takes away from the message due to repetition, use of jargon, and mostly unnecessary case study-esque examples. Had the book been a tight 100 pages (instead of a bloated 416), it would have been a great book instead of overall mediocre. That said, you can quickly get a feel for his style and just start skimming without really missing the juicy bits.
Profile Image for Mark Zodda.
720 reviews1 follower
May 9, 2022
Well-worth reading and making the basis for your investment decisions. I'm neither a novice investor nor an expert, but I found Swenson's book to be very interesting and informative. He provides the factual basis for many truisms that you often see in the personal finance realm, like avoid active management. His references are dated though I'm sure that most of the underlying facts and assumptions still hold up today. Recommended.
Profile Image for Rebecca.
294 reviews3 followers
June 27, 2021
I don't know much about investing but I heard about Swensen on an NPR show soon after his death. This book sounded interesting and helpful, and it was. However, it's very textbook-like, but without a glossary. Thankfully, each chapter (and sometimes the sections in the chapters) has a summary, so I ended up reading those and skimming the rest. That was enough for me!
31 reviews
June 22, 2022
The information is extremely valuable, but I feel like certain points were made over and over again using different examples. But the message comes clear. Index funds are more reliable and typically beat the market returns in the long run. I've switched to index funds and ETFs and they're the only investments doing well right now!
259 reviews
September 26, 2017
There's a lot of good information here, but the writing is not very engaging. I found it a tough slog, but I learned some important things.

Read something like Bernstein's Four Pillars first. It's much more approachable and covers a lot of the same ground.
Profile Image for Marina Gurevich.
15 reviews8 followers
October 11, 2019
The book is an important reminder of investment basics and is highly recommend if you need a high quality reminder of the fundamentals of all asset classes. BUT it’s e remedy outdated, especially in ETFs. Given that ETFs is ultimately what the author recommends, it is a significant gap
7 reviews
September 2, 2020
Fantastic content and suggestions. A real eye-opener for the abuses of the finance industry towards individual investors. Unfortunately, the writing style is rather repetitive which makes reading a slog.
Profile Image for Patrick.
26 reviews1 follower
March 1, 2021
Good advice: diversify, especially with respect to asset class, and skip certain assets altogether (e.g., corporate bonds). But slightly stodgy (perhaps to be expected) and excessive pages spent hating on salesmen/poor performers.
Profile Image for 慶植 王.
3 reviews
August 15, 2021
One of the great books criticizing active-managing mutual fund

The book provided many info to tell readers that the mutual fund with active management strategy cannot give sufficient returns to investors.
However, the most valuable part of the book is the macro cycle strategy.
24 reviews
December 22, 2023
The first few chapters are great. The rest (a detailed flogging of mutual funds and IA fees) are probably a bit less broadly relevant today (at least, more conventional wisdom) than when it was written.
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