Unconventional Success

Unconventional Success: A Fundamental Approach to Personal Investment
by David F. Swensen (Author)

"Unconventional success" should be convential. The concepts of it, that is. But, with greedy mutual fund companies soaking millions of dollars out of millions of pockets, it isn't the case, and it won't be the case in the future.

I do agree that the far majority of mutual funds are not good.

This book will be most helpful to folks who understand the basics of mutual funds already. David Swenson has beaten the market consistently over the long-term. This gives him credibility that many others in finance lack. Also applicable is his lack of conflicting interests. This said, I still read everything with extreme caution. The Layman Effect.

Today there are over 12,000 mutual funds. Many cannot even beat the S & P 500. David Swenson has beaten it for twenty years. Swenson notes the mutual fund industry and its false advertising, hidden fees, and skewed statistics on past performance, which is often the primary pitch for present buyers.

Some points Swenson noted was that mutual fund companies are accountable - surprise - to shareholders. It's also a fact that funds with higher costs are highly correlated to poorer performance.

Mutual funds run by managers charge high fees. The Funds sold by stockbrokers charge even more. Add managers buying and selling stocks at a rapid turnover, which runs up the fund's brokerage expenses, and cost to investors. The median cost to investors in 2002 was 2.35 percent. What is forgotten? The upfront commission a broker may charge. These costs significantly eat into investment returns.

Sticking to the ole' fundamentals, the most important and easiest step, is to obtain info. and stats compared to a fund's index.

Swenson's major point of advice is to invest through non-profit companies. He mentions a well-known and consistent one.

These funds that are non-profit companies that focus on index funds consistently beat out other funds. This is obvious for tax reasons also, but Swenson also advises to put deferred (retirement) investments into these funds, allocating a particular percentage to U.S. stock, total international, real estate
and Treasury Bonds.

Important to note is that Swenson has so much experience and knowledge that us "laymen" can just cover the basics of his advice, especially when looking at the ways to hedge, yet also gain. The concept of "rebalancing" may make many laymen nervous.

This book can help people. With so many people in mutuals and 401Ks, people need all the help and education they can get.