I have a soft spot for Barron’s Magazine, the investing weekly. When I was a kid my dad would always have a folded copy in his briefcase. A little over 13 years ago, when I decided I wanted to be a financial journalist, one of the first things I did was apply for a job at Barron’s. They weren’t hiring but I wound up writing a couple of dozen freelance pieces for them anyway.
I’m happy to say that they, or at least their book reviewer, have a soft spot for me too. The review that appeared of Heads I Win, Tails I Win was very flattering. I like how it starts:
Spencer Jakab comes off as a reluctant financial guru. You might expect a Wall Street Journal columnist and editor (Heard on the Street, Ahead of the Tape) to stress his investment prowess in a book on investing. But not until page 249 does Jakab confide that he rescued his mother’s stock portfolio from the dot-com bust of the early-2000s, persuading her to sell her Nasdaq-related holdings in the fall of 1999 and park the funds in “boring Treasury bonds.” Her circle of middle-age Hungarian immigrants ignored his advice and lived to regret it.
Anyway, read the whole thing and then read my book if you haven’t already.
This video, shot on the floor of the NYSE, aired the night before the book went on sale. It was with Michael Santoli, Sara Eiseon, and Bill Griffeth.
An excerpt of my book appears in today’s Wall Street Journal (front page of the Money & Investing section). It explains, using “Back to the Future Part II,” why market timing is so futile.
What follows is an excerpt of the excerpt (is there a word for that … excerptlet maybe?).
Investors are way off in their estimate of how their portfolio has done, routinely guessing several percentage points a year too high. While that comes as a shock, they are even more surprised to be told that it is missing good times rather than suffering through selloffs that hurt them the most.
Like Biff, investors sit out on some really good days by trying to avoid bad ones. Nearly all of those happen around scary episodes such as October 1929, October 1987 and in 2008 following the collapse of Lehman Brothers. Pretend, for example, that you took your money out of the market following the choppiest episodes over the last 20 years and wound up missing the epic rebounds that made up the 40 best days. You actually would lose money. A couple of days a year on average produce all of the market’s return.
Read the whole thing or, even better, buy the book. It just went on sale.
Can’t wait to read my brilliant explanations of why people are such lousy investors and how you can get better in Heads I Win, Tails I Win? A sneak preview is now online and in print days before the book is available in stores.
It’s an adaptation of a chapter titled “The Seven Habits of Highly Ineffective Investors” and is one of the parts of the book I had the most fun writing. It’s also the only chapter of my book, or for that matter any investing book, that recounts an episode of “Leave it to Beaver.”
There will be other excerpts available around publication time but this one is the longest and also appears in a publication that readers of my book should check out (they should subscribe to The Wall Street Journal too, of course!).
The AAII Journal accepts no advertising and is published by the American Association of Individual Investors. This group provides a lot of good investor education and also publishes an interesting survey of its members that I mention elsewhere in the book.
Stay tuned – release day is July 12th!
I was thrilled to see that my upcoming book was reviewed this weekend in Fortune Magazine and even more so when I saw that the reviewer was none other than Roger Lowenstein. He’s one of the most accomplished financial journalists around, the author of several books I’ve enjoyed, and also a former Heard on the Street columnist like me.
I was perplexed when I started to read the review, though. The first 264 words – as long as some entire book reviews – were about Benjamin Graham, the father of value investing, mentor to Warren Buffett, and a man I mention several times in Heads I Win, Tails I Win. After that he finally got to my book and said a couple of nice things.
He wrote that “Jakab has plenty of sensible advice” and that my writing is “anecdotal and witty.” But that’s where the praise ends. Lowenstein laments that the author, “a former security (sic) analyst … spends many pages debunking the idea that investors should try to time market breaks (he aptly likens this to astrology). He devotes not a paragraph to how one might estimate the future profitability of a business…One does not learn how to evaluate stocks. One learns that value investing has worked, but not why.”
While a more positive review would have made me happier, the weird thing was that Lowenstein really seemed to want to have read an entirely different book – one that taught my mostly mom and pop audience how to value stocks and beat the market. The premise of my book, though, is that this is mostly a wasted exercise, whether you try to do that yourself or pay some clever broker or stock picker to do it. My own work as a securities analyst and overwhelming academic evidence support this.
But the weird thing is that he invokes Graham. I guess Lowenstein isn’t familiar with the great man’s final interview in 1976 in the Financial Analyst’s Journal, the year he died. Here’s the money quote:
I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook “Graham and Dodd” was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I’m on the side of the “efficient market” school of thought now generally accepted by the professors.