After reading thousands of books on investing I concluded years ago that, absent a severe toilet paper shortage, most aren’t worth the paper they’re printed on. As a result, I’ve read only a handful in the last decade, but I made a recent exception for Abnormal Returns and found it well worth my time.
I cringe every time I hear the phrase “risk-free rate of return” so any book whose first chapter is “Risk” and first section is “There Is No Such Thing as a Risk-Free Asset” is bound to quickly get in my good graces. The rest of the book succeeds in maintaining that view. A consistent theme is that given the nature or markets, and of investors themselves, simple and cheap is a far more certain path to investment success than complex or expensive. Robust mediocrity proves more valuable and survivable for the majority of investors – and the rest may simply be lucky.
Abnormal Returns covers a remarkable amount of ground in just under 200 pages, yet achieves its brevity without being overly shallow or simplistic. It’s primarily geared for newer investors, and in that regard is an excellent introduction to the basics of investing, covering all the major issues and asset classes. But for experienced investors there is also enough meat to make it a welcome reminder of the many decisions and assumptions that went into developing their current approach to the markets, and a prod to reevaluate those in light of present circumstances. In fact, after finishing the book I realized I should bump my long-ignored TAA project up to the top of my to do list since it fits better with my current desire to spend as little time as possible on trading.
It’s well-written, easy to read, and the hardcover version also smells pretty good. I will be pushing the kids to read it next, and I recommend you read it too if you know what’s good for you.
By buying from Amazon through this link I get a small percentage at no cost to you. You get the book and my appreciation. Amazon gets lower margins. Two out of three ain’t bad. Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere