This book is perfectly named in honor of the book The Elements of Style by Strunk and White, whose goal was to make the many rules of writing simple and has published it’s 50th edition.

Malkiel and Ellis have done the same, having taken the complex for personal investment planning and made it simple for everyday people to succeed, no matter how much money they make. I wouldn’t be surprised if a 50th edition is published of this book in 2060.

This book is worth buying and would make a great present.

Rating: 5 / 5

The authors strongly believe in the buy-and-hold mantra and the efficient market hypothesis. Unfortunately, using this approach with low-cost index funds is totally antiquated in today’s financial world where we have seen two stock market crashes in the last decade where investors lost $11 trillion of market value. As the late Nobel Laureate economist, Paul Samuelson, has said: “The longer you own stocks, the greater the risk of a devastating loss.” That is why buy-and-hold is doomed to failure.

Today’s investors need a pro-active investment strategy using a specific action plan with specific buy and sell rules. Since most investors will not or do not want to consider an active investing approach, then this book will certainly suit their needs and provide a decent return, although it is subject to being fully invested during future bear markets and crashes which will occur, as they have in the past.

Buy-and-holding index funds is certainly a viable strategy, but it definitely has risk, more risk than most investors realize, and is certainly not an optimal approach. As in sports, a winning team requires both offense and defense. Buy-and-hold does not offer a defensive strategy when it is needed the most – during bear markets and crashes – and that is a major shortfall that is critical for investors to understand.

Interestingly, the authors made a surprising statement as follows “charting is akin to astrology.” This view is ridiculous in today’s world in light of the hundreds of members of the Market Technician’s Association who are Certified Market Technicians, the many members of National Association of Active Investment Managers, and the many large institutions and financial firms that have technical analysts on their staff who use charts to identify exit and entry points for the market. Using charts have helped many investors and institutions avoid this latest bear market. For example, by simply using the 200-day moving average with the major market averages, among other technical indicators, stock market losses were greatly reduced by being out of the market way before the September 2008 market debacle occurred.

In summary, the authors present a rationale for using the well-known buy-and-hold approach. They don’t seem to be swayed by the volatile and crushing crashes in the past decade, and that is their right. Investors need to understand that buy-and-hold is a dangerous approach in volatile times, and that they may want to consider alternative self-directed investing approaches to protect their hard-earned money in future years.

Rating: 3 / 5