The Best Book/Resource to Learn about Passive Investing

edited May 2015 in Awesome Books
Hello guys! I'm Filipe, I have 24y old and I live in Lisbon, Portugal. It's my first post here! I wanna start to say thank you to Preston and Stig for their awesome work! I'm a real fan!! Since my passion is not in the area of finances (it's more in the area of plant-based nutrition and fitness) and don't have the skill and the time for active investing, I wanna ask to this great community if they can provide me names of some of the best books/resources to learn about Passive Investing. Thank you one more time and "salut" to everyone!

Comments

  • Filipe, Thanks for the kind words! This might not seem like the most original answer but anything with John Bogle is awesome! Especially I can recommend "The Little Book of Common Sense Investing": [url=http://www.amazon.com/gp/product/0470102101/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0470102101&linkCode=as2&tag=pypull-20&linkId=NNXSMN722KMECB2I]http://www.amazon.com/gp/product/047010 ... 722KMECB2I[/url] Happy reading! -Stig
  • Stig, It's a pleasure to speak "directly" with you! Since I posted this topic I have been reading a lot on what is been saying in this wonderful forum and I already listen all your podcast episodes up to date, so I think I'm on the right tract in terms of thoughts (I didn't start taking action, maybe I will wait for the next crash... I'm not sure, so I will keep learning). My next book will definitely be "The Little Book of Common Sense Investing". Thank you for your advice! I hope that someday I will pay you back. - Filipe
  • Filipe, Great hearing from you. I think you're in for a great read with the "The Little Book of Common Sense Investing". I'm so happy to hear that you have found our material useful! -Stig
  • Hello Stig,

    I already read "The Little Book of Common Sense Investing" from J. Bogle. It was a great read and it strengthened my view on indexing. Now, I have two big questions: 1. How can I know more about asset allocation? Can you give me a book/resource to learn about it? 2. I'm thinking not to wait for the big crash and maybe starting right now with dollar cost averaging and then when the crash happens I start invest a bigger some of money. What do you thing? (yes or no)
  • Hi Filipe,

    I recommend reading this:

    http://blog.alphaarchitect.com/2014/12/02/the-robust-asset-allocation-raa-solution/#gs.3ATMf=4

    and this book:
    Global Asset Allocation: A Survey of the World's Top Asset Allocation Strategies (http://www.amazon.com/Global-Asset-Allocation-Survey-Strategies/dp/0988679922/ref=sr_1_1?ie=UTF8&qid=1462416111&sr=8-1&keywords=global+asset+allocation)

    I also recall reading something from Mohnish Pabrai where he advised that an investor could simply put 1/3 into a US market index, 1/3 into an international developed market index and 1/3 into an emerging market index that are low cost and simply hold. I can't find that quote now but it seems like sensible advice for a passive investor.

    When to enter the market - that would be another issue. ;-)

    I personally would just stay away from anything capital weighted - implicit in the strategy is buying high and and selling low; the very opposite of what any investor is attempting to do.

    Kind regards,
    G
  • Felipe whats your email address. Ill send you a zip file with a heap of books in pdf form if you like
  • Hi @Stig & @Filipe,

    Glad I found a discussion on asset allocation! Picking individual stocks based on value investing is going to be a portion of my investment, but I plan to have a significantly larger portion in a broad diversified portfolio to minimize complexity and risk myself. (Buffet also recommend most people to invest in a low expense index fund right!?) Based on this thought, I was wondering if dig deeper into some of these questions?

    #1 Do you support a diversified mix of index funds if I’m targeting 8-10% returns average?

    #2 Are there any good resources to understand how each asset class performs in different economic environments?
    Specifically, I am hoping to include assets such as TIPS, foreign & corp bonds, commodities, precious metals and REITs into the mix. I would like to understand the drivers for these assets.

    #3 What assets should we look into when equities in general have low expected returns (due to high P/E)?

    #5 What is your stance on the so called “All Weather Portfolio” & risk parity concept?
    Personally, I see that returns for equities and bonds are expected to be fairly low in the future. Considering this, it sounds like adding other assets such as Gold and Commodities may offer ways to increase average returns?

    Links for details on All Weather Portfolio:
    http://seekingalpha.com/article/3350735-duplicating-the-all-weather-fund-using-low-cost-etfs
    http://www.bwater.com/Uploads/FileManager/research/All-Weather/All-Weather-Story.pdf

    #6 How large should my fund be to start investing in individual stock picks?

    #7 In general, how do you see this podcast and platform taking on topics on broader asset allocation topics?

    Thanks :)
  • Tony robbins had a book out a while back that included a section on the all weather portfolio - after he interviewed Dalio. This maybe worth a read???

    https://www.tonyrobbins.com/wealth-lifestyle/the-end-of-the-bull-market/
  • For me, Passive Investing relates to a limit in buying and selling actions. It is a most common strategy that tracks a market weighted portfolio. I hope, I'm making sense with it. I just encountered an article and a book online and its one of the good reads that I saw: The Power of Passive Investing: More Wealth with Less Work written by Richard A. Ferri or you may check this article: The 5 Steps To Powerful Passive Investing by Mitch Tuchman

    Reference: http://www.goodreads.com/book/show/9373401-the-power-of-passive-investing
  • The article looks interesting @ MinnieDot. Anyway, Passive investing is being compared to active investing. By the way, I've also spotted many financial and investing books by Richard Ferri and the Power of Passive Investing might be the best. The book is about the difference between active and passive,debate of investing, and the case for indexing.
  • My friend has the Global Asset Allocation: A Survey of the World's Top Asset Allocation Strategies book I will try to borrow and browse it, thanks for the recommendation. I hope I can also learn from this.
  • Two questions in one.

    Is there a good book or website that walks through example valuations of companies using different models like discounted dividend or discounted cash flows? I know the absolute basics on each but would like to see the variations used for different types of businesses using real-world numbers.

    Also, in some of the Buffett books and value investing books I've seen a pretty simple method used but I don't know what it's called. For a company with very consistent earnings and dividend growth (a small pool), I've seen an approach that just takes the book value and adds up the retained earnings and the dividends (taxed appropriately) from one year to the next. Then you can look at the lowest, average, and highest P/E or P/B of the company to see a possible range future prices based on your calculated book value. Inflation or a discount rate can also be applied. Is there a name for this approach?
  • Will try the books. Thanks for your recommendation.
  • There are quite a few I love (And many I don't).
    I suggest:
    <ul>
    <li> I Will Teach You To Be Rich by Ramit Sethi
    <li> Money: Master the Game by Tony Robbins
    <li> Any books by John Bogle
    </ul>
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