Also released under the title: Exploiting the Myths
Published 2011 by Ignite LLC
In this informative, entertaining, and quick read, the author - Mike Dever, Founder, CEO & Director of Research of Brandywine Asset Management examines the misconceptions or “myths” of current investment theory and replaces it with what he describes as a "return driver" based methodology that results in both greater returns and lower risk.
I read the entire book on a recent flight from San Diego to Chicago to attend a NIBA meeting. I wasn't planning on finishing it in one sitting but once I started I couldn't stop. It is very well written, and I thoroughly enjoyed it.
A few weeks later I had the book with me again on a flight back from vacationing in Colorado. A fellow passenger noticed the provocative title and commented, “Jackass investing? All investing is jackass investing…nobody makes money investing.” If this passenger had the benefit of knowledge contained in this book I believe he would come away with a different point of view and perhaps avoid creating what Dever calls a “poor-folio” – a poorly constructed portfolio, which is the main goal of the book.
Most investors, he believes, make decisions based not on rational facts but on myths and emotions. He exposes the truth behind those myths and provides a rational alternative to the conventional wisdom that permeates the financial industry.
The book is divided into 20 chapters in which Dever explores and debunks 20 different commonplace investment myths and their attendant unnecessary risks. The author’s definition of ‘jackass investing’ is taking these unnecessary financial risks. He explains each myth by using numerous, studies, relevant facts, simple graphics, anecdotes, and great analogies. The author clearly shows that he knows what he's talking about and expresses his wisdom concisely. He explains things without assuming prior knowledge, but also without going into intricate detail.
The basic investment philosophy expressed is based on the premise that the most consistent and persistent returns across a variety of market conditions are best achieved by combining multiple uncorrelated trading strategies - each designed to profit from a logical, distinct “return driver” - into a truly diversified investment portfolio. A “return driver” is an underlying baseline condition that drives the price of a market. Identifying drivers shifts your portfolio from speculation to investing in the diversity across the drivers.
Although not a book focusing on commodities and futures, NIBA members will appreciate and can utilize the information contained in ‘Myth # 11: Commodity Trading is Risky’ and ‘Myth #12: Futures Trading is Risky’ in which he dispels those myths.
In today’s economic climate, investment education is no longer a choice. There are huge consequences of not recognizing and understanding the popular fallacies of investing. The bright side is that being armed with the information provided within these pages anyone can "cash in" on the myths. To assist you in doing so, the author has created a companion website: www.JackassInvesting.com/actions that includes specific actions you can take to create a truly diversified portfolio.
Readers will find Dever’s investment principles practical and compelling. I highly recommend it to both new and experienced investors.
Reviewer’s Bio:
John Jensen is a 32 year veteran of the futures markets the markets. He is Founder and President of Heritage West Financial, Inc. a Guaranteed IB, and Heritage West Capital Management, LLC, a CTA both located in San Diego, California. He also serves as president of the NIBA and serves on the Hearing Committee of the NFA and is also a past member of the NFA's Nominating Committee.
