form of commissions and margin interest that were in no way justified by the below benchmark returns. This steady transfer of funds from clients to brokers buys plenty of full-page ads in the Wall Street Journal and ample commercial time on CNBC to lure in even more clients, thus perpetuating the slow transfer of wealth that comes with each buy and sell. Prior to my revelation, I lived with a nagging suspicion that my investments could do better. I suspected there was a better way to invest, but I never really had the motivation to find it. I was busy with my family and my work, and I could never put a finger on the risks I had taken or the returns I should have earned for those risks. My revelation about the investment world came to me through a tragedy. A friend of mine was killed in a car crash. I told his widow I would help her in any way I could. A few years later, she said what she really needed was help with her investments. I knew she was relying on me to provide some good, solid help, and I also knew I was ill-equipped to give it. “What do I know about investing?” I asked her. “My own portfolio hasn’t done that well.” I knew I had to do some research. I knew I needed to find a better way to invest, and I needed to share it with her. I revisited the finance courses from my MBA program at the University of California, Irvine. I went to the library and the bookstore and bought more than 20 books on investing, and I read them all. (My library now includes 2,070 books on finance, economics, and investing dating back to 1648.) I dug into Burton Malkiel’s Random Walk
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...