Stocks For The Long Run by Jeremy Siegel – Book Review

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It’s hard to believe that it’s been more than 4 years since January of 2007. However, that’s how long it’s been since I first started learning what investing was for real through self-directed reading. 
Sure, I had learned about personal finance topics in my finance classes in my undergraduate degree. However, if I had relied on learning everything about personal finance from those classes, this blog would never have gotten started, and you most likely wouldn’t be reading it right now. 
You heard me right folks. I am willing to bet that you can get a better education about personal finance yourself by reading some of the high quality books out there then you can from any university professor. This whole debate is an entirely different matter (and one that I feel very strongly about – keep an eye out for a future post), so let’s get back to the subject of today’s post before I go off on too much of a tangent.
In January of 2007 (during a trip to Macchu Picchu, Peru with my family), I read “Stocks for the Long Run” by Jeremy Siegel for the first time. Since then, it has truly become one of my favorite personal finance/investing books of all time (up there along with A Random Walk Down Wall Street by Malkiel and What Wall Street Doesn’t Want You to Know and Swedroe).
I consider this my “investing bible.” I may even have a problem because I just realized that I have been sleeping with it no less than 2 feet away from me on the book shelf for the past couple of years! haha
In this book, Siegel and his Wharton Business School research team explore pretty much every question you have or could ever wonder about regarding long-term investing in stocks, bonds, and cash-based securities.
The book is divided in to five Parts:
In Part 1, Siegel examines historical data to determine what trends are present to discriminate how the equity and fixed income markets function. In Part 2, the research team analyzes different techniques to value securities and to predict the future returns investors can hope to obtain. Unfortunately for us, their findings indicate that future returns will be significantly lower due to the bleak outlook of dividends.
In Part 3, which is in my opinion, one of the most interesting sections of the book, Siegel analyzes how stocks and bonds have performed during specific periods in history. For example, he analyzed performance during the Sept. 11, 2001 disaster, during wars, and how they have performed when Republicans vs. Democrats are President of the United States. Some of the result are counter-intuitive!
Part 4 of the book explores various short-term periods in history in an attempt to discern whether or not patterns are present which can be exploited to profit when incorporated in to one’s investment strategy. Unfortunately, the team pretty much finds that there are no short-term fluctuations that can reliably beat the market averages.
The final section of the book, Part 5, is my favorite portion because it basically summarizes how all of the evidence he presented in the previous Parts can be used to create an intelligent investment strategy. And guess what, he concludes that low cost index mutual funds are the best way to go! How about that?! That’s why my investing strategy is based upon fixed income and equity mutual funds instead of individual stocks.
One thing that I think could be improved upon in this book is to add additional detail showing example portfolios of how asset allocation should change throughout one’s life.
However, for the most part, if you are wondering anything about stocks, bonds, or any security for that matter, this is the book to go to!

Recommendation for purchasing the book (if you so desire)

If you’re interested in buying this book, I would recommend purchasing a cheap, used copy from Amazon. There are two editions available for purchase – 1) the 2007 edition and 2) the 2002 edition.

Personally, I would buy the 2002 edition because it is only $0.48 vs. $23 for the newer edition. I seriously doubt that the added material is worth >$20 more in purchase price, because the 2002 version is already very good!

How about you all? Have you read Stocks for the Long Run by Siegel? What did you enjoy and what would you change? What are your favorite investment and/or personal finance books?

Share your experiences by commenting below!

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    1. I was just reading about Shiller Vs Siegel and I saw your review! Adding this to my reading list.

      My recent post Selling Stuff On Amazon- A Step-By-Step Guide

    2. Interesting review. I need to check it out.
      My recent post Splurge A Little on Starbucks

      • Thanks for reading Single Saver! What type of investing style do you employ? If you're in to passive investing, Siegel is definitely worth checking out!
        My recent post Stocks For The Long Run by Jeremy Siegel – Book Review

    3. My wife is always making fun of me because my favorite pastime is reading finance related books, new-stories, and blogs. If it's as good as you say it is, I'll have to check this book out for myself! Thanks for the heads-up!
      My recent post Dividend and Conquer

    4. Im always a bit skeptical of finance books. There are usually good nuggets of information here and there, but generally, I like to think of them as history books. Any company can go under at anytime…just ask Lehman Bros 🙂 I still think it comes down to doing your own research.
      My recent post 10 Highest Dividend Stocks that Protect against Inflation

      • That's a good point Travis! Thanks for commenting! I tend to favor finance books that describe more of the methods of investing, saving, etc rather than focus on the specific products. For example, a high yield savings account company could go out of business, and then the book that contained info about that company would be pretty useless.
        My recent post Petsmart vs Petco – Which Is More Affordable – Guest Post Live Today At Budgeting In The Fun Stuff

    5. Haha, it seems most of these books conclude the same thing — low-cost passive indexing is the best investment strategy! Even Warren Buffet himself said that!

      I prefer commission-free ETFs to index funds — but both are great forms of low-cost passive investing.
      My recent post My Cheap Month in New York — an accidental “digital nomad” story

      • Commission free ETFs actually are VERY good because they generally carry lower expense ratios than index mutual funds.

        The only thing that I've heard that could be bad about them is that they could be affected more by short term, emotional fluctuations in price than index mutual funds. Have you heard anything about that? It may not be true..
        My recent post May 2011 Financial Goals Update – Short Term- Mid-term- and Long Term

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