John Mauldin
1 There is nothing to learn from this hedge fund book
John you sound like a nice guy, but...
I rarely feel like I waste time, but this book is a large time waster. There is nothing about bull's eye anything. Simple information provided THAT YOU ALREADY KNOW!
1. We are in a bull market. Wait for P/E's to come down like they always do and then buy.
2. Value is good. He even goes back to the Warren Buffett war chest. Come on! Boy that drives me crazy.
3. Hedge funds (million dollars to join) are good and you guys are going to be lazy, so find a good money manager, not a stupid lazy one who does not do one's home work. The due diligence for research is not on picking value companies in some bull's eye fashion, but for picking funds, mostly the hedge fund variety, which is what John does for a living. So if you do not like funds, do not have a million dollars burning a hole in your pocket, and want to control your own investments, this book gives you NOTHING.
4. His chapter called Bull's Eye Investing is 7 pages long in a 400 page book. The chapter and book ends with this curious final statement(I am not joking). "Through my free weekly letter, I hope I can be a part of your "let's think about the future" for a long, long time. And I bet you we find the future far more fascinating and fun than we can even begin to imagine." Goodness what is this romper room madness in a book meant to pin point bear market strategy for non-professional investors?
Another weak Value Investing book in boring, repetitive sheep's clothing.
Again, sorry John.
2 serious summer reading, indeed
...a very good read for anyone interested in investing in securities, even if only so you understand what to expect from the market.
However, the best book of the last 40 years...is not. I'm not sure which book would merit that designation, but, depending on what you're looking for, there are some contenders. At the top of the best books of the decade, that it is, even if only because it brings together a lot of information and, I think, the *right* information: don't get your hopes too high, how not to do it and then how to do it.
If you're serious about going at it alone, your next best bet would probably be Morningstar's "Five Rules for Successful Stock Investing" and work your way from there, if you're still at it alone :). If not, Mauldin's book gives you enough pointers why and how to find some good value funds, based not on their relative, but decent absolute returns and stick with them.
3 The emergence of a secular Bear Market
Jeremy Grantham of GMO oversaw $54 billion in his fund and decided in 1998-1999 too get out of stock portfolio. Stocks for the long run had stopped looking attractive. Grantham discovered 28 bubbles with 2 or more standard deviations from the mean in the last 130 years and noted that in every bubble the market returned to their mean of 14.6 Prices/Earning ratio for the market as a whole when the P/E was above 23.
John Mauldin believes the market will return to single digit P/E ratios. Mauldin claims the market is 50 percent overvalued using four measurements based on dividend yield: first, the Tobin Q factor is the markets value of a firms assets divided by their replacement value is high by 31 percent; second, the price of stocks to their 10 year average of real earnings is too high by 31 percent; third, market capitalization (stock price x outstanding shares) compared to Gross Domestic Product (GDP) is high by 45 percent; and fourth, the market P/E value of 26 is high from the 15 P/E median and Mauldin and Grantham concede too raising the median to 17.5 P/E factoring that investors are smarter and more liquid. Mauldin concludes the market is overvalued at 50 percent and in recession, the DOW would correct to 6,000. Why the correction? The market loves comfort, stable growth, stable low inflation, and strong profit margins. Biotech and technology receive no exception and as investors move from future value expectations to present value expectations and evaluate companies on value. Some of the old companies will start to look good.
The only force capable of breaking the business cycle is innovation. Innovation charges growth and starts a bull trend.
Operating earnings for 1988 through 2002 was 52 percent, so, in 1988, $100 would cost $152 in 2002, if earnings kept up with inflation and the growth of $23.75 (1988) would have moved to $36.10 in 2003. 15 years of earning grow was 56 percent or 3 percent a year and barely keeping up with inflation meaning 96 percent of the earnings growth was due to inflation and earnings were no where near inflation plus GDP.
What is the 20-year horizon? Mauldin observed that every period of 9.6 percent market returns started with low P/E ratios. The P/E ratio amount strongly correlated with the trend in Market P/E ratio and none of the strong gains occurred without rising P/E ratios. Looking at the market trend, half of the investors realized compound returns less than 4 percent and 10 percent generated gains more than 10 percent. Subtracting inflation, taxes, and dividends the historical growth in earnings has been 2 percent. Only new companies have been able to produce 3 percent. Pensions need 7 percent in real growth. Is it possible some pensions are 1/7 their value? It is impossible to get a 9 percent growth assumption in a 5 percent bond market. Companies often make a 70/30 balance of stock to bonds. The cost for companies to drop their expected rate of return from 9.2 percent to 6.5 would be $30 billion according to CSFB assuming no recession that would correct the DOW to 6,000. Corporations are in a bind and they have assumed the stock market would grow faster than it realistically could. Pension fund replacement of 90 percent allows companies 30 years for the 10 percent in make extra payment; however, a replacement of greater than 10 percent may require the company to make extra payments within 3 to 5 years to bring the fund to 100 percent. Only 4 firms a year grow at 50 percent for 10 years and 18 percent make 10% for 10 years. The S&P earnings can't grow faster than the GDP. The S&P changed it accounting report to core earnings. The large infusion of capital into pensions will reduce reported earnings. As earnings drop so will price. Pensions are required to remain funded by law and as more retiree draw on the pension pressure will increase to replace the depleted funds. If companies are assuming a stock growth of 9.6 percent then larger portions of their earnings will be required punching out the steam on their growth and market capitalization. Companies can only hope that interest rates will remain low, the dollar will increase in strength, and taxation low. The dollar devalues as debt increases, foreign countries like Japan and China buy U.S Treasuries to hold up the value of dollar to keep their exports strong, the dropping dollar makes America products cheap. In a recession bond yields increase, taxes increase, the dollar devalues, deflation increases buying power, and stock price drop.
4 Wonderful Insights - Poor Practical Advice
John Mauldin provides brilliant analyses of US and global economic dynamics to make a strong case for a flat to down market over the next ten years. The book also includes an excellent tutorial on hedge funds. If these subjects are your main interest, then the book a really worthwhile read (5 stars).
However, while his writing is often masterful, the book fails to provide a workable investment strategy (which is sort of promised by the book's title). His advice on how to find stock market winners is disappointing because it's wholly impractical for the average investor. Essentially, his advice is to read everything there is to read about a company (SEC filings, reports, industry journals, creditable websites, etc.), go to trade shows, meet the company's management, meet the employees, etc.. He does allow for the fact that this process is somewhat arduous, so he advises working in groups to analyze a sufficient number of companies to find the winners. This is just what a lot of professionals do in the investment industry... but these are full-time jobs!
Overall: a great case for making hedge funds generally available to the public; a strong case for a flat to down market over the next decade or so; but, ultimately, doesn't deliver the golden arrow... so regrettably 3 stars.
5 I love this book--I get it!
Mr. Mauldin's writing is clear and concise. I have bought three copies of this book and given it to family members. It's one of those a-ha! books on investing so the normal person who's just trying to invest their money wisely (and can't figure out why their investments never work out)! can find their way through the Impenetrable Forest of the Stock Market. My father is a stockbroker, I grew up in a stockbroker's house, so shouldn't I know something about wise investing? But remember the day when the rules all changed--and we found out the deck was pretty much stacked against the little guy and gal? In this book, Mr. Mauldin gives some insightful knowlege--at least for me--about how to prune the deadwood and arm yourself with a weedwacker in the forest so that you can come out with a different attitude and better, new, more productive growth in your investment portfolio.
6 Great information, but you may not agree with him
I enjoyed reading this book. It reminds me of A Random Walk Down Wall Street. Mauldin advocates that the stock market is overpriced and that you should consider other investment options. He does a good job of laying out his argument. However, if you listened to him and pulled out of the stock market in 2004, you would have missed out on some large gains. He did get me thinking of investing in individual value stocks instead of index funds.
In the last part of the book he tries to sell you on hedge funds, but his case is far less convincing. I get the feeling that that section is a bit of self-promotion.
I agree with the other reviewers that the book could have been written better and that some sections are repetitive.
I appreciate Mauldin's insights. I am glad I have his perspective, even though I don't exactly agree with it. Maudlin is sticking his neck out with the prediction that the stock market will be in for a big decline coinciding with a recession either in 2005 or 2006. If he turns out to be correct, then he deserves another start in the rating. We shall see.
7 Good warnings & analysis; little advice for small investor
The book provides warnings about the upcoming bear market and the reasons for it. Mauldin says that money markets will beat stocks over the next 10 years. However, he doesn't provide the small investor with solid advice for where to invest. He ignores mutual funds and ETF's and does very little on asset allocation. If we want to earn more than 1% but can't get into a hedge fund, the other options he advises are nonexistent.
8 Disappointing
This book was very disappointing. While I agree with the author's basic premise that stock returns over the next several years will either be in the single digits or flat, the book is poorly organized. From chapter to chapter the book jumps to different topics which are very loosely tied together. What's worse is that within chapters, the author rattles off different points one after the other. In some ways, the book reads as if the author locked himself in a room for a few days and wrote the book in one sitting from beginning to end.
I disagree with one of the author's main suggestions of investing in hedge funds. I don't think your average investor should even invest in a hedge fund assuming they could qualify. The author notes that through fund of funds, hedge funds may be more readily available to the average investor. This may be true, but the minimum investments are still going to be fairly sizeable (probably $25k+). More importantly, hedge funds are an unregulated industry with few protections for investors, and can have high volatilty given that many managers leverage their investments. Your average investor who will probably need every penny for his/her retirement should not be investing in such a risky forum. Besides there have been recent reports indicating that as the hedge fund industry expands its returns are shrinking and reverting to market returns. Note--This is what happened at Long Term Capital Management. At first, its returns were spectacular, but diminshed over time as other funds and brokerages began copying LTCM's model. Its partners then decided to leverage their investments even more to boost its return, which led to its ultimate collapse when Russia defaulted on its debt. Personally, I think you should turn to other books by Bill Bernstein or Jack Bogle before you read this one.
9 Lots of wisdom, theories and ooh and aah(s) in this read
Having little knowledge of truly what Bulls Eye Investing was about, i trusted the recommendation from IBD and gave it a good read. The author did a great job of providing as much knowledge into this book that he possibly could; based on that, i completely recommend this book. The only downside to this book for me was that it was just booooooring... i didnt care about hedge funds either. But what basically boiled down to when it came to stock searching was this:
Stop-Loss
Dont Fall in love with stocks
Pick Value
Patience
Not only does he mention these towards the end of the book, they are just so bland/broad. The title is misleading and was used mainly as an eye catcher because it covers more about history, data and a bunch of unnecessary hog wash. Some chapters stood out more than others, but a feeling of repetiveness kicked in after the fourth or so. Hedge Funds, i skipped altogether. However this book covers the history of the market and everything you could possibly dream of knowing regarding the overall market direction. I still give "BULLS EYE INVESTING" a thumbs up for the amount of educational information on its behalf.
10 A Taste of Things to Come
John Mauldin writes as a cool "just the facts" analyst. If this book doesn't convince you that you need to tread carefully in the next decade, then nothing will.
"Bull's Eye Investing" is a full frontal assault on the perennial bullishness of Wall Street. Mr. Mauldin comes armed with a wide array of studies from other authors. No, Mr. Mauldin does not bring his own guns made by his own hands. What he has done is assembled a vast array of weapons and assembled them in a way that makes the whole greater than the sum of the parts. (Many of the chapters are co-written with other authors.)
The entire book can be boiled down to one conclusion: the next decade will see a predominately declining market. Most of the book is spent detailing why this must be. Nothing written is new or ground breaking. Many of the cited studies use old premises, updated with the newest data. Trailing price-to-earnings ratios, for example, have long been cited as an inverse predictor of future returns. If you are familiar with such studies and already accept their conclusions, then you do not need to read this book as you will find the book rather repetitive. But for those who are not familiar with such evidence, the depth of arguments that he piles on will be impossible to deny.
The title of the book suggests a discussion of methods to invest in uncertain markets. It is worth noting that Mr. Mauldin is neither a professor nor a money manager - he is an advisor who helps his clients select hedge funds and other investing vehicles. Thus, as before, his investing recommendations are an assemblage of various studies and newsletters by other authors as well as his own experience with the world of hedge funds. The practicability of these recommendations is debatable. On the one hand, some of the cited studies provide strong statistical evidence that a particular investing strategy will work and he argues convincingly why these strategies make sense. On the other hand, Mr. Mauldin does not address how well such strategies might work with the strong headwind that he takes such great pains to establish.
"Bull's Eye Investing" is reminiscent of "Irrational Exuberance", written by Professor Robert Shiller at the peak of the technology bubble. Dr. Shiller was ridiculed as someone who "doesn't get it." Those who still believe so can skip "Bull's Eye Investing", as these two books could be kissing cousins. Similarly, those who accepted the premise of "Irrational Exuberance" will simply find more evidence for the same thesis in this book. This book is for the undecided - read this book now before Mr. Mauldin, like Dr. Shiller before him, proclaims to the world "I told you so!"
11 Unconventional Wisdom
A few words to describe Mauldin and his writing style: Straightforward. Accessible. Engaging. Fearless. Creative. Profound.
At the very least, this book gives you interesting thoughts and perspectives to consider. At best, it can revolutionize the way you invest.
If you're unsure whether or not to buy this, subscribe to his free newsletter. You'll be convinced in about 2 1/2 paragraphs.
My guess . . . At the end of the decade when "absolute returns" has moved from a semi-fringe idea to a mainstream buzzword, this book will be viewed as THE definitive resource on the subject.
12 Packed with Knowledge!
This is a very good book about investing and market behavior. Readers should be forewarned that author John Mauldin may have some bias in that he is an advisor and money manager with a big commodities practice. Nevertheless, pay close attention to his evidence and the case he expounds here. Mauldin marshals numerous studies to indicate that a secular extended bear market is upon us and that it may be a long, long time before stock markets recover strength and surpass their present levels in inflation-adjusted terms. He suggests that a further drop of as much as 50% may be in the cards and, in case you aren't already scared, he supports his contention with solid evidence. Mauldin offers you a number of plausible alternatives for managing your money. We find that one of his book's great merits is that it calls attention to a potentially dark scenario that most investment coverage ignores.
13 Unbiased Opinion
More than often, people form their opinion first and look for evidence to support their opinion. John Mauldin researches the subject of investing in multiple dimension before forming any opinion. Even the title of this book is sending you that message, not the kind of gloom and doom message we find today.
This book should be studied and re-read in order to absorb all the knowledge. An all-time classic!
14 It will change the way you see the stock market
John is superb in this book. The whole book is full of wisdom. John systematically explains why we are currently in a secular bear market and how you should take financial analyst comments with a grain of salt. This book is required reading for anybody retiring within the next 25 years. I rarely read a book twice, I read this book already twice and keep browsing for useful advice. Excellent work by John, you will get your money's worth and more.
15 Right up there on the top shelf...
...and in the pantheon of Really Useful Investment Books. For me, it's a classic that sits alongside Norman Fosback's Stock Market Logic published thirty years ago and, though I realize some may wince, William O'Neil's CANSLIM books.
Particularly persuading, I found, was his portrait of the Muddle Through Economy. Also, the chapter on Greenspan and the Fed, which shone light into very dark places: this is the first time I've read a detailled textual analysis of Fed pronouncements and Greenspan obfuscation that actually made sense to me.
And yes, as others have said, it's heartening this isn't just another apocalyptic vision of looming catastrophe. We will survive; the only question is how well. This book will help keep you afloat.
So why not Five Stars? Mainly because of typos and loose editing. In this, I know, the book is no different from so many others, and I don't pin blame on Maudlin but on where it belongs: Wiley is a mainstream publisher and there really is no excuse.
16 Mauldin Misses The Bull's Eye!
Mauldin misses the mark with "Bull's Eye Investing". I agree with many of the other people who have reviewed this book who stated that Mauldin's discussion of the investment cycle is very well done and interesting. I was very dissappointed in his strong recommendation of hedge funds. During a secular bear market (and any market for that matter), preservation of capitol is the most important part of any investment strategy. Mauldin agrees! So why does Mauldin spend most of the second part of his book trying to convince the reader to invest in hedge funds? A recent article in 'Forbes' magazine, "The Sleaziest Show On Earth", basically labeled hedge funds as a license to steal. Forbes pointed out that Hedge funds are unregulated and are not required to publish their performance results. Mauldin didn't seem to be concerned that an investor may not be able to track the performance of his hedge fund or that hedge fund expenses can be 20% or more! Mauldin actually recommended using hedge fund indexes to reduce the risk! I believe this type of investment advice is totally irresponsible. Hedge funds may be an option for speculators, but they are not an option for serious investors!
17 Current and Valuable
This book is so interesting and helpful that I'm motivated to read his "recommended" readings at the end of the book. I highly recommend this book to anybody who wants insight into the direction of the stock market and how factors such as demographics, PEs, earnings and others effect the market. The fact that this book was written so recently is the icing on the cake for an investment book. I've recently read a few investment books including Irrational Exuberance, Contrarian Investment Strategies, The Intelligent Investor, and What works on Wall street and I've found this one the best.
18 Best Financial Book of Last 40 Years
This book is simply the best - probably the most enlightening investment book of the past 40 or so years. Mauldin has done an extraordinary amount of research. He pulls off the wraps on the world of investments that the savvy use, but are unknown to the average mortal, such as hedge funds and other alternative investments. I will admit I am biased, as John is one of my advisers - but the bias is due to a very positive experience, and having found no one who is more solidly grounded in how financial investments really work.
19 Noone Knows the Future
I wouldn't buy this book nor would I read it for free.
There are hundreds if not thousands of self-professed experts out there. The fact is that their guess is as good as anyones. I don't think anyone should look to a book for advice on how to manage their money.
Study the facts and form your own conclusions. If this author truly had any foresight into the future, he wouldn't be telling readers of a $16 book in my opinion. He would be putting his money where it counts and keeping his mouth shut.
20 Well thought out - methodical
This book should be subtitled "Economics 101 for Investors". John lays out a historical perspective usually not found in personal investment tomes. Usually, most authors promote some magical formula for getting wealth based on a formula that works until we move from secular bull to secular bear or vice versa. This book teaches a lot about market cycles and cycles within cycles. I wish I would have has this book about 30 years ago. John also has an informative free weekly email newsletter that is a real education.
21 Thank you John, for reminding us what investing should be al
At a time when raw intellect, vision, and straightforward thinking are in very short supply in the American financial establishment, John Mauldin represents an intellectual force to reckon with, admire, and respect. His astuteness, real understanding of issues, honesty, clarity of thought, and foresight can be matched by only a handful of contemporary American financial thinkers/writers. His latest book "Bull's Eye Investing" is a "must read" not only by the `laymen" but also by us, the "pros" so we can be reminded of the lessons we once had learned, but some of us have chosen to have forgotten. Thank you John, for reminding us what investing should be all about.
Ike Iossif
President, Chief Investment Officer.
Aegean Capital Group, Inc
22 Best Current Investment Guide
This book lays out in clear and complete terms what the likely future path of the economy and stock markets and the logic behind coming to his conclusion. The breadth of discussion topics as well as cognent flow is impressive. It is simply the most comprehensive projection I believe I have seen.
But what I like the best about John Mauldin's writing is his balanced approach - he is neither a stock shill nor a gold bug -but one who allows the facts and logical arguments to dictate his conclusions.
As for disclaimers, I trade the markets only for my own accounts and as my source of income. I do read and also recommend his weekly letter at www.frontlinethoughts.com .
23 Good book, in theory.
Good book, in theory.
Remember Mr. Mauldin is a business man and he is in hedge fund business.
He needs to promote his business.
He needs to cry bear.
Who cares about secular bear?
If I listened to his advice and wrote covered calls in 2003 I would have lost my shirt instead of making 50% on my money.
Cheers.
24 a true gem!
I have been a reader of John's weekley email for about the past year. I only wish iI had been reading them sooner, as he is one smart cookie. He sure would have saved me some money!
In his book, John postulates the direction of the market in the future (sideways or down), and tells you why. He also suggests strategies to take to avoid loss & possibly gain more in the future.
Is there anything REALLY new in here? Nah. But has anyone taken the time to thoroughly analyze, dissect, and explain the market in the same way John has, WITHOUT the fluff? Nope. Does he back up every postulation and idea with fact? ABSOLUTELY! And unlike some of the go-go "investment advisors" out there, he sticks pretty much to the facts.
Unless you are a one really smart investor, there is a lot of information in here, and this is a tome on the market that is well worth reading.
25 A fountain of objectivity
This book may be only 400 odd pages, but it is so packed with relevant information and cogent thought that you'll need to read it three times to absorb it all. Therefore, I feel safe calling it the new Atlas Shrugged, which if you have read you know is over one thousand pages of compelling capitalist perspective on how American ingenuity is used and abused by the trappings of socialism. John Mauldin (a.k.a. John Galt) exposes the profiteering nature of the emperors of investment punditry and investor manipulation, as Ayn Rand struck against the suicidal human nature of taking from those who have the greatest ability (investors) and giving to those who have the greatest need (financial managers). Enter Bull's Eye Investing, where we find those who have entrusted their hard earned savings poised for pilfering by brokers and advisors who can't see beyond their own commissions to the reality of market and economic cycles. Read this book and recall how many brokers have told you "Hey, I have to make a living too," as they insinuate themselves into your asset management. Praise Mauldin for risking personal excoriation at the greedy hands of his industry for drilling into our heads that when money is involved, truth is the first victim.
26 Don't Waste Your Time and Money
In my opinion, the author offers nothing in terms of original thinking or analysis. He quotes many other people and just seems to ramble on and on.
Too many investors are looking for other people to tell them what to do with their money. There are plenty of internet resources that investors can tap for free. I wouldn't waste my time and money on this book. It is garbage in my opinion.
My advice is to do your own research and make your own conclusions.
27 Made Me Rethink My Whole Investing Approach
I'm in the process of getting serious about investing as returns from existing investments are now a sizable part of my annual income.
This book's main argument, that the stock market is going to be flat, at best, over the next decade seems pretty persuasive. The most persuasive reasons for this are:
- The market, when starting from a high P/E and low interest rates, historically is flat at best.
- The market historically overreacts to a bubble (like the Internet bubble) and we have not yet completed that overreaction.
Mauldin recommends:
- Small-cap value oriented stock picking. This is the direction I was already intending to pursue. I think I'm going to need some help with this find the right kind of stock screening data.
- Hedge funds. This is counter to my strategy (and the whole value approach to investing) of really, deeply understanding your investments.
- Betting on a falling dollar. Mauldin provides no specific ways of doing this.
I'm interesting in joining a club of serious investors who want to pool what they are learning in the areas of small-cap and value investing. Please email ddillon@direcway.com if you know of such a club, online or local.
Here's a few more notes on the book:
o The style is very readable, but repetitive. The book would be considerably better if it had been polished and edited down to about half its length.
o Topics on other trends, such as demographics, pensions, the dollar being overvalued are also very valuable.
28 The Bottom Line
The bottom line on Mr. Mauldin is that over the past few years following the advice contained in his weekly emails has made me a lot of money, even more important I have avoided large losses. Reading his weekly essay is a highlight of my week. Naturally the question comes up: why should I buy the book when I can get the data for free. Well, first is simple fairness: he deserves some pay back for dispensing so much wisdom for free every week. But hey, whose going to buy a book because the author deserves the money? Well, there are several good reasons. First the list of other free sources of investment/economic analysis available on the internet is worth the price of the book by itself. Second, there are several important chapters that have not been made available in his emails, and lastly the book organizes the data in a way that arms the individual investor with a broad intellectual base in which to put in context the daily stream of market data. Buy this book, and put in the time to fully understand it, and the reward will be many times the price of the book.
29 The best book I've read in the last five years
Rarely does a book on the topic of investing and the economy qualify as "can't put it down" material, but this one does - I finished it in a short weekend.
Immensely readable, the book provides a framework for understanding an investment world that seems no longer to play by the rules. So many books of this kind come across as alarmist or naive, but Bull's Eye Investing is rational, methodical and comprehensive in its' analysis of everything from underfunded pensions to global demographic trends.
The book left me with a 'bearishly optimistic' outlook for the next decade. Mauldin makes a compelling case for caution as a small investor, but also identifies strategies and analytical approaches that provide the reader with a path forward even in what he calls the "Muddle Through Economy."
In the end, Mauldin's concise recipe for moving forward as an investor is nothing less than gourmet fare.
30 Truth Wins Every Time
"Bulls Eye Investing" is an extremely important book. It is macro-factual analysis that joins the zenith of economic scholarship. Mr. Mauldin does financial meta-analysis at a level that breaks ground from a philosophy of markets perspective. The graphs, tables, data, research, and yes, the thinking are as clear as any business bottom line-- direct and unmistakably to the point. The writing is easy to understand and the reader stands in awe of how John Mauldin makes clear the endless, tortuous mumbo-jumbo of the market and the oceans of unfathomable data one has to confront when trying to make any sense out of investing at all. More important is what the reader may infer about his own stock market prospects (going forward!) armed thanks to Mauldin, with a withering tour de force of the facts.
All in all, this work and its writing is brilliant, and revolutionary. I am extremely grateful to its author and will go so far as to extol its virtue to the gods. By reading this book, middle class boomers like me will be able to save thousands of hours of agony, useless study, pain AND MONEY. My heart valves thank the author--from the bottom up.
Before listening to another word from a broker or believing in any of Wall Street's Smoke and Mirror malarkey, READ THIS BOOK.
Otherwise caveat emptor might take on even more ruinous meaning for you in the future than it may already have done when the tech bubble blew up in 2000. This is a MUST READ and STUDY for anybody in the market. Especially for the buy and hold believer. It will rock you to the core.
31 Must read
I have read well over a hundred investment books. This is clearly one of the very best and is an absolute must read. It should be a must read for every politician holding public office.
32 Great book
This is a great book, though like the review titled "Good, but is the free stuff better?" I noticed that you can get most of the material for free on the web in sometimes more readable form.
33 Good, but is the free stuff better?
This book asks where the stock market will be in ten years' time, and how you should invest as a result of that. It's potentially important, because discussion of long-term investment strategy (as opposed to next quarter's earnings) is so rare - yet obviously critical for investors. For that reason, I'm going to write a more detailed review than most of the others you'll find here. I'll summarize Mauldin's key arguments, briefly discuss his recommendations, and finally give you an honest appraisal of whether you should buy the book.
SYNOPSIS. In the first half of the book, Mauldin sets out to prove that in ten years' time the US stock market will likely be no higher than it is now, and possibly significantly lower. The stock market's future level will be determined by (a) earnings growth and (b) the value the market places on those earnings (ie. P/E ratios), so Mauldin focuses on these two elements. First, he argues that earnings growth will be disappointing. Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%. Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically. He assembles a battery of arguments to prove his case. Secular bull markets have never started from times when the market's P/E ratio was as high as it is today. The market is currently overvalued according to multiple measures, and will likely revert to its historical mean. The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios. Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market. With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower.
If the market will be flat or down over the next decade, how should you invest? That's the subject of the second half of the book. Mauldin recommends that you buy value stocks or a mutual fund run by a value-oriented manager, since value stocks have historically outperformed growth stocks. Stocks that pay dividends are particularly attractive, as a large part of the total return from the stock market has come from dividends. You should also assemble a laddered bond portfolio, buy real estate, and buy gold or gold stocks if you have the expertise. His key recommendation, however, is that you should put your money into hedge funds, since hedge fund results are not dependent on the market rising.
HOW CONVINCING IS HE? Mauldin supports his argument that the stock market will stagnate over the next decade with data, academic studies and a reasonable description and rebuttal of opposing viewpoints. He comes unstuck, however, with the practical recommendations in the second half of the book. Three quick examples: (1) The first half of the book suggests there's a reasonable likelihood of deflation. In that case, cash would be a better investment than most of Mauldin's recommendations. (2) If the stock market is really heading down, as Mauldin suggests with his assertion that the market's P/E ratio could go to 10 or below, the best strategy for most investors is simply to buy long-term index put options; but he doesn't mention this. (3) Hedge funds have lousy tax efficiency, so returns for taxable investors would be a lot worse than Mauldin seems to suggest. These points deserve more discussion than this space allows, so I'll address them in more detail (and provide practical alternatives) on the TechUncovered web site. Suffice it to say that despite his honesty, Mauldin's viewpoint is likely skewed by his profession: acting as an introducing broker to hedge funds.
SHOULD YOU BUY THE BOOK? Despite these criticisms, Mauldin asks important questions and assembles and summarizes a lot of material. But here's the problem. Much of the content has been reproduced from Mauldin's free emails, which are available on his web site, and some of the key arguments are available for free elsewhere, such as Grantham's letters and Bogle's speeches. (I've provided links to these sources on the TechUncovered web site.) Worse, unlike the emails, the book has been poorly edited. A couple of the chapters are co-written with a colleague, and read like stand-alone hedge-fund marketing material, while others repeat points in earlier chapters. So the book misses the opportunity to integrate the content of the emails into a readable, methodical argument. Whether you decide on the email archive or the book, though, Mauldin is definitely worth reading.
34 Empowerment of the Individual
John Mauldin has done the average citizen a great service by putting the economic environment and investment choices into an understandable and logical format. He guides our decsions by use of historical statistics that demonstrate the best probabilities of success in making and keeping money from investments. He is neither bull nor bear but realist, and in the process debunks the myth of "buy and hold." Because this book refers to so many sources of information, it must be studied, not glanced at. It is not a panacea; rather it helps the individual get a compass in a very complex world. However, it is rewarding beyond words if one reads and ponders the wisdom that lies within. We all have choices; this permits us to make wise ones.
35 Thoughtful Analysis
This is an excellent book for those who are looking for real direction in deciding how to allocate their portfolios over the upcoming years. Mauldin is neither a raging bull or a perpetual bear. His position about the future direction of markets and the "Muddle Through Econonomy" he expects over the upcoming decade is clear and straight foward and he supports it with an excellent analysis and references to some of today's best investment minds. He has taken a complex subject and organized it in a logical and readable fashion. You may not agree with all of Mauldin's conclusions, but any serious investor should give thoughtful consideration to his analysis and arguements.
36 Bull's Eye Advice
If you're a reader of the author's weekly commentary, you already know one of his strengths is the ability to offer good commentary -- sometimes opinionated and sometimes factual -- without the hype. Most books and commentaries are written more to market the author than inform the reader, and that leads to inflammatory posturing that simply incites (but doesn't inform) the readers. Mauldin consistently presents a reasonable case for his views, and doesn't mind offering opposing perspectives as potentially valid. His book follows the same format of being more interested in teaching his readers than marketing himself. Beyond that, you'll find his understanding of market mechanisms -- and his advice -- is superb. Don't worry if you don't understand the entire book. If you're an investor, read it at your current level of understanding and you'll find it worth the time and money. Then re-read it as you become more financially astute. If you're just interested in garnering a better understanding of what motivates investors and drives the financial markets, you'll also find this book quite illuminating.
37 great book, but not enough new content
This is a great book, and it really organized Mauldin's thoughts into a neat cohesive form, and gives you a solid plan for dealing with the muddle-through economy. The only major criticism I have is that so much of the material in this book is available in his free weekly column. Indeed, in many passages I got an extreme sense of dejavu.
38 Mauldin On Target
John Mauldin sounds a clear, strong note. Bull's Eye Investing is sturdy stuff. It slices with precision though an investing world that is flabby with turgid, overblown and dangerously uninformed opinions.
-- Andrew C. Carpenter
Executive Editor
Journal of American Finance
