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Description - The Big Investment Lie: What Your Financial Advisor Doesnt Want You to Know by Michael Edesess

In July 1971, Michael Edesess, having received a Ph.D. in mathematics, started his first job, performing theoretical work on the stock market at a major brokerage firm. Within months he realized something was askew. The academic findings were clear and undeniable, but the firm--and the whole industry--paid no real attention to them. Theories and evidence both showed that professional investors could not beat market averages. A typical study in The Journal of Finance concluded: "The evidence on mutual fund performance discussed above indicates not only that ! mutual funds were on average not able to predict security prices well enough to outperform a buy the-market-and-hold policy, but also that there is very little evidence that any individual fund was able to do significantly better than that which we expected from mere random chance." Professional investors couldn't even predict stock prices better than the nearest taxicab driver. Yet the entire business was based on the falsehood that they could. It was as if theoretical physicists knew the laws of thermodynamics but, nevertheless, the business of engineers was selling plans for perpetual motion machines. The Big Investment Lie is that an investor will gain by hiring professional advisors and managers to beat the market. Widespread acceptance of this lie allows an entire industry to prosper lavishly. But an investor will almost surely lose--more than they imagine--by hiring professional help. Over a long career Edesess observed, often aghast, often as a deeply-placed insider, while the pitch for the Lie became more elaborate, and outlandish fees for a worthless service actually increased. In The Big Investment Lie, Edesess shows how to break free from this pervasive falsehood. By following his Ten New Commandments for Smart Investing, investors will maximize their long-run wealth and achieve their best possible financial future.

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Book Details

ISBN: 9781576754078
ISBN-10: 1576754073
Format: Hardback
(94mm x 64mm x 11mm)
Pages: 250
Imprint: Berrett-Koehler
Publisher: Berrett-Koehler
Publish Date: 1-Jan-2007
Country of Publication: United States

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Author Biography - Michael Edesess

MICHAEL EDESESS is an economist and mathematician with experience in the investment field and in the energy and environment fields. He was a founding partner and chief economist of the Lockwood Financial Group until its sale for $200 million to The Bank of New York in September 2002. Previously an independent consultant to institutional investors, his clients included several of the largest investment banking and consulting firms. Dr. Edesess has spoken at conferences on investment research and taught international finance at the graduate school level, has been published in The Wall Street Journal and The Journal of Portfolio Management, and has been interviewed on CNBC. He was a Senior Fellow at the University of Denver's Institute for Public Policy Studies and taught a wide variety of courses as an adjunct professor.