The 12 Investment Myths: Book Review

by Ryan

The 12 Investment MythsAlthough Jim Calhoun Jr.’s book “The 12 Investment Myths” lasts only 104 pages, it packs enough value to last a lifetime. With a straight forward, concise, and at times, humorous demeanor Jim brings some common myths of investing to light that many investors may not have thought about.

Working as a fee-only financial advisor the author stresses that investors should seek the advice of an advisor such as himself, who works for fees and is a fiduciary, rather than a product peddler. Through his many years of experience Jim provides his thoughts on how the wall street game works, why brokers love it when you don’t know what you’re doing, and why there are so many mutual funds in he world.

However, that’s just the tip of the ice berg. Jim discusses in depth, some of the deepest rooted problems with individual investors and how they can go about debunking the errors in their investing mindset.

The 12 Myths

The book is broken down into 12 individual chapters along with a basic introduction and conclusion. Each chapter discusses, and dispels popular myths about investing. You may, or may not have heard of these myths, but some of my favorite included:

  • The End is Near – So Why Invest?
  • All Risk is the Same.
  • The Media is a Good Source of Investment Advice.
  • Brokerage Firms are Built on a Client Service Model.

The greatest thing I walked away with was a broader picture of how wall street has an interest in keeping activity (volume) up, so that they can continue to peddle products that may not be so great for the end investor. Jim discusses this and supports with facts and figures including one that really surprised me:

From the book (pg 37) Jim mentions and sources that:

“Today the average holding period for a mutual fund is just over three years.”
“Today the average holding period for an individual stock is about 10 months.”

Not exactly a long time to be invested in a product that is meant to be held for long periods of time.

Although many of the things Jim talks about are fairly common sense, he does a great job of providing facts, figures, and examples to make you understand why buy and hold investing (if done right) is the best strategy, and why emotional based investing will kill your performance in the long term.

The Only Issue I had With the Book

At times it felt like I was being sold a fee-only financial advisor. I mean, I understand how they work, and the fact that they are a fiduciary for me as an investor, but after hearing about this in every chapter (yes, for all 12 chapters) it made me get a bit sick of hearing the same thing.

Yes, most brokers of stocks do have an interest in peddling stocks, yes I understand that you’ve made that point, but after a while it’s like beating a dead horse, albeit a horse that I agree with the author about.

Final Thoughts

Jim does a great job packing a lot of value into his book and reminding folks that over-complicating the market and trying to beat it is a recipe for disaster. Anyone who hasn’t dabbled much in investing or has done a lot of trading without a lot of positive results should pick up this book. In two hours this book can save you thousands of dollars and change your outlook on how you manage your investments.

Interested in Reading it? You should buy it here.

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{ 1 comment… read it below or add one }

harvestwages.com September 4, 2011 at 1:36 am

Helly Ryan,
Great post here. Great book too!
harvestwages.com´s last blog post ..Avoid impulse spending

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