Spence Green

For the last six months I have been re-structuring and simplifying the mess that is my portfolio. Although I perceived that I devoted more than average time to curating and understanding investments, my portfolio had become a wreck. All the usual mistakes were there: high expenses, overlapping mutual funds, under-diversification. The chief sin was present: deviance from my target allocations. While working on these issues, I solicited book recommendations from intelligent people that I respect. There are thousands of investment books on Amazon. However, the people that I asked always mentioned the same four books. They are:

• The Intelligent Investor. Ben Graham.
• Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition. John Bogle
• The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk. William Bernstein
• Unconventional Success: A Fundamental Approach to Personal Investment. David Swenson

These books argue neither for or against the simplicity of investing. They argue that successful personal investing results from unwavering adherence to simple strategies (dollar-cost averaging, minimizing fees, maintaining a target allocation, indexing, diversification, etc.). They argue for discipline. It’s not hard to rebalance quarterly. It’s not hard to minimize costs. It’s not hard to track asset allocation. If you’re lazy, but also want to keep your shirt, I’ve been told that it’s wise to master these practices.

It is arguably easier than ever to adhere to these principles due to the avalanche of financial products launched since Ben Graham’s day. However, the menu is more crowded, which is also a curse. Investors need simple principles, and they need to adhere to them rigorously.

Well-thumbed copies of these books are on my shelf.