A Wealth of Common Sense; Contents; Introduction: Why Simplicity Is the New Sophistication; 1 The Individual Investor versus the Institutional Investor; Institutional versus Individual Investors; Were All Human; Extra Zeroes; Long-Term Thinking; Key Takeaways from Chapter ; Notes; 2 Negative Knowledge and the Traits Required to Be a Successful Investor; The Biggest Problem of All; Traits of a Successful Investor; Standing on the Shoulders of Giants; Key Takeaways from Chapter ; Notes; 3 Defining Market and Portfolio Risk; Volatility: Risk or Opportunity?
Understanding Rule Number 1 of InvestingThe Risk Tolerance Questionnaire; Risk versus Uncertainty; Risk Aversion; The Cycle of Fear and Greed; Key Takeaways from Chapter ; Notes; 4 Market Myths and Market History; Myth 1: You Have to Time the Market to Earn Respectable Returns; Myth 2: You Have to Wait until Things Get Better Before You Invest; Myth 3: If Only You Can Time the Next Recession, You Can Time the Stock Market; Myth 4: Theres a Precise Pattern in Historical Market Cycles; Myth 5: Stocks and Bonds Always Move in Different Directions.
Myth 6: You Need to Use Fancy Black Swan Hedges in a Time of CrisisMyth 7: Stocks Are Riskier Than Bonds; Myth 7a: Bonds Are Riskier Than Stocks; Myth 8: The 2000s Were a Lost Decade for the Stock Market; Myth 9: New All-Time Highs in the Stock Market Mean Its Going to Crash; Myth 10: A Yield on an Investment Makes It Safer; Myth 11: Commodities Are a Good Long-Term Investment; Myth 12: Housing Is a Good Long-Term Investment; Myth 13: Investing in the Stock Market Is Like Gambling at a Casino; Key Takeaways from Chapter ; Notes; 5 Defining Your Investment Philosophy.
Degrees of Active and Passive ManagementThe Benefits of Doing Nothing; Exercising Your Willpower; Simplicity Leads to Purity; Defining Yourself as an Investor; Key Takeaways from Chapter 5; Notes; 6 Behavior on Wall Street; Threading the Needle; Exhibit 1: Beating the Market Is Hard; Exhibit 2: Stock-Picking Is Hard; Exhibit 3: The Mutual Fund Graveyard; Exhibit 4: If Picking One Active Fund Is Hard . . .; Exhibit 5: Smaller Upside, But Bigger Downside Risk; Exhibit 6: Persistence Is a Problem; So Never Invest in Active Funds?; The Most Important Thing; Key Takeaways from Chapter ; Notes.
7 Asset AllocationAsset Allocation Decisions; Why Diversification Matters; Mean Reversion and Rebalancing; Risk Factors, Value Investing, and the Power of Patience; The Value Premium; The Rise of Smart Beta; How to See It Through; Key Takeaways from Chapter ; Notes; 8 A Comprehensive Investment Plan; Why Do You Need a Plan?; The Investment Policy Statement (IPS); Lifecycle Investing; Beating the Market; Saving Money; Taxes and Asset Location; Key Takeaways from Chapter ; Notes; 9 Financial Professionals; Vetting Your Sources of Financial Advice; Outsourcing to a Financial Professional.
