Review: The Elements of Investing by Burton G. Malkiel & Charles D. Ellis

The-Elements-of-Investing-150x150Overview: The Elements of Investing is a quick read that gives sound financial advice. It is, however, difficult to understand who the intended audience is. Malkiel and Ellis discuss the very basic elements of investing in stocks, but the writing is somewhat jargony and not well suited to novices or young adults. Also, while they write knowledgeably about the investment vehicles they are most familiar with (stocks and bonds), they don’t make any effort to address other investment vehicles (real estate, small business ownership, etc.). Overall this is a good book to review sound financial principles, but it isn’t the classic it was intended to be.

Who will benefit most by reading this book: Academics who know little about the stock market.

How the rest of us can benefit: This book is a quick read and provides a nice review for time-tested financial strategies. Not the classic it was written to become, but still a decent read for all investors.

Complete Review: The Elements of Investing is, as advertised, a nice primer for young adults who want to know a little something about how money and investing works. The actual writing style is quite boring, and not geared for young adults or those new to investing (their target audience) but for those well versed in financial literature—so this mismatch in style makes the book much less valuable. The five key principles outlined in the book (save, index, diversify, avoid blunders, keep it simple) offer good advice, but again, it’s simply a collection of common knowledge for those who read these kinds of books, and perhaps too general for those who don’t.

Simple rules for successful long-term investing

  1. Save early and regularly
  2. Use the help of your employer and Uncle Sam to supercharge your savings (use retirement plans)
  3. Set aside a cash reserve
  4. Make sure you are covered by insurance (life insurance, disability, medical)
  5. Diversification reduces anxiety
  6. Avoid all credit card debt… PERIOD!
  7. Avoid the short-term sound and fury of Mr. Market
  8. Use low-cost index funds
  9. Focus on major investment categories (common stocks, bonds, real estate)

The books they recommend in the appendix (recommended reading list) are primarily books that are more difficult to read—those that discuss the intricacies of stock picking.

Product Description

A timeless, easy-to-read guide on life-long investment principles that can help any investor succeed

The Elements of Investing has a single-minded goal: to teach the principles of investing in the same pared-to-bone manner that Professor William Strunk Jr. once taught composition to students at Harvard, using his classic little book, The Elements of Style. With great daring, Ellis and Malkiel imagined their own Little Red Schoolhouse course in investing for every investor around the world-and then penned this book.

The Elements of Investing hacks away at all the overtrading and over thinking so predominant in the hyperactive thought patterns of the average investor. Malkiel and Ellis offer investors a set of simple but powerful thoughts on how to challenge Mr. Market at his own game, and win by not losing. All the need-to-know rules and investment principles can be found here.

Contains sound investment advice and simple principles of investing from two of the most respected individuals in the investment world

Burton G. Malkiel is the bestselling author of A Random Walk Down Wall Street and Charles D. Ellis is the bestselling author of Winning the Loser’s Game

Shows how to deal with an investor’s own worst enemies: fear and greed

A disciplined approach to investing, complemented by conviction, is all you need to succeed. This timely guide will help you develop these skills and make the most of your time in today’s market.

From the Inside Flap

In his classic book The Elements of Style, Professor William Strunk Jr. whittled down the art of powerful writing to a few basic rules. Forty years later, E.B. White initiated a revision, and thus The Elements of Style became known as Strunk & White. Following this same format, authors Charles Ellis and Burton Malkiel, two of the investment world’s greatest thinkers, have combined their talents to produce The Elements of Investing—a short, straight-talking book about investing and saving that will put you on a path towards a lifetime of financial success.

The Elements of Investing lays to rest the popular shibboleths that undergird the hyperactive trading of the average investor. In it, Malkiel and Ellis skillfully focus their message to address the essentials and offer a set of simple, but powerful thoughts on how to avoid Mr. Market and his “loser’s game,” and instead enjoy the “winner’s game” approach to investing.

All the investment rules and principles you need to know are here—with clear advice on how to follow them. In just two hours of reading time, you will learn all you need to know to be truly successful in investing. Divided into five essential elements of investing, this little book packs a big message that can help secure your financial future all the way through retirement. Topics touched upon include:

  • Diversifying broadly over different types of securities with low-cost “total market” index funds and different asset types—and why this is important
  • Focusing on the long term instead of following market fluctuations that are likely to lead to costly investing mistakes
  • Using employer-sponsored plans to supercharge your savings and minimize your taxes
  • And much, much more

A disciplined approach to investing, complemented by understanding, is all you need to enjoy success. This practical guide explains what you really need to know and puts you on the right course for long-term success through all kinds of markets.

Published: 2009, 274 pages, 7 CDs (8:32)
Reviewed: June 2010 by Tyler Christensen
Other Reviews: The Simple Dollar, Wealthy Boomer, Amazon
Official Site: n/a

Tyler Christensen
Follow me

Tyler Christensen

Tyler is a husband and dad, professor, writer, web designer, and DIYer.
Tyler Christensen
Follow me