The Big Investment Lie
Book

The Big Investment Lie

What Your Financial Advisor Doesn`t Want You to Know

Michael Edesess
Berrett-Koehler, 2007
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Editorial Rating

9

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  • Applicable

Recommendation

This hard-hitting book on professional investment advice is a little like a confession. Indeed, Michael Edesess founded a financial business, and admits that on numerous occasions he sat listening silently as sales people lied to and deceived investors. Divided into three sections, the book takes you through how much investors pay advisors, how little investors receive in return and the sales techniques advisors use on their clients. What Edesess says about finance and investing will come as no surprise to people who are familiar with Wall Street. The author’s passion, and his understanding of how the investment management business works, is invaluable. getAbstract recommends this book as a warning to all investors.

Summary

The Beardstown Ladies

In the 1980s, a group of female senior citizens living in Beardstown, Illinois, formed an investment club. They exercised old-fashioned, American-heartland frugality and common sense, and invested according to their homespun principles. They did homework and footwork. They used conventional research media, but they also looked around. For example, they bought Wal-Mart stock because one of the members saw a full parking lot at the local Wal-Mart. They bought Hershey stock because one of them brought Hershey candy to a meeting and everyone enjoyed it. Saving and investing diligently, they accumulated quite a portfolio. Eventually, their story caught the attention of the national news media.

A U.S. television show featured the “Beardstown Ladies,” twice. Before their second appearance in 1992, the producers asked them to calculate the return that their portfolio had earned. One of the ladies borrowed a computer at her local bank and calculated an average annual return of 23.4% over the course of the preceding 10 years. This was 8.5% more than the return on Standard & Poor’s 500 Index. The ladies rocketed to national fame with books, audios and...

About the Author

Michael Edesess, Ph.D., is a mathematician and chairman of an international nonprofit organization. He was a founding partner and chief economist of a financial group.

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