Book: Wise Investing Made Simple

Chapter 1: The Names Are Never the Same.
- Top list of funds are different each time. Does outstanding performance persists?

Chapter 2: How Markets Set Prices.
- Bookies or brokers make betting a negative sum game.

[Efficient market]
= A market in which trading systems fail to produce excess returns
- Everything currently knowable is already incorporated into prices
= A market in which it is difficult to persistently exploit mispricings
- Point spread = unbiased predictor

* risk adjusted expected return
# Betting against an efficient market is a loser's game

Chapter 3: The Twenty-Dollar Bill
- Efficient markets hypothesis (EMH)
- It is not impossible to uncover mispricings, but cost of efforts are likely to exceed the benefits
- Successful trading strategies self-destruct because they are self-limiting

- Dr. Mark Rubinstein

Chapter 4: Persistence of Performance: Athletes versus Investment Managers
- compete against "collective wisdom of the market"

Chapter 5: The Demon of Chance
- by skill or by luck? Coin-tossing gurus.

Chapter 6: When Even the Best Aren't Likely to Win the Game
- Active investing is loser's game. The odds of success are so low that it is imprudent to try.
- Active investing is exciting. Investing, however, was never meant to be exciting. It is meant to be about providing you the greatest odds of achieving your financial goals with the least amount of risk.
- Daniel Kahneman.

Chapter 7: Outfoxing the Box
- Charles Ellis

Chapter 8: Between a Rock and a Hard Place
- the tragedy of Sisyphus - condemned to a life of repeating an action that is doomed to fail.
- It's more prudent to not play than to play.

Chapter 9: Great Companies Do not Make High-Return Investments
- Loren Fox
- Risk and expected return should be positively related.
- Value stocks are stocks of risky companies, hence it provide large and persistent premium over growth stocks to compensate the risk.
- High price reflects low perceived risk, and thus low future returns should be expected.

Chapter 10: Stocks for the Long Run
- Stocks are risky no matter the length of investment horizon.

1. There is nothing new in investing, only the investment history you don't know.
2. Never treat the highly unlikely as impossible.

* In 1900 the Egyptian stock market was one of the largest in the world. Now it's no where.
{It was public knowledge that when lumped together, the Cairo and Alexandria Bourses rated among the world's top five Stock Exchanges. Egypt's economy was at an all-time high and the number of companies traded in the Cairo Bourse alone had reached 228 with a combined capital of 91 million pounds.

But like the swing of a pendulum, the high state of euphoria disappeared overnight. Prudence having given way to high-risk speculation, what had started out with a real estate boom in Egypt, ended in what became known in the annals of speculative history as the Crash of 1907 Some historians concede that the money panic of 1907 started in Alexandria, Egypt, with the failure in July of a large bank - Cassa di Sconto. Japan was hit next, then Germany, then Chile. By October, the fallout reached Europe and the United States. In Egypt, the overextended banks folded up one after the other. }

* The Nikkei index hit 40,000 in 1989 and now it's below 10,000.
{Fueled by low-interest mortgages, real estate prices in Japan had risen so high that by the end of the 1980s just the land under the Imperial Palace in Tokyo was nominally worth more than all the real estate in California. Then, in late 1989, the bubble burst and real estate prices plummeted, leaving Japan's financial institutions saddled with toxic mortgages and facing bankruptcy.}

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Chapter 11: Buy What You Know
- Familiarity breeds investment by creating an illusion of safety. People over confidently confuse familiarity with knowledge.

Chapter 12: Why Did I Buy That Stock?
- Capturing incremental insight is difficult, if not impossible, to achieve in this highly competitive market.

Chapter 13: Too Good to be True
- Mistake of confusing information with knowledge that you could use to generate above market returns. Trends tell little about future profits. Demand may rise but market can be over-supplied.

Chapter 14: Too Many Eggs in One Basket
- Portfolio risk can be substantially reduced by building a globally diversified portfolio.

Chapter 15: Confusing Before-the-Fact Strategy and After-the-Fact Outcome
- [Fooled by Randomness]

Chapter 16: An Investor's Worst Enemy
[Why Smart People Make Big Money Mistakes]

Chapter 17: A Higher Intelligence
- Managing money in an efficient market without investing passively is investment malfeasance - Not knowing that such a market is efficient is investment misfeasance

Chapter 18: Even With a Clear Crystal Ball

Chapter 19: Be Careful What You Ask For

Chapter 20: Ship of Fools
- Most market forecasts are based on economic forecasts and economists' forecasting skill is about as good as guessing
- Investors should treat economic and market forecasts by so-called "experts" (gurus) as investment graffiti
- the only value they have is as perhaps entertainment.

Chapter 21: What if Everyone Indexed?
- All hope springs eternal, it's unlikely that everyone will abandon active strategies because there will always be someone winning.

Chapter 22: Mad Money
- "You make more money selling the advice than following it."

Chapter 23: The Big Rocks
- Putting big rock into jar, about time management. "Investing is about achieving your financial goals with the least amount of risk."

Chapter 24: Don't Sweat the Small Stuff
- The greater tragedy in life is to miss out more important things in life.

Chapter 25: The Big Rocks Portfolio
Chapter 26: A Tale of Two Strategies
Chapter 27: How to Identify an Advisor You Can Trust