The Peaceful Investor is a new book released in January 2020 now available in paperback and Kindle at Amazon. The Peaceful Investor synthesizes decades of research into a plain language guide to investing for individual investors. Sample online chapters and the Table of Contents can be accessed at http://investorhome.com/peaceful-investor/
Appropriate investing is a process that should be implemented to achieve an individual’s goals and limit risks, but too many investors make financial decisions based on instincts, or influenced by their circle of friends, family, or media. The Peaceful Investor starts with the psychology of investing and relatively recent discoveries from behavioral finance because individual’s experiences and pre-existing beliefs affect how they interpret new information. It can be critical to recognize risk tolerances and biases and consider how they may impact decision making to help prevent investors from shooting themselves in the foot. The book then bluntly discusses statements by some prominent individuals that the investment business is a “scam” and analyzes in depth the many (often unreasonable) costs of financial services. Informed investors should avoid being taken advantage of, or allowing Wall Street, or advisers to siphon off any more of their funds than necessary.
Investors should differentiate investing from speculation (or gambling) activities, understand the differences between trading and investing, and understand how skill and luck impact investing. Historical performance for individual asset classes like bonds, stocks, and real estate, as well as alternative investments and tangibles (most of which have hundreds of years of empirical data) should be considered, but reasonable current projections should be adjusted based on current rates and conditions. Risk factors, or so-called efficient market anomalies are summarized to help investors evaluate whether it makes sense to invest passively, actively, or using social/environmental or other screens. Then appropriate asset classes and specific securities can be selected in a portfolio designed to meet an individual’s goals and constraints. Finally, investors should evaluate their expectations and actual performance versus appropriate benchmarks, including the global investment universe.
Individuals often pay attention to noise, use bad assumptions, and often make mistakes (like buying high and selling low), but so do high net worth and institutional investors, which often have their own conflicts of interest and pre-existing commitments. The playing field has become so level that individual investors today can not only do as well as so-called professionals, they can outperform them. The Peaceful Investor provides a roadmap to avoiding financial hazards, and closes with a checklist to help investors implement a financial plan designed to achieve their goals and live a peaceful financial life.