TL;DR: growth (whether a country's, an industry's, or a company's) doesn't matter, what matters for investors is the gap between growth expectations and actual growth. That's not exactly shocking news but Siegel does a great job of quantifying and illustrating the point. And that's a point that's easy to forget, particularly in bubbly times. Before I read this book I was googling Estonia and Vietnam ETFs, studying the portfolio of ARK funds, scanning the news for upcoming tech IPOs, etc. This book gave me pause and probably saved me a ton of money.


(from chapter 16)

Also, this: "as the holding period increases to between fifteen and twenty years, the riskiness of stocks falls bellow that of fixed-income assets" (chapter 12). Again, not exactly shocking news that risk is a function of time, but Siegel articulates the point more clearly than I've ever seen elsewhere. It's easy to forget that inflation, well, inflates a company's prices and assets, so in the long run stock returns have to adjust for that, while bonds offer no such "natural" protection. (And that is probably especially true in countries whose governments have a history of "tweaking" official inflation indices, not to mention countries whose governments have a history of outright defaulting.)

The book is from 2005 but at times it feels like Siegel is addressing 2021 investors. Like when he discusses the signs of a bubble:

... extraordinarily high valuations based on concepts and names instead of earnings or even revenues, and un unwavering belief that the world has fundamentally changed and that these firms cannot be measured by traditional means.

And see if this doesn't make you think of today's SPACs:

To bypass the lengthy process of going public, a company could conduct a 'reverse acquisition' and effectively merge with NetJ.com. In other words, NetJ.com was a shell in which other companies could live. With internet mania raging, dot-com companies rushed to sell shares quickly to a more-than-willing public, and a merger was much faster than the lengthy process of issuing an IPO. [...] The only source of value for NetJ.com will be 'entirely dependent' upon its management in locating a 'suitable acquisition or merger candidate.'

In 2021 there is even a SPAC whose ticker is JAAC, which stands for "Just Another Acquisition"; and you can now buy SPAC ETFs.

I also learned a lot from Siegel's discussion of how different companies calculate their earnings differently, and how that may affect the P/E ratio. He discusses the concept of "core earnings" and I wonder if that could apply to every country and how the P/E ratios would change, say, in Brazil, if Brazilian companies adopted it, and what investment strategies could be built on top of the gap between conventional P/E ratios and P/E ratios based on core earnings.

This is an uneven book though - about 1/3 of it is just opinative or speculative. For instance, Siegel goes on and on about how you should buy stocks that pay dividends because dividends are a strong signal of value. And he shows that some dividend-based strategies (like the "Dogs of the Dow" strategy) would have been successful. But you could find a strategy that involves, say, picking companies with 5-letter names, and show that it too would have beaten the market. I'm reading Marcos López de Prado's "Advances in Financial Machine Learning" and he has seven chapters on all the stuff you need to worry about when doing backtesting; TL;DR: it's 100x more complicated than saying "you would have beaten the market if you had picked these companies", which is what Siegel does.

Also, Siegel doesn't engage the literature that shows dividends to be irrelevant. Math-wise, it isn't that hard: $1 paid in dividends means $1 less in market value. And that's a literature that stretches back at least to the 1960s (see here), not something that only started after the book came out. Stocks that pay good dividends do tend to perform better, but there is evidence showing that that's because dividend-paying stocks have excess exposure to the value, profitability, and investment factors. Hence you can do just as well by buying stocks that have similar excess exposure to those factors, whether they pay dividends or not - which about doubles your pool of stocks to choose from.

Finally, Siegel makes a scary prediction that haven't materialized. He says that as boomers retire they will sell their stocks and bonds, which will make prices go down a lot. Sixteen years later, the S&P500 has a P/E ratio of about 27 - it was 17 when the book came out. Maybe a lot of boomers haven't retired yet, maybe investors in developing countries are buying a lot of US stocks; who knows. Whatever the reason, that part of the book has aged like milk.

Despite its flaws though this book is great and totally worth it. ( )

The Future for Investors will make you re-think the common perceptions that the secret to investing lies in picking the right high-flying growth and technology stocks. Siegel has specialized in this area (and speaks about the topic as clearly as he writes). Because high expectations drive trendy stocks to a higher P-E, they often under-perform. Venerable dividend-paying stocks often excel over time because of the impact of reinvested dividends. Siegel also shows the importance of global markets for US investors and the future of the political economy. Using data back to 1802, his research seems especially credible because he takes a much longer time frame than most of his contemporaries who typically rely on the industry standards that begin in the early 20th century. ( )

Siegel wrote "Stocks For The Long Run", which I found to be the better book. It's worth the read. ( )

주식,가치투자