Business-plan

It's a very well written book. The main purpose of this book is to show that mutual funds industry overall does not provide a good choices for regular individual investors and the book covers this topics exceptionally. It really reveals the real intentions of the industry and shows that this is the only way this indstry can work. The book advocates passive investment and especially index funds and exchange traded funds (ETF). While there were already quite a few good, if controversial, books about efficient market theory ('You can't beat the market'), such as famous 'Random walk On Wall Street', this book brings more details about today market environment and explains what choices passive investor has. My only complain is that sometimes I feel some kind of zealotry in authors considerations. Even for somebody that believes in efficient market theory some of the statements in this books could seem very questionable. Stock mutual funds takes majority of books space but the moment authors venture to the other territory (and they do try to cover practically all kinds of investments) their arguments often seem too absolute. Still, this is the book every investor in mutual funds must read (and it will probably convince you to make some changes in your investment strategy - it did this for me)

The Great Mutual Fund Trap explains how you avoid wasting remarkable amounts of time and money in a futile search for the mutual fund or money manger that is going to beat the market. It does the job in clear English but without oversimplifying. The chapters explaining efficient markets and capital asset pricing models are especially good at showing the relevance of these arcane theories to the average investor.

This book should also be recommended reading for anyone who serves on the board of a non-profit institution with an endowment.

Even the Managing Director of Morningstar thinks this is a must read book. The "Trap" illuminated how much of my returns have been lost in fees and taxes AND how this really adds up over time. It also explains why it is pointless to try to beat the market through churning a portfolio. Further it shows that the lists of the best performing mutual funds are grossly distorted and a poor way to go about picking the best funds. I learned a great deal about investing from this book and highly recommend it!

"The Great 401(k) Hoax" offers an accurate, well-researched analysis of what has become an fallacious bit of common wisdom in the United States: that the Stock Market is a means by which average Americans can amass wealth. It is a lie, perpetrated by the US financial industry to divert funds that would have gone into traditional, safer long-term investment options like bonds, start-up businesses or real estate into mutual funds and small-investor portfolios.

A part of this transfer is the 401(k) plan, where the weight of a pension plan is supposed to rest on stock investment rather than defined benefits (pensions where retirees receive fixed payments). The authors do an excellent job of explaining why companies in America switched from defined benefit pensions, and why using the Stock Market as a basis for them is a terrible idea. Readers of "One Market Under God" will find this information and argument very familiar, but the specific focus on the 401(k) plan and it's impact on the future retirement of millions of Americans is enlightening.

The major failure of the book is in its writing style. I've edited MA Theses and Dissertations that were vastly superior in terms of diction and command of the language than this book. Frankly, whoever edited this book should be fired. Also, I have to seriously wonder if the authors did not enjoy reading "The Starr Report" a little too much. Clearly they have a bone to pick with Bill Clinton, which is fine with me. However, by the middle of the book, I wanted to strangle them both if I had to read that Clinton blew another opportunity to do great things because he had "Monica's thong wrapped around his head." Their efforts at sarcastic humor detract from what is a very serious subject - the future retirement of millions of Americans - and their every sarcastic effort comes across as the work of a witless junior high schooler obsessed with potty jokes.

This book, written by a senior contributing editor and former staff writer for Business Week magazine, makes a powerful showing that the 401(k) and other defined contribution retirement plans exist for the benefit of corporations, not for the individual investor. For me, the most impressive argument was the mathematical proof the authors offer showing that it is simply impossible for a large number of Americans to retire on their stock market earnings. In 1999, they claim, the entire after-tax profits of the whole corporate sector of the United States economy came to $455.7 billion. Distributed evenly among all Americans 65 years of age or older, this comes to only $1,117 per month. And we know darn well it is not and never will be distributed evenly. Other statistics they cite show that the average amount held in a 401(k) plan is ludicrously low compared to projected retirement needs. No doubt, this average has dropped precipitously even since the time their book was published, owing to the worsening of the recent economic downturn.

Other books, such as "Retirement Myth," have explored the difficulties inherent in the idea of mass retirement. The problem is stunningly simple, if you think about it: stocks represent a right to a share of future corporate production. In other words, to a share of the value of the work put in by other people, from the CEO to the guy who sweeps the floor. Never, in the history of the world, has a large proportion of a population been able to live solely off of the work of others. Even slavery supports only a privileged minority.

The solution the authors offer is to invest in bonds of various types, including U.S. savings bonds. This rankles a bit, too, because savings bonds depend on future taxes paid by other people. The same is true of social security. Given the choice between corporate profits and an obligation backed by the full faith and credit of the United States Government, however, it's not too difficult to see which is more reliable. I think most of us should just resign ourselves to working at least part time as long as we are able to do so.

The great 401(k) hoax has a long-term view that is very sobering and that people must pay attention to. The public has been told that they will do best if they take care of their own pension plans -- this saves corporations billions of dollars!