text: The author makes a couple of valuable points. First, any long-term investment strategy has to take into account the existence of recurrent "secular" (i.e., indefinitely long) bear markets. Most leading investment advisors recommend a "buy and hold" strategy, but this only works during predominately bull market periods. Most studies of successful investment strategies are biased towards the recent 1982-1999 bull market, which is anomalous in historical terms. The author uses a plethora of graphs and charts to prove that "buy and hold" doesn't always provide the best returns. Obviously, then, it's better to pull out during the bear markets, but that's easier said than done. The author provides a very complete analysis of the characteristics of bear markets, including P/E ratio, interest and inflation rates, and GDP. The problem is that those characteristics don't always correlate with market performance. For example, this book was written in 2004 and the author predicted a bear market. Well, if you heeded his advice, you would have missed the bull market of 2004, 2005 and early 2006, especially in small-mid caps and foreign stocks. Even with high P/E ratios, a bull market can continue for several years: witness the late 90s. It's virtually impossible to time the market even if you monitor the major stock indexes on a daily basis. There is so much volatility on a daily, weekly, monthly, and yearly basis that's it's impossible to know when the market has switched directions. By the time that it is apparent, it's too late to profit. Even in the midst of great bull markets, there might be week, month, or even year-long downturns. The author says nothing about individual stock picking, beyond a general value approach. The book is all about big picture, long term trends. Another problem is that the author's predictions are based on his analysis of market trends going back to 1900. But the market (and economy) is a different beast now that it was in the 40s, 50s, 60s, and 70s. As they say, past performance does not predict future returns. 
  
  The investment advice provided here is not useful. He suggests a "portfolio of hedge funds," ignoring the fact that most hedge funds require a minimum deposit of 500K. He also recommends a "bond ladder," an approach which can be easily replicated with a good bond mutual fund, and frequent rebalancing of your portfolio asset allocations. I don't need to spend $25 and five hours reading to learn that!
  
  One thing I did learn from this book is the impact of volatility, which is often ignored in investment strategy recommendations. Volatility cuts into returns in ways that most studies do not account for. Most studies just average the returns across years, but that doesn't reflect real returns. Let's say you invest $100k into a stock that returns 35% the first year and -15% the second. Your average return should be 10% a year, right? Wrong. At the end of the first year you have 135k. Minus 15% the second year leaves you with 115k total, equal to 7% a year compounded. If you had received 10% a year compounded, your final total would be over 121k. That's 6k difference in just 2 years, and the volatility costs add up.
  
  The book is very poorly written, plodding, sooooo boring, with tons of repetition. Just as an example, the graph showing the "Y curve" relationship between P/E ratio and inflation is repeated no less than 3 times.
  