The Idle Investor by Edmund Shing - Free Review Copy Offer
Pat Riley
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I'd love to contribute to the review process, but the time I currently have on me hands will be all just a memory by the weekend when I'm back to work.
However, I'd be interested to see if the details of his methods relate to threshold values of the Shiller 10 year PE on the S&P and selling out and into fixed income when the Shiller PE retraces back a certain percentage from the peak. I suspect the Shiller PE may be a little too long term if he's suggesting checking on a monthly basis, but maybe not.
Be good to get reviews on output from a guy with his background as he is (or was) EM and commodities, especially energy, both of which are in the doldrums right now. Great time to write a book.
However, I'd be interested to see if the details of his methods relate to threshold values of the Shiller 10 year PE on the S&P and selling out and into fixed income when the Shiller PE retraces back a certain percentage from the peak. I suspect the Shiller PE may be a little too long term if he's suggesting checking on a monthly basis, but maybe not.
Be good to get reviews on output from a guy with his background as he is (or was) EM and commodities, especially energy, both of which are in the doldrums right now. Great time to write a book.
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Sharky
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Great, we have our list of reviewers...
@ryandj2222, @Steve, @tar, @Charlton, @007, @Pat Riley; (don't worry can be just a short review!), @DaveDavidsen, @fredg, @marktaylor58
Please make sure your email addresses are correct in your T2W profile, if you haven't sent me a pm with your email. For those newbies, I've included the first three that sent me a pm with their email address.
@ryandj2222, @Steve, @tar, @Charlton, @007, @Pat Riley; (don't worry can be just a short review!), @DaveDavidsen, @fredg, @marktaylor58
Please make sure your email addresses are correct in your T2W profile, if you haven't sent me a pm with your email. For those newbies, I've included the first three that sent me a pm with their email address.
Pat Riley
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The Idle Investor – Review
The title “The Idle Investor” and sub-title “How to invest 5 minutes a week and beat the professionals” immediately put me in mind of the outrageous claims of the “snake-oil” vendors so despised by the members of this site, so I was interested to see what line the author Edmund Shing would adopt.
Having read his resume at the start of the work I was reassured by his credentials: Head of European Equity Strategy at Barclays Capital and Global Equity portofolio manager at BCS Asset Management and a 20 year career in financial markets. This background, as it turned out, is drawn upon throughout the book in the formation of his “idle” strategy and I found this interesting, especially in the light of the fact that he argued that the "idle" investor could outperform others with his same background !
The target audience for the work is not, I would say, the average member of this site. It is aimed at long-term investors with at least £10,000 to invest rather than short-term traders.
The first section of the book deals with Basic principles in which the author draws upon his personal career to introduce 8 lessons which lead towards his trend-following and momentum, low-cost strategy employing diversification via regular asset re-allocation.
As this section progresses the 8 lessons are accompanied by the 7 axioms. I appreciate his sentiment that “in the financial world there is a great tendency to make the topic sound more complicated than it is in reality” . Yet the melange of these lists littering the work begin to resemble an attempt to make a cocktail using all the ingredients from the back of the kitchen cupboard !
Having described these axioms in detail they are summarised in a neat list at the end of the chapter and (despite my comment in the previous paragraph) this structure proves useful, because after the first reading of the book it is possible to summarise it in a few sheets of A4 by just using the last page(s) of each chapter.
The next chapter feels like a “justification” exercise drawing on the 7 axioms and numerous graphs to show why you can outperform investment managers and general market indices.
This takes us on to the next section of the book dealing with Investment building blocks. This chapter is valuable in introducing to the “idle” investor concepts such as risk and reward. Consideration of risk often plays second fiddle to rewards, even on this site T2W where more active traders reside.
Back to “list mode” again, in the following chapter, with 5 market-beating phenomena padded out with endless graphs which I admit to skipping on the whole, but then that’s me – I like to do my own analysis and just be presented with the salient points.
So we are half-way through the work and are presented with the foundations of the 3 idle investor strategies accompanied with 4 steps and another load of graphs and statistical tables. For me the most important lessons to come out of it are diversification and reduction of financial risk, which are indeed useful concepts to introduce to the casual investor and which form a useful background if and when they turn to more active trading.
The final section of the book describes in detail the 3 Idle Investor Strategies, which to my mind are really only one strategy with different levels of risk and investor intervention.
Again, like any good corporate training manual, the author tells you in 6 steps what the strategy is about, then tells you in detail (with graphs and tables), then gives you a timetable in steps, followed by a list of pros and cons, followed by a graphical action plan, followed by yet another summary !
This is repeated for the other 2 strategies and a further chapter of lists of the benefits of mechanical trading and lists of future investment trends almost reaches the end of the work. However, just for good measure, the final chapter provides a further list of 16 key principles !
So what do I conclude. I think my initial reaction to the title was unjustified and that the work would be a useful guide to long-term investors who, unlike T2W members, do not wish to spend much time on analysis or shorter timescale trading. It provides a mechanical based decision system based on firm principles of diversification, risk aversion and a trend-following strategy. To that extent it introduces valuable checks to a largely unsophisticated reader (trading-wise) which should reduce their risk. It also introduces good habits into idle investors which may be followed when they become T2W members (into which they would undoubtedly morph !).
Besides the endless lists and graphs (which constitute for me “padding out” and too much repetition) , on the down-side, I don’t recall seeing much on drawdowns, evaluation of market phases e.g non-trending, and stops. Perhaps this is where these simple strategies might fail and could cause damage and I feel the approach even for an “idle” investor requires more active participation and controls.
The book retails for around £10 (kindle) to £12 (paperback), so all in all I think it would be a reasonable purchase for the target audience.
The title “The Idle Investor” and sub-title “How to invest 5 minutes a week and beat the professionals” immediately put me in mind of the outrageous claims of the “snake-oil” vendors so despised by the members of this site, so I was interested to see what line the author Edmund Shing would adopt.
Having read his resume at the start of the work I was reassured by his credentials: Head of European Equity Strategy at Barclays Capital and Global Equity portofolio manager at BCS Asset Management and a 20 year career in financial markets. This background, as it turned out, is drawn upon throughout the book in the formation of his “idle” strategy and I found this interesting, especially in the light of the fact that he argued that the "idle" investor could outperform others with his same background !
The target audience for the work is not, I would say, the average member of this site. It is aimed at long-term investors with at least £10,000 to invest rather than short-term traders.
The first section of the book deals with Basic principles in which the author draws upon his personal career to introduce 8 lessons which lead towards his trend-following and momentum, low-cost strategy employing diversification via regular asset re-allocation.
As this section progresses the 8 lessons are accompanied by the 7 axioms. I appreciate his sentiment that “in the financial world there is a great tendency to make the topic sound more complicated than it is in reality” . Yet the melange of these lists littering the work begin to resemble an attempt to make a cocktail using all the ingredients from the back of the kitchen cupboard !
Having described these axioms in detail they are summarised in a neat list at the end of the chapter and (despite my comment in the previous paragraph) this structure proves useful, because after the first reading of the book it is possible to summarise it in a few sheets of A4 by just using the last page(s) of each chapter.
The next chapter feels like a “justification” exercise drawing on the 7 axioms and numerous graphs to show why you can outperform investment managers and general market indices.
This takes us on to the next section of the book dealing with Investment building blocks. This chapter is valuable in introducing to the “idle” investor concepts such as risk and reward. Consideration of risk often plays second fiddle to rewards, even on this site T2W where more active traders reside.
Back to “list mode” again, in the following chapter, with 5 market-beating phenomena padded out with endless graphs which I admit to skipping on the whole, but then that’s me – I like to do my own analysis and just be presented with the salient points.
So we are half-way through the work and are presented with the foundations of the 3 idle investor strategies accompanied with 4 steps and another load of graphs and statistical tables. For me the most important lessons to come out of it are diversification and reduction of financial risk, which are indeed useful concepts to introduce to the casual investor and which form a useful background if and when they turn to more active trading.
The final section of the book describes in detail the 3 Idle Investor Strategies, which to my mind are really only one strategy with different levels of risk and investor intervention.
Again, like any good corporate training manual, the author tells you in 6 steps what the strategy is about, then tells you in detail (with graphs and tables), then gives you a timetable in steps, followed by a list of pros and cons, followed by a graphical action plan, followed by yet another summary !
This is repeated for the other 2 strategies and a further chapter of lists of the benefits of mechanical trading and lists of future investment trends almost reaches the end of the work. However, just for good measure, the final chapter provides a further list of 16 key principles !
So what do I conclude. I think my initial reaction to the title was unjustified and that the work would be a useful guide to long-term investors who, unlike T2W members, do not wish to spend much time on analysis or shorter timescale trading. It provides a mechanical based decision system based on firm principles of diversification, risk aversion and a trend-following strategy. To that extent it introduces valuable checks to a largely unsophisticated reader (trading-wise) which should reduce their risk. It also introduces good habits into idle investors which may be followed when they become T2W members (into which they would undoubtedly morph !).
Besides the endless lists and graphs (which constitute for me “padding out” and too much repetition) , on the down-side, I don’t recall seeing much on drawdowns, evaluation of market phases e.g non-trending, and stops. Perhaps this is where these simple strategies might fail and could cause damage and I feel the approach even for an “idle” investor requires more active participation and controls.
The book retails for around £10 (kindle) to £12 (paperback), so all in all I think it would be a reasonable purchase for the target audience.
ryandj2222
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The Idle Investor is aimed at investors with around £10,000 or more to invest, and want to make good returns but don't have much time.
The author has plenty of work experience in the financial industry, so it is refreshing to hear him advise you away from fund managers and more towards ETFs with their lower fees and better performance. The lack of stamp duty on them is another plus.
There are three strategies outlined in the book depending on your degree of idleness. All of them are easy to understand and implement, and are based around ETFs for shares and bonds.
The most idle involves buying two ETFs, selling one of them for a couple of months a year, then buying it back. The final step is an annual rebalancing.
The next strategy is similar, but involves diversifying by time rather than allocation. You use 3 pairs of bond and share ETFs - UK, US and Euro and either hold all bonds or all shares at any one time. It's basically a sell in May strategy.
The final strategy involves a mechanical indicator to be used (nothing too complicated, just a moving average) to determine whether to hold stock or bond ETFs. It uses the same ETFs as above, but adds an emerging markets pair. The returns are a lot better on this one at 27.6% compound annual growth rate from 1990-2012. It needs input once a month.
Although the strategies sound convincing and easy, I would bet that most people would actually have trouble being as idle as this book recommends. Even once a month may be too little for some people, and the urge to "tinker" with the system might end up in lower returns.
I felt that two things were missing from the book. Firstly, smart beta ETFs are mentioned in a positive light at the beginning of the book, but aren't actually used in any of the three strategies or mentioned again. This was a bit disappointing as the author made them sound quite useful.
Secondly, I would imagine that most investors are likely to want to build up their pot over time with monthly contributions. There wasn't any mention of regular investing and how this could fit in with the strategies.
However, despite these minor qualms, I enjoyed the book and was convinced that the strategies would at least offer better returns than cash over time. In fact, I am going to try it with a portion of my SIPP.
The author has plenty of work experience in the financial industry, so it is refreshing to hear him advise you away from fund managers and more towards ETFs with their lower fees and better performance. The lack of stamp duty on them is another plus.
There are three strategies outlined in the book depending on your degree of idleness. All of them are easy to understand and implement, and are based around ETFs for shares and bonds.
The most idle involves buying two ETFs, selling one of them for a couple of months a year, then buying it back. The final step is an annual rebalancing.
The next strategy is similar, but involves diversifying by time rather than allocation. You use 3 pairs of bond and share ETFs - UK, US and Euro and either hold all bonds or all shares at any one time. It's basically a sell in May strategy.
The final strategy involves a mechanical indicator to be used (nothing too complicated, just a moving average) to determine whether to hold stock or bond ETFs. It uses the same ETFs as above, but adds an emerging markets pair. The returns are a lot better on this one at 27.6% compound annual growth rate from 1990-2012. It needs input once a month.
Although the strategies sound convincing and easy, I would bet that most people would actually have trouble being as idle as this book recommends. Even once a month may be too little for some people, and the urge to "tinker" with the system might end up in lower returns.
I felt that two things were missing from the book. Firstly, smart beta ETFs are mentioned in a positive light at the beginning of the book, but aren't actually used in any of the three strategies or mentioned again. This was a bit disappointing as the author made them sound quite useful.
Secondly, I would imagine that most investors are likely to want to build up their pot over time with monthly contributions. There wasn't any mention of regular investing and how this could fit in with the strategies.
However, despite these minor qualms, I enjoyed the book and was convinced that the strategies would at least offer better returns than cash over time. In fact, I am going to try it with a portion of my SIPP.
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