On the art of investing, customer satisfaction & persuasion

If you, like me, need to freshen your approach, this book would be an excellent way to help you do it.

“Playing the Winner’s Game — Think, Act, and Invest Like Warren Buffett,” by Larry E. Swedroe (McGraw-Hill, 2013).

There are a zillion reasons to buy this book — an hour’s read with a year’s worth of wisdom — and one of the big reasons is that it’s illustrated by Carl Richards, the author of “The Behavior Gap.” Readers know how much I like that book, and Carl’s drawings are no less on point here.

I like lots in this book, although I tend to disagree some with the author (and with Carl) about active/tactical. While, yes, passive buy-and-hold investing is fine for the long-term, many simply cannot stand the pain of downticks. For those investors, I think active/tactical make sense, and there are some tactical SMA managers that show stunning returns — Good Harbor, in Chicago, comes to mind, and there are others. My disagreement, of course, does not lessen the value of the book, and I’m certainly not 100 percent right 100 percent of the time.

Chapter 8 is titled “Should You Hire a Financial Advisor?” You could put the five questions at the beginning of Chapter 8 on your office wall, or, better yet, ask Larry Swedroe for permission to use them on a USB flash drive; then hand the flash drive to prospects. (After, of course, you have compliance approval.) Question #4: “Do I have a strong knowledge of financial history? One needs to be aware of how often stocks have provided negative returns, how long bear markets have lasted, and how deep they have been. Those who do not know their history are likely to repeat past mistakes.”

As to Mr. Buffett, the book is about acting intelligently, and the nods to WB are, I think, due to his supreme rationality. I often celebrate WB — when this column appears, I should, coincidentally, be in Omaha for the annual Berkshire meeting — for the intelligent way he manages shareholder relations. What do I mean? Well, this: hedge fund managers, mutual fund kingpins and, for that matter, many company CEOs, take huge bites from shareholder money, but Mr. Buffett takes a relatively low salary. He pays for his stock, the same as you, and his gains or losses are the same as his partners, his fellow shareholders. Any fool, including me, may invest a few bucks and buy shares in one of the best-performing investments in history. A few bucks? As this is written, Berkshire B shares are $102.57. I think the last time I mentioned Berkshire, the B shares were in the low $70s. See?

“Playing the Winner’s Game” has lots of Buffett inside (some of the best of his famous annual shareholder’s letters are included), and it is packed with common sense. Larry Swedroe has written a dozen earlier good books. Writing 13 books is challenging, but producing 13 good books is amazing.

I get a tremendous kick out of Carl Richards’ drawings, and I particularly liked his illustration about investing and watching grass growing being boring occupations. Me? I think investing is fascinating and not at all boring; I love the book, but, heck, I’m in the biz. My take is, though, that this book is great for advisors and regular people, too. It’s about common sense, like that offered by Warren Buffett and Larry Swedroe.

Evaluation copies of software and review copies of books are sometimes furnished by publishers without charge. However, Mr. Hoe only reviews books and programs he feels will be of value to LifeHealthPro readers and avoids writing reviews he feels would be of little interest to financial professionals.