By Michael Dever
$18.99 284 pages
In the introduction to Jackass Investing, author Michael Dever states “This book should not be controversial, but it will be. That is because investing, which should be a rational pursuit, is not.” I agree with Dever, who I’ve known for years. This book will be controversial. Not because what he presents is wrong. In fact, his book is thoroughly researched and logical to an extreme. It will be controversial simply because so many people have a vested interest in preserving conventional financial wisdom, and this book clearly refutes much of what is conventionally preached.
If I were to use one term to describe Jackass Investing, it would be “ground-breaking.” That is because Jackass Investing goes well beyond being a simple investment book. In it Mike Dever presents an entirely new system of thought. He introduces “return drivers” and explains how to use them to create trading strategies, which are the core components necessary to construct a truly diversified portfolio. He makes his case by systematically describing 20 common (and costly) investment myths, explaining why each is a myth, and not a fact. The author then shows you how to profit from them, precisely because others believe them to be true. The book clearly illustrates the author’s depth of knowledge and 30-plus years of investment experience. But although the concepts he presents are serious and well-supported, Jackass Investing is far from being a dull academic textbook. It’s a highly entertaining read, as he introduces his concepts with the help of entertaining anecdotes and comparisons to popular culture.
For example, In Myth #3 – You Can’t Time the Market,” Mike first recounts the Seinfeld TV episode titled “The Opposite,” where George Costanza comes to the realization that “every decision I've ever made, in my entire life, has been wrong. My life is the opposite of everything I want it to be.” Mike then shows how that relates to market timing, in that the market-timing instinct of the average person compels them to do the exact opposite of what they should do. And he shows the statistics to support this. But Dever doesn’t just provide entertaining anecdotes and statistical support. In the “Action Section” for the book, he shows readers a specific strategy they can use to profit by doing the “Opposite” of what the masses do.
In a nod to the 21st century, the book has its own website, www.JackassInvesting.com It is where Dever puts into practice the concepts presented in Jackass Investing. There are more than a dozen specific actions presented that can be combined into a “Free Lunch” portfolio. A Free Lunch portfolio is one that produces both greater returns, with less risk, than those espoused by conventional financial wisdom. Each of these Actions could itself be the subject of a book. They are well-researched and immediately available to be employed by the reader. And their pedigree is impressive, often being based on actual trading strategies that have been used by Dever in his trading at the firm he founded, Brandywine Asset Management, or other professional investors for more than a decade.
There aren’t too many books that are able to both introduce ground-breaking concepts, yet also provide specific strategies to use to exploit those concepts. Jackass Investing is one book that does both. It’s a testament to Dever’s writing ability that he is able to combine both into such an entertaining read.