The Big Investment Lie: What Your Financial Advisor Doesn't Want You to Know

  • 5h 32m
  • Michael Edesess
  • Berrett-Koehler Publishers
  • 2007

Michael Edesess learned early in his career that the investment industry's claims that it could beat market averages were simply not true. Professional investors, it seemed, could not predict stock prices better than the nearest cab driver. The Big Investment Lie helps readers cut through the thicket of hype in this perilous area, showing how widespread acceptance of the "lie" allows an entire industry to prosper on the small investor's dime. Edesess shows readers how to break free from this pervasive falsehood and pursue sensible investment policies. Individual chapters cover such subjects as the high cost of investment advice, effective pitches to sell the big lie, the hedge fund bonanza, derivatives, the "good old boys' club" of institutional investors, and much more. The final chapter, "Ten New Commandments for Smart Investing," gives a simple, sound plan for everyday investors to maximize long-run wealth and achieve a secure financial future -- without the "help" of predatory professionals.

About the Author

Michael Edesess is an accomplished mathematician and economist with experience in the investment, energy, environment, and sustainable development fields. He was a founding partner in 1994 and chief economist of the Lockwood Financial Group until its sale to the Bank of New York in September 2002. Previously an independent consultant to institutional investors, his clients included several of the largest investment banking and consulting firms. His areas of expertise cover the range of applications of mathematics to investments, including performance and risk measurement; Monte Carlo methods for asset-liability, asset allocation, and pension planning models; dynamic hedging using futures and options; effective style mix determination; backtesting; and quadratic portfolio mean-variance optimization. Dr. Edesess has spoken at conferences on investment research and taught courses in international finance, economics, mathematics, statistics, systems analysis, and environmental policy at four universities. He has been published in the Wall Street Journal and the Journal of Portfolio Management and has been interviewed on CNBC.

In addition to his work in investments, Dr. Edesess is active in the fields of environmental and resource economics and international development. He currently chairs the board of International Development Enterprises USA, a nonprofit focusing on poor rural smallholders in developing countries, and has chaired the board of the Rocky Mountain Institute, a prominent energy efficiency think tank in Snowmass, Colorado, and the Rocky Mountain Advisory Board of Environmental Defense. He has written for numerous publications and spoken at conferences on energy, sustainable development, economics, and investment, with articles appearing in Technology Review, Rising Tide, the Christian Science Monitor, Rocky Mountain News, and Pensions and Investments. He holds a bachelor's degree from the Massachusetts Institute of Technology and M.A. and Ph.D. degrees in pure mathematics from Northwestern University.

In this Book

  • The Beardstown Ladies versus the Professionals
  • The Extraordinarily High Cost of Investment Advice
  • The Outer Limits: Hedge Fund Fees
  • Taxes Down the Drain
  • Why Do We Give Golden Crumbs to Rich People?
  • Why Investment Professionals Can't Predict Markets
  • The Abject Failure of Professional Advisors and Managers
  • The Market Can Turn on a Dime
  • The Claims of Money Managers: "Smoking Our Brand Prevents Cancer"
  • Idle, Greedy Hands and Too Much Data Do the Devil's Work
  • The Simple Rules of Nobel Prize Winners
  • There's No Such Thing As a Free Lunch
  • Investment Genius or the Thousandth Coin?
  • Effective Pitches to Sell the Big Lie
  • How Investors Delude Themselves
  • How Hedge Funds Operate and Are Sold
  • How Consultants and Money Managers Sell to Institutional Investors
  • Derivatives: The Good, the Bad, and the Ugly
  • The Modern Slippery Slope of Business Ethics
  • Conclusion: The Ten New Commandments for Smart Investing
  • Notes