The Missing Billionaires: A Guide to Better Financial Decisions 1st Edition

This book is about bet-sizing not billionaires. Does a good job of explaining esoteric and non-obvious ideas your broker is unlikely to explain, mostly having to do with risk, and the risk of going bust. Mix of some forumulas and anecdotes, but each chapter has a good summary to keep you on track

The book never quite answers the question about the missing billionaires. It gives some broad guidelines but is probably too technical and academic for most readers.

An excellent refresher on the concepts and ideas and insights of Financial Economics, and how they have held up over the start of the 21st century. But....the co-author was a partner at LTCM. The 1998 collapse of LTCM, and Alan Greenspan's mobilization of the full force of the Fed to mitigate its collateral damage to the broader economy, set the precedent to the Fed's over-reaction to 9/11, the 2008 Financial Crisis, and the 2020 pandemic. Interest rates remain distorted to this day because of those actions (hundreds of thousands of homeowners locked in 'velvet handcuffs' of 2% mortgages, etc). To be fair, Chapter 8 is dedicated to an (oddly impersonal) post-mortem of what went wrong at LTCM, including Warren Buffett's scathing assessment of the collapse. But LTCM is quite a blemish on a resume. Isn't it?

I became interested in this book after hearing Victor Haghani give a Ted Talk titled with this book's title.I found that the book's content differed substantively from that Ted Talk and the book's title.While the book discussed several concepts its two largest concepts were Utility and lowering one's risk profile as market valuations increased.On Utility the book advises one to often reduce risk as what you already have provides more utility that a large windfall, so why take substantial risks to make outsize gains when the additional wealth will provide less utility.Does wealth of $100 million provide that much more utility than $10 million? Does wealth of $1 billion provide that much more utility than $100 million?Incorporating utility into the investment process encourages one to take substantively less risk, which would probably produce less billionaires, not more.The second main concept of the book was to decrease risk as market valuations rose. There is substantial evidence that over the long-term higher market PE ratios lead lower future returns. However over the short-term the evidence is much less compelling. Say that over the next 5-10 years higher starting PE ratios due clearly seem to predict lower market returns, but over the short-term of 1-3 years the predictive value of starting PE ratio is much less compelling.The book repeatedly used certain terms, either without defining them or not defining them until several chapters later. This greatly detracted from the book!I am reasonably competent related to taxes, I studied accounting and passed the CPA exam before retiring from the Army. Chapter 17 of the book is titled; "Tax Matters". It covers in detail the process of deciding to realize exisitng unrealized stock gains so that you increase your allocation to safer assets. While it clearly covers the tax costs of realizing gains, it did not cover the ongoing tax costs of having increased "safe" investments. For example if you move $100,000 from equities to cash or bonds, you will give up $2,000 in qualified dividends for probably $5,000 in ordinary income which will cost additional tax on an ongoing basis, yet there was no discussion of this ongoing tax cost.A couple of interesting concepts, but a very average book at best.

What an absolutely amazing book. As the authors say "There are millions of books out there telling you what to invest in, but nothing out there telling you how much to invest in any particular investment or all your investments". That was a revelation. I'm so endlessly bored with books / social media / networks / etc telling you to buy stocks or to not buy stocks or to buy particular stocks or to buy gold or oil or bitcoin, etc, etc. It was Amazingly Refreshing to read a book that offered a precise roadmap towards how much to invest in anything or everything with some modeling and mathematical precision behind the suggestions. A must read for anyone who cares about their money!! And a fun read too, not dry at all!!!!

The coin flipping discussion and relation to the stock market was quite good. I was expecting great things concerning the allocation of capital to investment opportunities. The discussion of the Kelly Criterion left out the reasons for half Kelly betting and did not explore what happens when you over bet. (hint - volatility increases while return falls) It was not clear what utility has to do with investment optimization. Maybe a utility curve of 2 is better than 1 but why? Certainly in the coin flipping example; a utility curve of 1 leads to the fastest growth of capital. The section concerning the 60 / 40 portfolio did not explain why a utility curve of 3 was appropriate here. Sticking to a utility curve of 2 as in the coin flipping example would have lead to the conclusion that 100% or more (leverage) of stocks would be appropriate for a portfolio. Frankly the logic in the book is hard to follow as the authors seem to avoid the conclusions from the formulas. Perhaps because suggesting a 100% allocation to equities would make readers question the logic that follows from the coin flipping example.Eventually the authors get around to laying out their investment prescription which involves dynamically rebalancing a portfolio between stocks and bonds as CAPE changes. This is what Elm does for it's clients so I am not surprised that this would be sold in the book. Market timing doesn't have a good track record and I am sceptical that this historically good approach isn't just a figment of data mining.For a better understanding and frankly more entertaining discussion of the Kelly Criterion, I suggest the book "Fortunes Formula" by William Poundstone.Overall "The Missing Billionaires" while interesting misses the mark.