I feel like I should start this book review with one of those “This is intended for mature audiences” warnings.
Depending on your involvement in the financial industry, you might be disgusted. You might be insulted. You might even be dubious. Personally, I was left with this attitude of “Sure, just one more thing to be disillusioned about. “
“Uninvested” Will Add To Your General Disgust With the Economy
I received an advanced review copy of “Uninvested: How Wall Street Hijacks Your Money and How to Fight Back.” It’s an innocuous looking book that’s just under 150 pages. Each of those pages reads like a virtual punch in the gut. (At least, it did for me.)
“Uninvested” finds itself in that flurry of books that seeks to reveal the dirty underbelly of our financial and investment system and to piss you off into a better, more involved way of investing and controlling your money.
Here are just a few of the facts that you’re not going to really want to read about or know:
- In 1950, 97 percent of public equities were directly owned by individual investors. Today, 75 percent of public equities are owned by institutional investors such as mutual funds, pension funds, etc.
- Money management companies hold $37 trillion of investors’ money — representing more than half of the total financial assets of U.S. households.
- A $10,000 investment in a fund that produces a 10 percent annual return before expenses and that charges shareholders 1.5 percent in fees to cover operating expenses would produce a return of $49,725 after twenty years; in contrast, a .5 percent fee would produce a return of $60,858 in the same period.
I’m not a financial or investment expert. I’m probably not even close to being as smart of an investor as you are. But I’ve just about had enough of being put into an investment corner (and I’ll bet you have too).
The good news is that Monks has written “Uninvested” for people like you and me; who have been forced into investing into mutual funds and products because companies decimated pension plans, and social security will be non existent by the time we’re ready to pull out the fraction of the thousands of dollars we put in.
The Case Against “Outsourced Investing”
In “Uninvested,” Monks makes a hard case against what he calls “outsourcing” your investing. He uses “Willard Dunn Libby” a real life “every-day” man as an example of someone who he would encourage us to emulate. There’s just one problem. Libby was born in 1915 and lived and invested his money according to the custom of the day.
“He did his homework, he read financial statements. He bought stock in companies in which he believed, in businesses that made sense to him. If he didn’t understand the business, he didn’t invest. He didn’t make investments unconsciously. He didn’t invest in companies that ran counter to his values. He recognized brokers for what they were and are (salespeople).
Willard avoided mutual funds and other financial products that came attached with complicated fees. His returns were tied up in long-term performance….”
Monks wants us to imagine a world of Libbys.
While I think this is noble on so many levels, it strikes me that what Monks is proposing feels like a sort of cafeteria investing. It seems like wishful thinking that we can take the practices of a bygone era and apply them to the insane complexity that exists today.
Libby’s life doesn’t remotely represent (or even come close to resembling) the life that you and I are living. At the time, very few people were investing their money, period.
Libby was college educated, served in a war, was married, had a great job. His wife stayed home to raise kids and he worked a leisurely 40 hours per week.
I’m willing to bet that few of you have enough time in your day to read a 500-word article, let alone do research on where you’re going to invest your money given the morass of complexity going on today.
Taking On The “Uninvested” Lifestyle Is Like Hunting For Your Food
I know, it sounds like I lambasted this book. But I have to say it got my emotions up on a topic that is generally dry and boring. And if a book on finance and investing gets me emotional — imagine what it will do for you!
If you’re a more mature investor, I think you’ll be inspired to take on at least a couple of strategies. I know I did.
Personally, I set aside $1,000 about twice a year, do some research and choose a single company in which to invest. I agree with Monks that it gives you a whole different level of engagement.
Reading “Uninvested” is like hunting for your food. You’ll be more connected, have a sense of pride and feel much more in control of your life and money.