This book contains dozens of descriptions of classic investment blunders that even experienced investors make. I found that this book is not a classic Investment How-to, but rather a list of what to watch out for, how to spot snake-oil, and how to approach investing with a balanced index fund strategy that will beat virtually all professional money managers (especially after taxes and other expenses are considered). Numerous examples, studies, and professionally backed research is used to make hard-hitting points stick and shatter many myths that abound in the financial industry. Combine this book with Larry Swedroe's other works and you have a complete set of facts to make a winning portfolio that will survive and prosper in any market.

Modern portfolio theory (MPT) has an aggressive advocate in Larry E. Swedroe's RATIONAL INVESTING IN IRRATIONAL TIMES. Investors are advised to stick with index funds, tax managed funds, or exchange traded funds (ETF) and allocate across a range of asset classes. This investment strategy may be a little dull, Swedroe concedes, but his evidence for its soundness is compelling. This book is organized around 52 mistakes that investors make many of which might be avoided by adopting the author's strategy. Many of these mistakes are familiar to readers of the current crop of investment literature: Stay away from hedge funds, IPO's, market timing strategies, market gurus, yeserday's winners ("recency"), the misuse of margin, and high turnover portfolios. Recognize that many mistakes result from our own behavioral patterns including overconfidence in our skills, failing to sell our losers ("regret avoidance"), mistaking skill for luck, failing to rebalance over time to our basic plan, over-concentration in a company we think we know, etc. Much of this familiar territory. Where Swedroe distinguishes himself is in his relentless focus on a few key ideas that are logically developed and supported by recognized academic research. Financial markets are too efficient in their assimilation of new information for an active manager to consistently outperform a benchmark index. Lucky streaks are common but not proof to the contrary. News is by definition a surprise (viz., randomly occuring and unpredictable) and the evidence is strong that it is a "persistently important factor in stock performance". Active management will not anticipate the unexpected. Achieving "incremental advantage" over the market is therefore virtually impossible. Trading costs, tax issues, and the opportunity cost of having to hold cash in actively managed mutual funds are additional factors that make them structurally deficient. Separate studies by Mark Carhart and Russ Wermers support the underperformance of mutual funds relative to appropriate benchmarks. Meanwhile, the best way to reduce the portfolio risk of bad news in an uncertain world is to diversify. If your ouija board is warped, diversification might be a prudent strategy. The research of Fama and French, Ibbotson and Kaplan, and Brinson, Hood, and Beebower all reach a somewhat surprising conclusion: Far and away the most important factor in equity returns is not stock selection or timing. It is asset allocation based on market capitalization (size) and value (book to market, BtM). It is far more important to be in small cap value stocks or international growth than Industry Leader X over Competitor Y. Using indexed securities is an efficient way to deploy your assets to these broad asset categories. To be sure, Swedroe's argument for indexed securities over individual stocks and most actively managed mutual funds runs counter to an entrenched financial services establishment that is based on exclusive analyst recommendations, punditry, and televised stock news sizzle. Nonetheless every investor will profit by implementing some of the ideas in this book.

This book i must say was very boring. It repeats the same thing over and over. It mainly talks about Index funds as the cure, but i think someone could invest irrationally using index funds. This book would have been good giving real solutions on overcoming irrational investing. Simply saying buying an index fund does not cut it. A better and interesting book i would say is "Why Smart People Make Big Money Mistakes-And How to Correct Them: Lessons from the New Science of Behavioral Economics" by Gary Belsky and Thomas Gilovich.

In his latest gem, Rational Investing in Irrational Times, Larry Swedroe discusses the 52 most common mistakes by investors today. Using the most convincing academic research on behavioral finance/investment psychology, along with his expertise on asset allocation and the value premium, Mr. Swedroe guides the investor through the rough waters of today's investment environment.

Investors of all skill levels will benefit from the convincing case Larry Swedroe makes for properly diversifying your portfolio with low turnover, low cost passive investment options through either the use of index funds, ETF's, or other passive investment options. He also makes the most convincing case yet for the value premium, why it has been sustained and consistent, and why it is most likely to continue in the future.

While his two other excellent books, "The Only Guide to a Winning Investment Strategy You'll Ever Need," and "What Wall Street Doesn't Want You to Know" are not required reading for his latest book, they are both highly recommended.

Mr. Swedroe is the most accessible financial advisor on the Internet today, regularly posting on the Vanguard Diehards forum on Morningstar and Indexfunds.com. He is always gracious with his time and is quick to answer any questions posted for him. He is one of the very few advisors, including Richard Ferri and Bill Bernstein who really seem to care about the financial well being of investors.

Save your money spent toward financial publications and newsletters, and "invest it" in this incredible new book from Larry Swedroe.

In this, his latest (and in my opinion, greatest) book, Larry Swedroe provides investors with a solid road map for avoiding the common investment mistakes that make it difficult, if not impossible, for them to reach their financial goals.

On the Morningstar Vanguard Diehards Forum, we see posts on an almost daily basis from investors trying to recover from the very mistakes that Swedroe's book addresses.

Larry's fluid writing style makes for easy reading by both novice and experienced investors alike.

This book contains a wealth of solid information. It's a real gem, and should definitely be part of every investor's library.
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