The Missing Billionaires: A Guide to Better Financial Decisions

It change my attitude and approach to my investment advisor and financial planner. I'm taking a lot less risk now and I'm seeking higher certainty.

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.

Makes you reflect about your financial decisions under the expected utility point of view. The authors underline the importance of “how much” rather than focusing only on “how good” and investment could be. Very well written

This is an important but very frustrating book. Investors should be aware of the ideas presented. The authors provide guidance based on sound statistical principals on how to allocate funds between risky e.g. stocks) and safe (e.g.inflation-protected treasury bonds) investments under different scenarios and point out that mistakes in this area can lead to bad investment outcomes. However, it is written very poorly, making it very frustrating to read and hard to implement. The core of the book is the Merton formula. However, they don't provide the units of the parameters of the formula (percentages or fractions?) and I had to dig around to find it. In some cases, they do plug in numbers but then the result they give (60% as opposed to the real answer of 62.5% stocks) adds to the confusion. In other cases, they give examples (see page 139) and state what the person should do, but don't explain how they calculate it. They don't explain why the CAPE S&P PE ratio is better than the usual one or why they use long term TIPS (as opposed to short term TIPS) as a their safe investment. Or why they yell investors to avoid municipal bonds. They don't offer sound advice on how taxes affect investment strategies. They don't offer advice on how the point in ones career would affect investment allocations until late in the book and then don't give real guidance. I would strongly urge the authors to team up with a third co-author who is good at explaining things and publish a revised book.

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.

50 years from now, people will talk about how everything changed with the publication of this book. It might take a few years to fully catch on (as most revolutions do), but the theory is so sound, and the experience of the authors so steeped in practical application, that the results will eventually speak for themselves. If you’re new to the concepts, terminology, or math it might be mind bending to try to understand the whole book in one go, but the authors do a great job of summarizing their key points so everyone can understand.

I purchased the audible version. It’s interesting so far but there some parts where seeing tables of numbers is essential. I think the publisher has recently made this available. Bravo! I'm not sure I can put links here but check the Elm Wealth website to find the free "audiobook companion pdf".