Foreword ix

Note on the Text xi

Introduction xiii

1 The Changing Game 1

2 The Loser’s Game 35

3 The Winners’ Game 47

4 The Winner’s Game II 61

5 The Rise and Fall of Performance Investing 73

6 Seven Rules for More Innovative Portfolio Management in an Age of Discontinuity 89

7 Will Success Spoil Performance Investing? 93

8 To Get Performance, You Have to Be Organized for It 99

9 Investing Success in Two Easy Lessons 107

10 The End of Active Investing? 111

11 In Defense of Active Investing 119

12 Murder on the Orient Express: The Mystery of Underperformance 127

13 Best Practice Investment Committees 141

14 Levels of the Game 157

15 An Invitation to Winning 163

16 Small Slam! 167

17 A Lesson from Seaside Cemetery 171

18 Tommy Armour on Investing 173

19 Ted Williams’ Great Lessons for Investors 177

20 Symptoms and Signs 181

21 Lessons from the Warwick and Château Chambord 191

22 Investment Management Fees Are Higher Than We Think 199

23 Computer People May Be Planning a Revolution 203

24 Characteristics of Successful Investment Firms 207

25 A New Paradigm of Investment Management 215

26 Lessons on Grand Strategy 221

27 Pension Funds Need MORE Management MANAGEMENT 227

28 The Significance of 65 233

29 Where Were We? 237

30 Hard Choices: Where Are We Now? 243

31 Bonds for Long-Term Investors? 251

32 What Role Should Bonds Play? 261

33 Too Much Liquidity Will Cost You 265

34 Letter to My Grandkids: 12 Essential Investing Guidelines 269

35 Miss Sally’s Attic 277

36 Ben Graham: Ideas as Mementos 281

37 The Corporate Tax Cut 291

38 Repurchase Stock to Revitalize Equity 295

39 Anti-Trust, Bank Mergers, and the PNB Decision 315

Index 325

PRAISE FOR FIGURING IT OUT

“It might seem odd to describe the courtly and charming Charley Ellis as a revolutionary, and yet he is. As you’ll discover in this brilliant collection of essays, not only did he recognize far earlier than most that investing is a loser’s game, but he also set out to take that next important step—figuring out what investors can do to improve their odds of financial success. Want a more comfortable financial future? You’ll find crucial answers in Charley’s lifetime of wise words.”

—JONATHAN CLEMENTS, editor of HumbleDollar.com and former personal finance columnist for The Wall Street Journal

“Charley Ellis has had a front row seat to the evolution of the investment management industry for over a half century. In working alongside the greats, Charley has ‘figured out’ that winning in investment management is really, really hard. This compilation of some of his finest work over the years offers anecdotes and data supporting his deepest held beliefs: focus on goals, get the big picture right, and let the power of indexing take care of the rest.”

—TED SEIDES, CFA, Founder, Capital Allocators, LLC

“The financial markets have changed dramatically over the past half century, yet our beliefs about what it takes to be a successful investor have not. Financial sage Charley Ellis has spent 60 years Figuring it Out while working with and teaching the best investors in the business. You too can become a better investor with this wonderful collection of brilliant, groundbreaking, and invaluable insights from one of the great financial minds of our era.”

—CONSUELO MACK, Anchor and Executive Producer, Consuelo Mack WealthTrack

Drawing on over 60 years of advising some of the world’s leading professional and individual investors, household investing name Charles D. Ellis delivers Figuring It Out: Sixty Years of Answering Investors’ Most Important Questions. In the book, Ellis provides unique investing insights on some of the most intractable and common issues facing retail and professional investors around the world, often in a most engaging way.

The author explores some of the great controversies that have animated the investing world over the last sixty years, from the rise and fall of performance investing to whether bonds are an appropriate investment vehicle for long-term investors. He also discusses questions about the costs associated with excessive liquidity in a typical portfolio and how to identify the characteristics of successful, high-performing investment firms.

Throughout the book, Ellis challenges conventional beliefs, including the beliefs that active managers beat the market, that investment committees should focus on hiring and firing managers, and that investment consultants will add value. He instead makes a strong case that every investor is unique and the key to long-term success is figuring out what is important to each investor. Ellis details how to design a long-term investment program based on what is best for each investor, with the goals of achieving unique objectives and being faithful to the program in mind.

A can’t-miss resource for both institutional and retail investors, Figuring It Out: Sixty Years of Answering Investors’ Most Important Questions will also earn a place on the bookshelves of portfolio managers, business enthusiasts, and anyone with even a passing interest in the world of finance.