Winning the Loser's Game

THE LOSER’S GAME 1

2 THE WINNER’S GAME 11

3 THE GRIM REALITIES 17

4 BEATING THE MARKET 23

5 MR. MARKET AND MR. VALUE 37

6 INVESTOR’S DREAM TEAM 43

7 INDEXING: YOUR “UNFAIR” ADVANTAGE 55

8 INVESTOR RISK AND BEHAVIORAL ECONOMICS 63

9 THE PARADOX HAUNTING ACTIVE INVESTING 71

10 TIME: ARCHIMEDES’ LEVER 77

11 INVESTMENT RETURNS 83

12 INVESTMENT RISKS VERSUS UNCERTAINTY 93

13 BUILDING INVESTMENT PORTFOLIOS 101

14 WHOLE-PICTURE INVESTING 105

15 MORE ABOUT BONDS 109

16 WHY POLICY MATTERS 115

17 PLAYING TO WIN 119

Praise for Winning the Loser’s Game

The best book about investing? The answer is simple: Winning the

Loser’s Game.

—F. William McNabb III, former CEO,

The Vanguard Group, Inc.

Of the thousands upon thousands of books for individual investors, perhaps

a dozen are worth reading. Of the dozen, only one is written with verve and

clarity. Read this classic, learn its lessons, follow its precepts and prosper.

—David F. Swenson, Chief Investment Officer, Yale University

Winning the Loser’s Game is one of a tiny handful of books that should be

read by every investor. Charley Ellis has written a timeless investment classic

that will be as worth reading 50 years from now as today—but for your

own sake, don’t wait to pick it up.

—Seth Alexander, President,

MIT Investment Management Company

A seminal work. Its true and tested investing principles, vindicated over

decades of experience, provide an invaluable framework for institutional

and retail investors alike. The message resonates even more powerfully in

today’s world of unorthodox economic policy-making and lasting financial

distortions.

—Gumersindo Oliveros, CEO and CIO,

KAUST Investment Management

Investors today face one of the most uncertain and difficult investing environments

in a generation. A classic is by definition timeless, a source of

inspiration and guidance in every circumstance. Winning the Loser’s Game

fits the mold to perfection: Its lessons for investors, and very especially

individual investors, have never been more valuable than today.

—Luis M. Viceira, George E. Bates Professor,

Harvard Business School