I read this question last week and I immediately knew my answer.
I have read hundreds of books, but only one influenced my career change and led to such a positive impact for my clients.
This book was the “tipping point” which enabled us to start this investment firm and provided the foundation of our investment principles.
This book was the beginning of business relationships which are the backbone for our firm, for research, technology and the use of Dimensional Fund Advisors (DFA) mutual funds.
This book changed my life and the lives of my clients and their families.
“The Only Guide to a Winning Investment Strategy You’ll Ever Need” was this instrumental book. Larry Swedroe, Director of Research for BAM Advisor Services, wrote this book in 1998. I read the book a year or two later, as I was exploring how to transition from a traditional CPA into the investment advisory business to better help my clients. Reading this book started me on the path of developing our core investment principles. It enabled us to provide an investment solution that would benefit our clients for the long term.
This book showed us how we could have an investment philosophy that would be effective, understandable, disciplined and hold up over time. This book provided a way to talk with our clients and prospects. Many of our clients come to us after experiences with other brokers or advisors. They appreciate the clarity of our investment approach and see that we invest with a consistent and rational philosophy. They recognize that we focus on what we can control and work to minimize their costs and taxes.
Swedroe’s book stresses that stock market corrections are normal and expected, during most years. Knowing this, you can benefit from the long term expected returns of a globally diversified stock portfolio. This knowledge provides you with the courage to remain committed to your stock investments and be confident about your future.
The book explains that you can’t effectively time the market or confidently pick stock winners to “beat the market” over a long term period. That research is just as valid today.
Swedroe refers to the “stomach acid test” as a way to see if you have the fortitude and discipline to stick with your stock allocation when the going gets rough. We talk to our clients about this, so they are able to remain in the market during volatile times. We make sure that you have an adequate foundation of cash or fixed income for many years of cash flow needs. This provides you with confidence and security.
Swedroe’s book gave me the courage, capability and confidence to commit to starting our investment advisory firm. Over a decade later, this foundation has contributed to the positive impact we have had on the lives of our clients and their families.
Don’t underestimate the power of a single book.