Stocks for the Long Run set a precedent as the most complete and irrefutable case for stock market investment ever written. Now, this bible for long-term investing continues its tradition with a fourth edition featuring updated, revised, and new material that will keep you competitive in the global market and up-to-date on the latest index instruments.
Wharton School professor Jeremy Siegel provides a potent mix of new evidence, research, and analysis supporting his key strategies for amassing a solid portfolio with enhanced returns and reduced risk. In a seamless narrative that incorporates the historical record of the markets with the realities of today's investing environment, the fourth edition features:
A new chapter on globalization that documents how the emerging world will soon overtake the developed world and how it impacts the global economy
An extended chapter on indexing that includes fundamentally weighted indexes, which have historically offered better returns and lower volatility than their capitalization-weighted counterparts
Insightful analysis on what moves the market and how little we know about the sources of big market changes
A sobering look at behavioral finance and the psychological factors that can lead investors to make irrational investment decisions
A major highlight of this new edition of Stocks for the Long Run is the chapter on global investing. With the U.S. stock market currently holding less than half of the world's equity capitalization, it's important for investors to diversify abroad. This updated edition shows you how to create an "efficient portfolio" that best balances asset allocation in domestic and foreign markets and provides thorough coverage on sector allocation across the globe.
Stocks for the Long Run is essential reading for every investor and advisor who wants to fully understand the market-including its behavior, past trends, and future influences-in order to develop a prosperous long-term portfolio that is both safe and secure.
For more than a decade, Stocks for the Long Run has been the authoritative guide to understanding market forces and building a successful portfolio. In this new fourth edition, Jeremy Siegel updates his argument for long-term stock market investment with: comparisons of ETFs, mutual funds, and index options and futures; evidence that the rapid growth of emerging markets will not only continue but may accelerate; insight into the benefits of fundamental indexation over market value indexation; an updated look at the surprising validity of Calendar Effects; and fresh analysis of the best-performing stocks since the formulation of the S&P 500 Index.
Praise for previous editions of STOCKS FOR THE LONG RUN
"A simply great book."-Forbes
"One of the top ten business books of the year."-BusinessWeek
"Should command a central place on the desk of any 'amateur' investor or beginning professional."-Barron's
"Siegel's case for stocks is unbridled and compelling."-USA Today
"A clearly written, neatly organized, highly persuasive exposition that lifts the veil of mystery from investing."-John C. Bogle, Founder and former Chairman, The Vanguard Group
Jeremy J. Siegel is the Russell E.Palmer Professor of Finance at The Wharton School of the University of Penneylvania, the acadmic director of the Securities Industry Institute, and a senior investment strategy advisor to WisdomTree Investments, which cre
Foreword
Preface
Acknowledgments
PART 1 THE VERDICT OF HISTORY
Chapter 1 Stock and Bond Returns Since 1802
"Everybody Ought to Be Rich"
Financial Market Returns from 1802
The Long-Term Performance of Bonds
The End of the Gold Standard and Price Stability
Total Real Returns
Interpretation of Returns
Long-Term Returns
Short-Term Returns and Volatility
Real Returns on Fixed-Income Assets
The Fall in Fixed-Income Returns
The Equity Premium
Worldwide Equity and Bond Returns: Global Stocks for the Long Run
Conclusion: Stocks for the Long Run
Appendix 1: Stocks from 1802 to 1870
Appendix 2: Arithmetic and Geometric Returns
Chapter 2 Risk, Retum, and Portfolio Allocation:
Why Stocks Are Less Risky Than Bonds in the Long Run
Measuring Risk and Return
Risk and Holding Period
Investor Returns from Market Peaks
Standard Measures of Risk
Varying Correlation between Stock and Bond Returns
Efficient Frontiers
Recommended Portfolio Allocations
Inflation-Indexed Bonds
Conclusion
Chapter 3 Stock Indexes: Proxies for the Market
Market Averages
The Dow Jones Averages
Computation of the Dow Index
Long-Term Trends in the Dow Jones
Beware the Use of Trend Lines to Predict Future Returns
Value-Weighted Indexes
Standard & Poor's Index
Nasdaq Index
Other Stock Indexes: The Center for Research in Security Prices (CRSP
Return Biases in Stock Indexes
Appendix: What Happened to the Original 12 Dow Industrials?
Chapter 4 The S&P 500 Index: A Half Century of U.S. Corporate History
Sector Rotation in the S&P 500 Index
Top-Performing Firms
How Bad News for the Firm Becomes Good News for Investors
Top-Performing Survivor Firms
Other Firms That Turned Golden
Outperformance of Original S&P 500 Firms
Conclusion
PART 2 VALUATION, STYLE INVESTING, AND GLOBAL MARKETS
PART 3 HOW THE ECONOMIC ENVIRONMENT IMPACTS STOCKS
PART 4 STOCK FLUCTUATIONS IN THE SHORT RUN
PART 5 BUILDING WEALTH THROUGH STOCKS
Index
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