Invest in stocks for the long term

introduction
About the 5th revised edition
Recommendation

Part 1: The Past, Present, and Future of Stock Returns

Chapter 1 | Why You Should Invest in Stocks
"Anyone Can Get Rich" | Past Perspectives on Stock Investing | Shifting Investor Sentiment | Perspectives on Stock Investing After the Market Crash | The Great Bull Market of 1982-2000 | Financial Crisis

Chapter 2 | The Great Financial Crisis of 2008
A Week That Rocked Global Markets | Is the Great Depression Coming Again? | The Causes of the Financial Crisis | The Fed's Role in a Crisis

Chapter 3 | The Financial Crisis and Market, Economy, and Government Policy
Preventing Deflation | Financial Market Responses to the Financial Crisis

Chapter 4 | The Crisis of the Social Security System
Our Reality | The Aging Wave | Rising Life Expectancy | Declining Retirement Age | The Need for a Raised Retirement Age | Global Population and the Aging Wave | The Essential Question | Emerging Markets Filling the Gap | Will Productivity Growth Continue? | Conclusion


Part 2: Evaluation by History

Chapter 5 | Stock and Bond Returns Since 1802
Financial market data from 1802 to present | Total returns by asset class | Long-term performance of bonds | Gold, dollar, inflation | Real total returns | Real bond yields | Continuously falling bond yields | Equity premium | Stock and bond returns around the world | Conclusion: Stocks in the long run
References: Stocks from 1802 to 1870

Chapter 6 | Risk, Return, and Portfolio Asset Allocation
Measuring Risk and Return | Holding Period and Risk | Measuring Risk | Correlation Between Stock and Bond Returns | The Efficient Frontier | Conclusion

Chapter 7 | A Market-Representing Measure
Market Average | Dow Jones Industrial Average | Market Capitalization-Weighted Index | Stock Index Return Bias
Reference: What happened to the original 12 stocks that formed the Dow Jones Industrial Average?

Chapter 8 | S&P 500 Index
Sector Composition of the S&P 500 Index | Top Performers | Corporate Misfortune Turns into Investor Good | Other Outperforming Companies | Companies That Turned into Big Hits | Why the First S&P 500 Companies Outperformed the Index | Conclusion

Chapter 9 | The Impact of Taxes on Stock and Bond Returns
Income Tax Rates and Capital Gains Tax Rates | Pre-tax and After-tax Returns | Capital Gains Tax Deferral Benefits | Inflation and Capital Gains Tax | Why Stocks Will Continue to Be Tax Advantageous | Should You Put Stocks or Bonds in Your Tax-Deferred Account? | Conclusion
Reference material: History of tax law

Chapter 10 | Sources of Shareholder Value
Discounted Cash Flow | Sources of Shareholder Value | Dividend Growth Rate and Earnings Growth Rate | The Concept of Earnings | Conclusion

Chapter 11 | Stock Valuation Criteria
A Bad Omen Reappears | Traditional Market Valuation Metrics | Reasons Why Stock Prices Could Rise Further | Conclusion

Chapter 12 | Market Excess Returns
Stocks that outperform the market | Small-cap and large-cap stocks | Value stocks outperform growth stocks | Dividend yield | Price-to-book ratio | Analysis of the link between company size and P/B | Initial public offerings: The low returns of newly listed small-cap growth stocks | Characteristics of growth and value stocks | Why returns vary depending on company size and fundamental value | Conclusion

Chapter 13 | International Investment
International Investment and Economic Growth | International Diversification | Stock Risk | Conclusion


Part 3: The Impact of the Economic Environment on Stock Prices

Chapter 14 | Gold, Monetary Policy, and Inflation
Currency and Prices | The Gold Standard | The Establishment of the Federal Reserve | The Fall of the Gold Standard | Devaluation and Monetary Policy | Monetary Policy After the Abolition of the Gold Standard | The Federal Reserve and Currency Creation | The Impact of the Fed's Actions on Interest Rates | Stock Prices and Central Bank Policy | Stocks as a Hedge Against Inflation | Why Stocks Can't Protect Against Short-Term Inflation | Conclusion

Chapter 15 | Stocks and the Business Cycle
Who sets the benchmarks for the business cycle? | Stock performance around turning points | The performance of investment strategies that utilize the business cycle | What challenges are there in predicting the business cycle? | Conclusion

Chapter 16 | The Impact of Global Events on Financial Markets
What Factors Drive the Market? | Uncertainty and the Stock Market | Democrats and Republicans | Stocks and War | Conclusion

Chapter 17 | Stocks, Bonds, and the Flow of Economic Data
Economic Data and the Market | Principles of Market Reaction | Information Contained in Data | Economic Growth and Stock Prices | Employment Reports | Economic Data Release Cycle | Inflation Reports | Impact on Financial Markets | Central Bank Policies | Conclusion


Short-term volatility of 4-part stocks

Chapter 18 | ETFs, Stock Index Futures, and Options
ETFs | Stock Index Futures | Futures Market Fundamentals | Index Arbitrage | Predicting New York Opening Prices Using Globex | Two Witches and Three Witches | Margin and Leverage | Tax Savings Using ETFs and Futures | Pros and Cons of ETFs, Futures, and Index Funds | Index Options | The Importance of Index Products

Chapter 19 | Market Volatility
The October 1987 Stock Market Crash | Causes of the October 1987 Crash | Circuit Breakers | The Flash Crash—May 6, 2010 | Characteristics of Market Volatility | Stock Volatility Trends | Volatility Index | Distribution of High Daily Volatility Days | Market Volatility and the Business Cycle | The Importance of Market Volatility

Chapter 20 | Technical Analysis and Trend Investing
The Characteristics of Technical Analysis | Technical Analyst Charles Dow | The Randomness of Stock Prices | Randomly Generated Stock Charts | Trends and Reversals | Moving Averages | Momentum Investing | Conclusion

Chapter 21 | Calendar Anomalies
Summary of Calendar Anomalies | January Effect | Monthly Returns of Large-Cap Stocks | September Effect | Other Periodic Returns | Day of the Week Effect | Utilizing Calendar Anomalies

Chapter 22 | Behavioral Finance and Investment Psychology
The Tech Bubble, 1999-2001 | Behavioral Finance


Building Wealth Using Part 5 Stocks

Chapter 23 | Regular Stock Funds and Index Funds
The Performance of Standard & Poor's Equity Funds | Finding a Talented Fund Manager | Why Funds Underperform the Index | A Little Knowledge Leads to More Risk | Traps Intermediate Investors Fall into | The Impact of Costs on Returns | The Rise of Index Funds | The Pitfalls of Market-Cap-Weighted Indices | Market-Cap-Weighted and Fundamentals-Weighted Indices | The History of Fundamentals-Weighted Indices | Conclusion

Chapter 24 | Building a Long-Term Growth Portfolio
Theory and Practice of Investing | Guide to Successful Investing | Implementing Investment Plans and Investment Advisors | Conclusion

Review
Acknowledgements
main

Invest in stocks for the long term

Professor Jeremy Siegel of Wharton School
The most complete investment guide in history

Professor Jeremy Siegel, who teaches finance at Wharton School, is the first to propose and systematically prove the proposition that "there is no asset with as low risk and high return as stocks for long-term investment."
His book, "Long-Term Investing in Stocks," became an international bestseller upon its publication and is considered a must-read for stock investors.
This book, which is also used as a textbook at Wharton School, presents immutable laws of stock investment based on nearly 200 years of stock market data.

Professor Jeremy Siegel provides clear data and analysis to answer investors' most pressing questions about investment, including how financial markets changed following the 2008 financial crisis, how much profit they can make from stock investments in the future, what drives long-term economic growth, and whether they should hedge against exchange rate risk.

The newly translated and published "Long-Term Investing in Stocks" adds new data and analysis on the 2008 financial crisis, the severe economic downturn, and the growth of emerging markets.



A fundamentally weighted portfolio suitable for the Korean stock market

Professor Jeremy Siegel argues that fundamentally weighted indices are more meaningful than market capitalization weighted indices.
Furthermore, it is argued that investing in value stocks is more advantageous than investing in growth stocks.
Both of these stories imply that there is excess profit that comes from the fundamentals of the company.
Professor Siegel takes a balanced approach, not being caught up in the efficient market hypothesis.

Shin Jin-oh, Chairman of Value Leaders, who reviewed this book, wrote in his review note that through data analysis spanning 19 years and one month from the end of January 1996 to the end of February 2015, he demonstrated that a fundamentals-weighted portfolio is far more advantageous than a market capitalization-weighted portfolio.
In other words, based on fundamentals, excess profits exist, and the Korean stock market is a good environment for value investing.

In addition, Professor Siegel provides four reasons why stocks are indeed an advantageous long-term investment option in Korea.



A law proven by 200 years of data,
Invest in stocks for the long term!

“While stock returns may be lower than in the past, the overwhelming evidence suggests that they are the best investment vehicle for those seeking long-term, stable returns.”
Jeremy Siegel's claims are supported by extensive data.
The large and small bear markets that have occurred over the past 200 years have not been able to disprove the superiority of stocks over other assets as a long-term investment vehicle.
Moreover, when you account for inflation, stocks appear to be a much more stable and predictable investment than bonds.
Ultimately, the author explains that in order to achieve good results while being less affected by the volatile stock market, it is best to take a long investment period and maintain a sufficiently stable and high rate of return.

This newly published edition strengthens the foundation for long-term stock investing by adding important factual data and powerful new arguments throughout the book.
Therefore, whether you are a novice investor or a seasoned investment professional, you will gain a lot of wisdom from this book.