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The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New
The new paradigm for investing and building wealth in the twenty-first century. The Future for Investors reveals new strategies that take advantage of the dramatic changes and opportunities that will appear in world markets.
Jeremy Siegel, one of the world’s top investing experts, has taken a long, hard, and in-depth look at the market and the stocks that investors should acquire to build long-term wealth. His surprising finding is that the new technologies, expanding industries, and fast-growing countries that stockholders relentlessly seek in the market often lead to poor returns. In fact, growth itself can be an investment trap, luring investors into overpriced stocks and overly competitive industries.
The Future for Investors shatters conventional wisdom and provides a framework for picking stocks that will be long-term winners. While technological innovation spurs economic growth, it has not been kind to investors. Instead, companies that have marketed tried-and-true products for decades in slow-growth or even declining industries have superior returns to firms that develop “the bold and the new.” Industry sectors many regard as dinosaurs—railroads and oil companies, for example—have actually beat the market.
Professor Siegel presents these strategies within the context of the coming shift in global economic power and the demographic age wave that will sweep the United States, Europe, and Japan. Contrary to the popular belief that these economic and demographic trends doom investors to poor returns, Professor Siegel explains the True New Economy and how to take advantage of the coming surge in invention, discovery, and economic growth.
The faster the world changes, the more important it is for investors to heed the lessons of the past and find the tried-and-true companies that can help you beat the market and prosper in the years ahead.
Jeremy Siegel, one of the world’s top investing experts, has taken a long, hard, and in-depth look at the market and the stocks that investors should acquire to build long-term wealth. His surprising finding is that the new technologies, expanding industries, and fast-growing countries that stockholders relentlessly seek in the market often lead to poor returns. In fact, growth itself can be an investment trap, luring investors into overpriced stocks and overly competitive industries.
The Future for Investors shatters conventional wisdom and provides a framework for picking stocks that will be long-term winners. While technological innovation spurs economic growth, it has not been kind to investors. Instead, companies that have marketed tried-and-true products for decades in slow-growth or even declining industries have superior returns to firms that develop “the bold and the new.” Industry sectors many regard as dinosaurs—railroads and oil companies, for example—have actually beat the market.
Professor Siegel presents these strategies within the context of the coming shift in global economic power and the demographic age wave that will sweep the United States, Europe, and Japan. Contrary to the popular belief that these economic and demographic trends doom investors to poor returns, Professor Siegel explains the True New Economy and how to take advantage of the coming surge in invention, discovery, and economic growth.
The faster the world changes, the more important it is for investors to heed the lessons of the past and find the tried-and-true companies that can help you beat the market and prosper in the years ahead.
336 pages, Hardcover
First published January 1, 2005
73 people are currently reading
942 people want to read
About the author
Jeremy J. Siegel
17 books85 followersJeremy J. Siegel is the Professor of Finance at the Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania.
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Displaying 1 - 30 of 49 reviews
March 3, 2021
TL;DR: growth (whether a country's, an industry's, or a company's) doesn't matter, what matters for investors is the gap between growth expectations and actual growth. That's not exactly shocking news but Siegel does a great job of quantifying and illustrating the point. And that's a point that's easy to forget, particularly in bubbly times. Before I read this book I was googling Estonia and Vietnam ETFs, studying the portfolio of ARK funds, scanning the news for upcoming tech IPOs, etc. This book gave me pause and probably saved me a ton of money.
(from chapter 16)
Also, this: "as the holding period increases to between fifteen and twenty years, the riskiness of stocks falls bellow that of fixed-income assets" (chapter 12). Again, not exactly shocking news that risk is a function of time, but Siegel articulates the point more clearly than I've ever seen elsewhere. It's easy to forget that inflation, well, inflates a company's prices and assets, so in the long run stock returns have to adjust for that, while bonds offer no such "natural" protection. (And that is probably especially true in countries whose governments have a history of "tweaking" official inflation indices, not to mention countries whose governments have a history of outright defaulting.)
The book is from 2005 but at times it feels like Siegel is addressing 2021 investors. Like when he discusses the signs of a bubble:
And see if this doesn't make you think of today's SPACs:
In 2021 there is even a SPAC whose ticker is JAAC, which stands for "Just Another Acquisition"; and you can now buy SPAC ETFs.
I also learned a lot from Siegel's discussion of how different companies calculate their earnings differently, and how that may affect the P/E ratio. He discusses the concept of "core earnings" and I wonder if that could apply to every country and how the P/E ratios would change, say, in Brazil, if Brazilian companies adopted it, and what investment strategies could be built on top of the gap between conventional P/E ratios and P/E ratios based on core earnings.
This is an uneven book though - about 1/3 of it is just opinative or speculative. For instance, Siegel goes on and on about how you should buy stocks that pay dividends because dividends are a strong signal of value. And he shows that some dividend-based strategies (like the "Dogs of the Dow" strategy) would have been successful. But you could find a strategy that involves, say, picking companies with 5-letter names, and show that it too would have beaten the market. I'm reading Marcos López de Prado's "Advances in Financial Machine Learning" and he has seven chapters on all the stuff you need to worry about when doing backtesting; TL;DR: it's 100x more complicated than saying "you would have beaten the market if you had picked these companies", which is what Siegel does.
Also, Siegel doesn't engage the literature that shows dividends to be irrelevant. Math-wise, it isn't that hard: $1 paid in dividends means $1 less in market value. And that's a literature that stretches back at least to the 1960s (see here), not something that only started after the book came out. Stocks that pay good dividends do tend to perform better, but there is evidence showing that that's because dividend-paying stocks have excess exposure to the value, profitability, and investment factors. Hence you can do just as well by buying stocks that have similar excess exposure to those factors, whether they pay dividends or not - which about doubles your pool of stocks to choose from.
Finally, Siegel makes a scary prediction that haven't materialized. He says that as boomers retire they will sell their stocks and bonds, which will make prices go down a lot. Sixteen years later, the S&P500 has a P/E ratio of about 27 - it was 17 when the book came out. Maybe a lot of boomers haven't retired yet, maybe investors in developing countries are buying a lot of US stocks; who knows. Whatever the reason, that part of the book has aged like milk.
Despite its flaws though this book is great and totally worth it.
(from chapter 16)
Also, this: "as the holding period increases to between fifteen and twenty years, the riskiness of stocks falls bellow that of fixed-income assets" (chapter 12). Again, not exactly shocking news that risk is a function of time, but Siegel articulates the point more clearly than I've ever seen elsewhere. It's easy to forget that inflation, well, inflates a company's prices and assets, so in the long run stock returns have to adjust for that, while bonds offer no such "natural" protection. (And that is probably especially true in countries whose governments have a history of "tweaking" official inflation indices, not to mention countries whose governments have a history of outright defaulting.)
The book is from 2005 but at times it feels like Siegel is addressing 2021 investors. Like when he discusses the signs of a bubble:
... extraordinarily high valuations based on concepts and names instead of earnings or even revenues, and un unwavering belief that the world has fundamentally changed and that these firms cannot be measured by traditional means.
And see if this doesn't make you think of today's SPACs:
To bypass the lengthy process of going public, a company could conduct a 'reverse acquisition' and effectively merge with NetJ.com. In other words, NetJ.com was a shell in which other companies could live. With internet mania raging, dot-com companies rushed to sell shares quickly to a more-than-willing public, and a merger was much faster than the lengthy process of issuing an IPO. [...] The only source of value for NetJ.com will be 'entirely dependent' upon its management in locating a 'suitable acquisition or merger candidate.'
In 2021 there is even a SPAC whose ticker is JAAC, which stands for "Just Another Acquisition"; and you can now buy SPAC ETFs.
I also learned a lot from Siegel's discussion of how different companies calculate their earnings differently, and how that may affect the P/E ratio. He discusses the concept of "core earnings" and I wonder if that could apply to every country and how the P/E ratios would change, say, in Brazil, if Brazilian companies adopted it, and what investment strategies could be built on top of the gap between conventional P/E ratios and P/E ratios based on core earnings.
This is an uneven book though - about 1/3 of it is just opinative or speculative. For instance, Siegel goes on and on about how you should buy stocks that pay dividends because dividends are a strong signal of value. And he shows that some dividend-based strategies (like the "Dogs of the Dow" strategy) would have been successful. But you could find a strategy that involves, say, picking companies with 5-letter names, and show that it too would have beaten the market. I'm reading Marcos López de Prado's "Advances in Financial Machine Learning" and he has seven chapters on all the stuff you need to worry about when doing backtesting; TL;DR: it's 100x more complicated than saying "you would have beaten the market if you had picked these companies", which is what Siegel does.
Also, Siegel doesn't engage the literature that shows dividends to be irrelevant. Math-wise, it isn't that hard: $1 paid in dividends means $1 less in market value. And that's a literature that stretches back at least to the 1960s (see here), not something that only started after the book came out. Stocks that pay good dividends do tend to perform better, but there is evidence showing that that's because dividend-paying stocks have excess exposure to the value, profitability, and investment factors. Hence you can do just as well by buying stocks that have similar excess exposure to those factors, whether they pay dividends or not - which about doubles your pool of stocks to choose from.
Finally, Siegel makes a scary prediction that haven't materialized. He says that as boomers retire they will sell their stocks and bonds, which will make prices go down a lot. Sixteen years later, the S&P500 has a P/E ratio of about 27 - it was 17 when the book came out. Maybe a lot of boomers haven't retired yet, maybe investors in developing countries are buying a lot of US stocks; who knows. Whatever the reason, that part of the book has aged like milk.
Despite its flaws though this book is great and totally worth it.
September 23, 2009
This book surprised me a bit, it is a book about the stock market that actually has something both new and worthwhile in it.
The author makes a good case for expensing stock options,
quoting warren Buffett,
If stock options are not a form of compensation, what are they?
If compensation is not an expense, what is it?
and if expenses shouldn't go into the income statement,
WHERE SHOULD THEY GO?
He points out that most tech companies are run for the benefit of employees who have stock options.
Stock options are kind of like paying workers with lottery tickets,
When they saw others winning , it looked like a good idea.
But it really isn't.
Basically if you want to make money, avoid loser stocks,
and don't overpay for growth.
People bid "growth" stocks up to levels where profits are unlikely
except for the insiders looting the company with their stock options.
The first 3 parts of the book are about stocks,
in the 4th part he goes into the aging crisis and how to keep
social security from going bankrupt.
His ideas are original, but I don't think they'll work.
They assume India & China will bail us out.
The author makes a good case for expensing stock options,
quoting warren Buffett,
If stock options are not a form of compensation, what are they?
If compensation is not an expense, what is it?
and if expenses shouldn't go into the income statement,
WHERE SHOULD THEY GO?
He points out that most tech companies are run for the benefit of employees who have stock options.
Stock options are kind of like paying workers with lottery tickets,
When they saw others winning , it looked like a good idea.
But it really isn't.
Basically if you want to make money, avoid loser stocks,
and don't overpay for growth.
People bid "growth" stocks up to levels where profits are unlikely
except for the insiders looting the company with their stock options.
The first 3 parts of the book are about stocks,
in the 4th part he goes into the aging crisis and how to keep
social security from going bankrupt.
His ideas are original, but I don't think they'll work.
They assume India & China will bail us out.
January 24, 2016
This book makes a strong case for value investing, especially for investing in underpriced stocks that pay a dividend. I am somewhat skeptical about many of his claims since his work is very academic. Half way throug the book, Jeremy Siegel states that historical performance is the best indication of future results. While this may often be true, it seems to ignore 'Black Swan' events that can wipe out the market in a very short time. As we are now moving through a significant market decline, I think his strategies would not help protect principal going into the decline, but would help accelerate returns as the market returns to correct valuation. And that is my biggest concern with this book. He did very little to discuss appropriate valuations, but threw out a few token metrics to help identify underpriced stocks. This book is well worth the read, but it should be balanced with healthy skepticism.
December 31, 2022
An easy to read book with data backed facts for new investors. Main takeaways are 1) investors who overpay for growth often under perform because of the difference b/w expected and actual growth, 2) investors who accumulate shares through dividends of an overlooked yet stable firm can boost their returns when the stock recovers (he calls it return accelerator), and finally 3) growing working population in developing countries will offset the decline of same in developed nations while producing enough goods and services for retiring baby boomers in exchange for their assets worth trillions of dollars.
The first half of the book makes a case for investments strategies that have worked well in the past (buy cheap and hold long), while warning against the perils of new technologies and "hot" trends. The second half is more concerned with the macro economic effects of the aging population in nations like United States & Japan, and why investors must care. Though I'm not very interested in macro-economic predictions, Mr. Siegel's style of writing makes it an interesting read all the same.
The first half of the book makes a case for investments strategies that have worked well in the past (buy cheap and hold long), while warning against the perils of new technologies and "hot" trends. The second half is more concerned with the macro economic effects of the aging population in nations like United States & Japan, and why investors must care. Though I'm not very interested in macro-economic predictions, Mr. Siegel's style of writing makes it an interesting read all the same.
April 23, 2018
This book came at the perfect time for me. The explosion of cryptocurrency into mainstream media in December 2017 was what set me onto the path of learning about financial planning and investing. At a time when I was seeking a "strategic" breakthrough win with something that seemed like a vehicle to get-rich-quick, this book provided harrowing comparisons to the Dotcom bubble of the 90s. Not to disparage those that are playing the crypto-trading game nor the impact that underlying blockchain technology may play in the global marketplace, but this book provided brilliant insight for me that speculation will almost always never play out in your favor. Even more than a decade since its publishing, this book remains as relevant as ever and provides critical historical insight for anybody seriously looking into building long term wealth through investing.
June 10, 2019
This is a very well-written book that strikes an excellent balance between scientific research backed by serious data analysis, and actionable investment advice. Prof. Siegel is very well known as the author of "Stocks for the Long Run", a classic work that makes a very powerful argument in favor of long-term investing. "The Future for Investors" can probably be considered a continuation of this work and features Prof. Siegel's findings on how factors such as industry sectors, dividends and earnings remain relevant for investors; and his insights on how things like immigration, technology, and demographics will shape future investment gains.
It is not exactly light reading, but I am glad I persevered and took the time to ponder Siegel's opinions on how the near future will look like from an investment standpoint. Highly recommended to anyone interested in the markets.
It is not exactly light reading, but I am glad I persevered and took the time to ponder Siegel's opinions on how the near future will look like from an investment standpoint. Highly recommended to anyone interested in the markets.
December 13, 2022
Thank you Jeremy for an in-depth look at historical data and your observations and findings for what will work in terms of the challenges of investing within current demographic and portfolio constraints. I enjoyed learning more about what works over the long-term and how to better reach choices for what is a better choice of investments to add value and increase the longevity of a portfolio.
I appreciate your efforts and look forward to following your insights as we continue to develop our retirement assets and find ways to help our children be set-up to help others in the future through their work and assets we pass on to them.
I appreciate your efforts and look forward to following your insights as we continue to develop our retirement assets and find ways to help our children be set-up to help others in the future through their work and assets we pass on to them.
December 14, 2009
I read the first edition of Siegel's book in March of 2005 and the 4th edition in January 2008. This is one of the best books on investing, primarily in the stock market that I have ever read and I have read a number of them. He takes a long hard look at acquiring stocks and some mutual funds to build long term wealth. He provides a frame work for picking stock that will be long term winners. This is a book, not only to read, but to keep for review as a reference from time to time.
October 11, 2018
Jeremy Siegel has excellent knack for telling the complex theories in simplest possible way. This is book is also no exception. Jeremy provide us enough data point to support his argument of Buy Hold and Reinvest then repeat the same for long long time. He brings some interesting theories on table like baby boomers and their effect on economy. Though I have not liked all the chapters, few chapters provides us most valuable and essential mindset while investing.
Over all a decent read.
Over all a decent read.
June 16, 2007
I enjoyed this book as much or more than the first. Really top rate. Jeremy Siegel is now the main advisor for www.WisdomTree.com Investment firm, in addition to his academic work.
This book really helped me to focus on investing and not stocks, to focus on where to invest and how.
Great book, would be worth 10X the price.
This book really helped me to focus on investing and not stocks, to focus on where to invest and how.
Great book, would be worth 10X the price.
May 14, 2015
Boring and adds nothing to the discussion or to his previous work for that matter. Finally got around to reading this after seeing it recommended various times, and I frankly don't understand why. Good ideas here, but derivative.
October 19, 2022
Just when I was starting to ditch the dividend arm of my portfolio, this comes in. I recommend reading Terry Smith's Investing for Growth, just to have a counterpoint to buying low PE stocks. Terry contradics him nicely showing a graph that you could have paid up (high af PEs) for certain high quality stocks a few decades ago. Siegel is definitely a wise person and this is more of a down-to-earth book than his other one Stocks for the Long Run. That has an often-cited picture showing that stocks beat everything else (that Irrational Exuberance covers in a somewhat critical way). However, in this book he makes some points and presents a problem (age wave) that could disturb the picture, yet proposes a "global solution" that will save us all (which I think is already underway). Meaning that the east will save the west's slowing/aging population problem. It also helped me open my eyes why investors should still care when and how stock savings are liquidated by those who need it for their pensions, even if one is not using a gov or private retirement plan, the actions of others still matter. And in the west there won't be as many young people paying old people's ponzi scheme retirement for the gov plan to be enough, hence the need for investing on one's own. But the population and growth will shift a bit towards the east, so another point made for global investing. It's funny because my home country is not the U.S. yet I have a bias towards it so it hit the spot for me.
I don't actively increase the dividend arm of my portfolio any more, after I reached a level where it supports my monthly recurring bills and even some of my food, and it's nice as another stream of income, but I want nothing in the uselessly large range. You reach that and all you do in it is to pay taxes (I don't wish to use tax deferred accounts in my country, we have no wash sale rule so I can pretty much deter capital gains indefinitely). I like it much better for the rest of my portfolio when firms can reinvest the earnings tax free. I'm looking for companies where the "reinvestment rate * ROC >= 15%" (based on the Falcon Method).
What I didn't like was the shunning of factors I'm interested in. I don't necessarily want railroads and pharma, and I think gems can be found in any sector, even in the new techy ones. A thought materialized while I listened to this book, and it was that if I don't like ads, then investing in Meta probably doesn't align with me, but we'll see. I mean what value does it contribute to people?
Overall I liked it as it's full of wisdom, even if you are not a deep value investor, he makes valid points. He correctly steers the reader away from IPOs and asset classes other than stocks yet doesn't put them on the pedestal either. He tells some strategies that beat the market such as Dogs of the Dow, which I found interesting as well. I'm more aligned with the quality growth way now, but this one definitely has its place and is worth reading. I think it can sit next to Irrational Exuberance on the shelf, as it's a bit dialed back on the enthusiasm for stocks.
I don't actively increase the dividend arm of my portfolio any more, after I reached a level where it supports my monthly recurring bills and even some of my food, and it's nice as another stream of income, but I want nothing in the uselessly large range. You reach that and all you do in it is to pay taxes (I don't wish to use tax deferred accounts in my country, we have no wash sale rule so I can pretty much deter capital gains indefinitely). I like it much better for the rest of my portfolio when firms can reinvest the earnings tax free. I'm looking for companies where the "reinvestment rate * ROC >= 15%" (based on the Falcon Method).
What I didn't like was the shunning of factors I'm interested in. I don't necessarily want railroads and pharma, and I think gems can be found in any sector, even in the new techy ones. A thought materialized while I listened to this book, and it was that if I don't like ads, then investing in Meta probably doesn't align with me, but we'll see. I mean what value does it contribute to people?
Overall I liked it as it's full of wisdom, even if you are not a deep value investor, he makes valid points. He correctly steers the reader away from IPOs and asset classes other than stocks yet doesn't put them on the pedestal either. He tells some strategies that beat the market such as Dogs of the Dow, which I found interesting as well. I'm more aligned with the quality growth way now, but this one definitely has its place and is worth reading. I think it can sit next to Irrational Exuberance on the shelf, as it's a bit dialed back on the enthusiasm for stocks.
September 6, 2024
I really enjoyed this book as I find Jeremy Siegels writing style easy to read and understand.
This book has the same investment principle and goals as does John Bogle, Warren Buffet, Peter Lynch, Benjamin Graham and others who advocate value investing for the long term.
His explanation of how to pick investments for the long run with explanations of details appeals to me as it goes along lines of other successful investors.
Siegels description of potential challenges in the coming century and possible solutions are interesting and thought provoking. It is especially eye-opening that this book was written 20 years ago and some of the events are happening and also some solutions are taking place yet others we are still waiting for.
This book has the same investment principle and goals as does John Bogle, Warren Buffet, Peter Lynch, Benjamin Graham and others who advocate value investing for the long term.
His explanation of how to pick investments for the long run with explanations of details appeals to me as it goes along lines of other successful investors.
Siegels description of potential challenges in the coming century and possible solutions are interesting and thought provoking. It is especially eye-opening that this book was written 20 years ago and some of the events are happening and also some solutions are taking place yet others we are still waiting for.
December 3, 2017
I really like what the author has to say. Few people talk about the baby boomers and how they might affect the future of investing. I also like how he points out the few companies that have survived the test of time and still pay dividends.
June 13, 2017
More than anyone should need to know but alas!
August 18, 2017
Betting on businesses that don't change
February 16, 2018
One of the best books I've read that explains and proves that keeping stocks long term is the best thing to do.
November 12, 2018
Classic.
April 18, 2019
It should be read for the one idea which is propogates- growth is not return!
June 29, 2019
This was a transformative book for me that I read in my early twenties. It greatly shaped and influenced my investing strategy for the last 20 years.
March 29, 2020
The book has some interesting notions to keep in your mind, but overall there are much better books to read about investing.
April 23, 2020
Well written with good points and interesting themes throughout. The appendix alone is worth the purchase price!
March 6, 2021
Mandatory read for all investors.
Read
December 23, 2021I liked a very good book
January 28, 2022
One of the best books for investors with time-tested strategies
October 12, 2024
Dividends are crucial in building wealth. Capital price is just noise and psychology of the crowds. It's madness. Cold hard cash determines how wealthy you can be.
April 12, 2025
A little complicated for a simple person like me. I learned a little bit, but I think most of it was over my head. Back to the library it goes.
May 16, 2025
Good perspective on the tried and true - would like to hear an updated version
June 6, 2021
Fantastic. I just love Siegel. Super interesting and relevant to all investors. A must read of you are interested in increasing your know how on investing
February 22, 2017
Professor Siegel demystifies the drivers for success behind the work of great investors, like Warren Buffett. To think in terms of growth or value when picking investments is wrong, based on Siegel's evidence. Instead, one should look at perception. There, the magic trick has been uncovered. Professor Siegel also proposed a great thesis for how the negative impacts from the upcoming demography shift will be counterbalanced by global growth; something that I would love to explore further. Professor Siegel is confident, transparent and charismatic. The book just makes you feel great. For a more comprehensive comment on the book visit http://albertoalopez.blogspot.com/201...
Displaying 1 - 30 of 49 reviews