Foreword

To invest well is not easy. At least that's what the data suggests—just look at the well-documented consistently poor performance of most portfolios, whether individual or institutional. But it doesn't need to be as hard as we have made it, says this book. If we focus on what really matters over the long term, we can each help ourselves and our clients figure out what's most important for eventual success. We tend to allow short-term influences to occupy far too large a share of mind, to the detriment of focusing on actions that will improve long-term outcomes.

That central message is what this book is about, and embedded in it is a timeless roadmap that investors and investment practitioners can and should follow. It is a set of principles derived from the many front-row seats that Charley Ellis has occupied over the last six decades—a period that encompasses the most profound transformations that have taken place in the investment industry.

Charley's keen observations and writings over these years elucidate what has changed—and also what has been enduring. The essays of this book represent (1) his foundational principles for succeeding in the business of investment management; and (2) his unambiguous insights and guidance that make investment stewardship much less daunting—for the sophisticated as well as the lay investor.

The power of Charley's insights comes from their validation in history. He teaches us that “figuring it out” in investing is being able to see in current and future developments what matters and what does not, which in turn needs to be anchored in a well-developed understanding of the past and the nature of the forces that have brought us to the present. That's why wise people study history and seek out the original documents. That's why we read biographies of great leaders. And that's why historians say the best way to understand the present is to understand the past and the best way to understand the past is to study what came before and caused it. And that's why we ask new friends, “Please tell me your personal story.” This book provides just such narratives through a documentary history of this period of great industry change.

Each essay yields enduring insights and lessons, among them:

• For clients of investing organizations, individuals and institutions will both benefit from behind-the-scene insights into the degree of change in the very nature of the daunting challenges faced by all active managers. As Dorothy said to Toto: “We're not in Kansas any more”—again!
• For those who are aiming to make their careers in this remarkably well-paid field of endeavor or are early in their careers as practitioners, here is an opportunity to appreciate how change is itself a powerful constant in the investment space, and how critical it is to anticipate and embrace innovation and evolution.
• For practitioners near the completion of their careers, there are provocative reminders of past developments we underestimated (to our regret) or recognized only slowly. And they keep coming!
• For those who seek metaphorical investing advice that will remain ingrained, “The Loser's Game,” “Murder on the Orient Express,” and “Investing Success in Two Easy Lessons” are must reads.
• For those who wonder where and how fees can so adversely affect investors' long-term welfare, several essays make it all quite clear.
• For those who still harbor hopes that indexing may have had its day, the negative case is clearly presented.
• For those who are looking to succeed as a client, “The Winners' Game” and “Best Practice Investment Committees” provide must-read guidance.
• For those who worry that business profitability all too often encroaches on professional values, there are several appeals from an ultimate insider for a re-orientation of the industry.

Investing and investment stewardship are a journey. Through beautifully written and colorful prose, this book brings to life the pitfalls we will face time and again, and it provides a clear roadmap for making that journey less hazardous and ultimately one of great success.