Although what Stein and DeMuth have proven seems like common sense from one angle (buy heavily when prices are low), it is not what most of Wall Street and the financial press urges investors to do. Nor is it emotionally easy to follow this advice, since it means buying at times such as the middle of the Great Depression, when the popularity of stock market investing is at its lowest ebb, and it means avoiding buying when the market is zooming to the moon, and it seems as though every neighbor of yours is making a fortune in Internet and telecom stocks (the late Nineties). Stein and DeMuth do a great job describing these situations, to provide the internal fortitude needed to follow a buy low strategy.
The debate over this book arises over how applicable it is to the average individual investor (its target audience). All the research conducted by Stein and DeMuth concerns the S&P 500, and they freely admit that the conclusions they draw do not necessarily apply to other indices, markets, or individual stocks. Furthermore, they look at 20-year results, so the final verdicts for the last 20 years (including the bull market of the '90s) are not in yet.
However, Stein and DeMuth cite many others studies that are aligned with their general strategy of buying under-valued stocks, and summarize the superior results that these other studies report. Because of this, and the book's sharp wit and hard-hitting style, this book is a great introduction to value investing and the fundamental methods of valuing stocks. The boom and bust of the late Nineties and early 2000s prove that far too many investors (and professionals) don't pay enough attention to stock market valuation.
This book won't tell you how to make a quick fortune. It won't tell you how to identify the next Microsoft or Dell Computer. But it does tell you how to identify better times to invest in stocks, and can help you avoid huge losses from investing in bubbles. Because of the strength of the book's advice, which recent history proves is so often ignored, and the fact that it is a short and entertaining read, I highly recommend it.
In spite of the kicky title and irreverent writing style, this is a genuine attempt to educate investors. It's full of rather conservative, long-term advice. Look for undervalued stocks. Don't jump in and out of the market. Diversify. When Stein and DeMuth talk about Market Timing, it is not a reference to day trading, rather to buying stocks when they are cheap. Buy low, in other words.
Their thinking on dollar cost averaging is refreshingly sensible. Instead of the Bob Brinker style of investing a fixed amount every month (or year or whatever) regardless of cost per unit, you should wait until the stock is cheap, then buy as much as you can. This assumes the investor has a brain, and enough discipline not to mess it up, which seems to be Brinker's fear.
Anyway, there isn't much new here. It's solid investing advice, breezily presented, so if you need a refresher, or are new to investing, this isn't a bad book to start with.