Book Review: The Coffeehouse Investor

I’m catching up on my book reviews. I realized there are many books I put on my recommended reading list for which I haven’t actually written a review. The Coffeehouse Investor by Bill Schultheis is one of them. I read this book during the 2000-2002 bear market. It was one of the books that tipped me over from a stock and mutual fund speculator to a true investor. My asset allocation is a variation of the model portfolio in this book. I checked out the book from the library last week for a refresher.

The author Bill Schultheis used to be a stockbroker with Smith Barney. He quit in 1998 after he discovered what he was doing didn’t make much sense to his clients, because everybody should be able to deploy a simple, yet effective investment plan with minimal effort. The subtitle of this small book is how to build wealth, ignore Wall Street, and get on with your life. It narrows everything down to three fundamental principles:

  • asset allocation
  • approximating the stock market average
  • saving

It’s really as simple as that. Written in a conversational style with short sentences, this small $10 book is a quick read, yet it’s very powerful and liberating. It’s great for someone who’s intimidated by the seemingly complex world of investing.

The book’s companion web site lists the annual returns for the model portfolio recommended in the book.

The return in 2008 was -20.25%, roughly the same as the -21% return I got from my own portfolio. Also don’t forget to play the Outfox the Box game which really drives home the point of getting satisfied with the market return and getting on with your life.

Their web site says there’s an updated edition coming in April 2009 with four new chapters. I look forward to reading the new edition.

Rating: ***** (Excellent). Recommended for new investors, or experienced investors looking for enlightenment.

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  1. Pete says

    I read this book recently as well, and it was pretty good. Never got around to actually doing a review. I may have to pick it up again at the library and re-read it. Thanks!

  2. Bill says

    Hi TFB,

    Thanks for highlighting The Coffeehouse Investor. I enjoy your web site, and in these challenging times for investors, the clarity you bring to a wide array of financial/investing topices is appreciated.

    The third edition of the book, published by Portfolio, will be out in mid-April. It directly addresses the current investing environment we are in, and explains why the three Coffeehouse principles are more important than ever before.


    Bill Schultheis

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