The Investor's Dilemma: How Mutual Funds Are Betraying Your Trust and What to Do about It

Once again Louis Lowenstein has done what others have neglected to do: unveiled the truth behind mutual fund fees, excessive trading, and at the same time points the reader to old fashioned, real value investing managers and how they stick to the tried and true. An excellent read! PDC

In THE INVESTOR'S DILEMMA the writing is so clear and the case so well laid out and logically built that I feel I've had the most enlightening new look at investing...at how to participate in the growth of the world economy with but a few funds. The book's concrete examples, naming names and showing specifics...rather than simply expounding theory...is compelling. As a longtime (26 years) investor in Sequoia...my only fund for years, I was extremely interested to read about Fairholme and Wintergreen and am now a shareholder in those, too. In the face of so many niche funds, sector funds and "style boxes", Prof. Lowenstein's pointing out that these three great managers are now free to invest all over the world in any size company they like is an extremely important point...one that can greatly simplify an investor's job. THE INVESTOR'S DILEMMA is a beautifully written lesson.

Your financial planner and mutual fund advisor are not going to recommend that you read Louis Lowenstein's book, "The Investor's Dilemma", but if you want to be a knowledgeable investor, I highly recommend that you do. Fund boards of directors and management companies are exposed for their betrayal of investor interests. Management fees continue to grow, while the benefits of increased assets under management go into the pockets of the publicly-owned and privately-held management companies. And the dreaded 12b-1 fees continue to be assessed to the fund holders enabling the management companies to further enhance their take at the expense of the fund investors. The final chapter, "How to Pick a Mutual Fund", provides excellent guidance on how to go about identifying funds worthy of your hard earned savings. My only disappointment was that Mr. Lowenstein only specifically recommends two funds, one of which I already own. With all his research, I would have thought he could have come up with more. Finally, the reader is left with somewhat of a mystery by the author. By way of full disclosure it is stated that "the author owns relatively modest positions in both funds" recommended. He goes on to recommend that investors own no more than three (four, tops) stock funds. So, where does Mr. Lowenstein invest the rest of his money? Does he eat his own cooking? I hated to see this book end. Perhaps there will be a sequel that will provide further guidance on selecting worthy funds and fund managers with more specific recommendations.

Lowenstein's book is a much-needed antidote to the self-serving advice consistently provided by brokers and financial advisors -- and the newspaper and magazine reporters who parrot them. It sets out in such plain language, exactly how such advice serves their purposes but not their investing clients, that everyone can evaluate for themselves what to believe and why. A must-read for both experienced and unsophisticated investors.

The mutual fund industry has depended, for success, on its ability to portray itself as complex - too complex for the many millions who invest to know or understand how it actually works. Lowenstein converts that complexity into a clear, understandable explanation, while defining the myriad conflicts of interest which short change those investors while creating incredible wealth for the managers. Amazingly, he also sets out easy to follow methods of choosing a fund which protects its investors and their money, even though there are not many. The book is superbly researched well organized and written with great warmth.