The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk
Author: William J. Bernstein
List Price: $29.95
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ISBN: 0071362363
Publisher: McGraw-Hill Trade (22 September, 2000)
Sales Rank: 2,105
Average Customer Rating: 4.88 out of 5
Customer Reviews
Rating: 5 out of 5
The Intelligent asset allocator
This is a superb investment book. Bernstein first covers basic statistical topics and historical risk and return data for stocks, bonds and bills. He then presents a lucid discussion of portfolio theory and its applications for the small investor. The most important result of this theory is that the risk and return of a portfolio are very different from the risk and return of its constituent parts, so that adding a 'risky' asset to a portfolio can actually decrease the portfolio's overall volatility. This discussion requires only minimal mathematical background. Bernstein then takes on the controversial topic of market efficiency. He also describes stock valuation models, current valuation levels, growth and value investing, Fama and French's three factor model, the concept of the efficient frontier and numerous other important topics in finance. But the discussion throughout is very clear and understandable as well as practical. After making a compelling case for index investing with periodic rebalancing, Bernstein presents helpful Vanguard and DFA model portfolios. What the author has done is to take the most significant results from academic finance and translated them into English for the individual investor. He has done investors a great service.
Rating: 5 out of 5
How's Your 401(k)? Do It a Favor -- Read This Book
I would have to agree with John Bogle's endorsement: "This is a great book!"
While Malkiel's Random Walk covers Modern Portfolio Theory, Bogle covers the virtues of index investing, and Graham, Lynch and Fisher cover individual stock selection, studies show that asset allocation alone is responsible for over 90% of a portfolio's performance in the long run. Yet asset allocation theory seems to me to be under-represented in the investment literature for non-professionals.
Bernstein's book goes a long way to correct this gap. He starts out almost too simply. Bernstein takes the reader step-by-step through a discussion of basic financial math and statistics (hitting variance and correlation coefficients in particular) as he builds the case and explanation behind asset diversification. He writes to an intelligent audience but does not assume a mathematical or financial background. I like that he encourages the reader to take a chapter at a time. He instructs the reader to finish the chapter, and then put the book down and get back to life. This adds to the methodical tone of the book: a step at a time.
In the final chapter "Odds and Ends" the author changes gears. Suddenly we are in the world of - well - odds and ends, the finer points of portfolio management. This was the most interesting part of the book for me. Here Bernstein reviews the case for index investing and - of special interest to me - value investing. What is the premium in returns for small vs. large caps, value vs. growth? Which MPT stat, P/E or P/B is the better predictor of future performance? Why is value averaging so important and yet so counter intuitive? This chapter alone was worth the price of the book.
Finally, Bernstein shares the wealth. The bibliography and recommending reading sections are terrific. This alone might be worth twice the price of the book.
In a time when we are all more intimately involved with the management of our retirement accounts, I cannot recommend this book highly enough to anyone and everyone. You cannot afford not to be familiar with the contents of this book. Highly recommended.
Rating: 5 out of 5
Don't be scared
When you pick up this book and look through it the graphs my scare you. Don't let your math phobia kick in. William Bernstein does a great job of walking you through each chapter. In fact at the end of one of the first chapters he tells you to put the book down for a few days and just digest the information. I would rate myself as at least an investor with moderate investing knowledge. I found this book helpful and the charts held validate the points Mr. Bernstein is making. I suspect I will refer to it often when I have a guestion about investing. Similar Products
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