The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk Reviews

• A Word From Somebody in the Know

  
  By A1TXOSYBCWVNQJ on 2000-10-18
  I'm quoted on the back cover of Bill's book.

  In my quote, I admit that Bill's smarter than me. True enough--but that doesn't really indicate that the book is any good. After all, a whole lot of bright people in financial services have written books, most of which are hazardous to your wealth.

  Bill's book is different because Bill's personality is different. First, he's honest. He wants to be correct, not to get his hands on your money. Second, he has no apparent ego. If he believes something and you convince him otherwise, then he will happily change his belief. The first trait is uncommon among smart people who work in financial services. The second is rarer still.

  This book isn't especially difficult to read but its concepts are profound. If you understand it, you will know more about the fundamental principles of investing than 99.9% of all MBAs and Chartered Financial Analysts. Eventually, I suspect, you'll end up richer for your troubles, as well.

  Caveats. This book isn't for stock traders or anyone else who believes that they can get rich quickly. In addition, it's not beach reading. Although Bill writes very clearly and well, the book does take on serious material, so it demands serious attention. If you don't like to think, you won't enjoy the book.

  If you're still with me, buy the darn thing!
  
  

• How's Your 401(k)? Do It a Favor -- Read This Book

  
  By A3TMM0LPFCLDCS on 2001-08-29
  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.
  
  

• A classic investment book in the making

  
  By A3OBSEQX8ZEA48 on 2000-10-14
  ONE CLICK THIS BOOK NOW

  Few investment books rarely deserve our time and attention but this is a "must read" for novice and experienced investors alike.

  If you've read anything by Bogle, Malkiel, Swedroe or Graham, then you'll appreciate Berstein's book. And given the current market situation and volatility, your nerves will be calmed by what Berstein has to offer.

  The arguments are cogent and the text is well-written which makes this book easy to read again and again. And best of all, you can act on his recommendations for how to get started on constructing and re-balancing a diversified portfolio.

  What's the big message to grok then from reading this book? (Let me whisper this to you very quietly so as not to disturb the brokerage and fund managers). Stock picking and active fund management are not as effective (consistently) as simply buying and holding a diverse set of asset classes. Most of which can be assembled and maintained using low-cost index funds. (Bernstein also points out the importance of low transaction costs and fees on performance/returns).

  You may have heard this before but Berstein has done the hard part and now explains in detail why this is the case if not the law of intelligent investing. Is this case, what you don't know about investment risk will hurt you.

  But the bigger message is that market risk is real. Asset values go up and down. However, by applying intelligent asset allocation, your individual portfolio risk can be managed (even minimized) while at the same time achieving reasonable rates of investment return. In other words, owning and investing in a diversified set of assets is the single most important investment policy decision you will make. Period.

  Imagine that. Stock picking and hot hand mutual funds don't work as effectively as a diversified portfolio of index funds in the long run. And this is key because intelligent investing is all about time. Buying and holding a diversified portfolio for long periods of time. And most importantly, maintaining a disciplined approach to asset allocation and re-balancing on an annual basis.

  Who should read this book? For starters, anyone who has won the big prize on Who Wants To Be A Millionaire? Read this book before you call a broker.

  Secondly, any individual managing their own investments and/or 401K investments.

  Finally, to all reformed stock pickers and chartists: do you want to sleep better at night? Read this book as well as Swedroe's book. As much as we would like to have our own black box trading systems to out perform/hedge the market, it probably isn't going to happen on this planet. Just ask the folks at Long Term Capital Management or George Soros or Julian Robertson.

  If you're still not convinced of Bill Bernstein's wisdom, then go to his [site] and read his quarterly journals. His understanding and grasp of the subject are inspiring even to first time investors like myself. And he's a good writer too!
  
  

• The Intelligent asset allocator

  
  By A1GQ7NRE5LQLTH on 2001-11-29
  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.
  
  

• Let the good doctor stimulate your thinking

  
  By on 2000-10-08
  My copy of William Bernstein's new book, " The Intelligent Asset Allocator," has arrived, and I give the book a very high recommendation for anyone interested in this vital subject. Fundamental mathematical concepts of geometric return, standard deviation, and correlation are given clear and understandable definition. The real-world behavior of investment portfolios is dissected with intelligence and insight.

  Portfolio optimization (its limitations as well as its legitimate uses), portfolio rebalancing, indexing (Mr. Bernstein's arguments against active management might even surpass Mr. Bogle's), Dunn's Law, efficient markets, random walks, momentum factors, the three-factor model, behavioral finance, and numerous other topics are given full and rewarding discussion.

  I especially found Mr. Bernstein's treatment of investor utility functions to be especially insightful. In addition to the usual concern with risk tolerance, he suggests an investor must decide on how simple or complicated one`s investment plan must be, and also how tolerant or intolerant one will be concerning tracking error to the market index as fundamental to implementing one's asset allocation plan.

  In implementing asset allocations Mr. Bernstein considers the two indexing giants: Vanguard and DFA. Readers will find this section especially valuable.

  This just scratches the surface; thought-provoking insights are available on just about every page of this absorbing book.

  My recommendation may carry very little weight in your estimations, so I would add that the front jacket to the text contains a small, sunny emblem with the following inscription:

  "This is a GREAT book!" John C. Bogle

  Amen to that, blb
  
  

• An excellent book for serious investors only.
  By A2PF34CUJ5JQOE on 2001-03-05
  ... Being an investment advisor specializing in asset class strategies, I was immediately impressed with his grasp of the principles of modern portfolio theory, the efficient market hypothesis, and his incredible knowledge of statistics. What impresses me even more is that he has been able to take these fairly academic topics and communicate them very effectively to serious investors who wish to build and maintain wealth over the long-term. By the way, a serious investor to me has nothing to do with the size of their portfolio. It has everything to do with their desire to learn and apply sound, logical, fact-based principles while recognizing and ignoring the vast amount of Wall Street garbage touted by stockbrokers and other salesmen.

  There are other reasons to be impressed with Bill and the knowledge he has imparted through this book. For one, Bill is a practicing physician, a neurologist, in fact. And-trust me on this-physicians are the world's worst investors. They tend to change investment strategies and advisors more often than Liz Taylor changes husbands. Why? My theory is that physicians are the most "cold-called" group of investors in the world. They hear every story from every angle and are always in search of the highest promised return on their investments. As a result, they have a habit of buying high and selling low whether with individual securities, mutual funds, or investment advisors. Dr. Bernstein probably did that a few times himself and-recognizing a nervous system disorder when he sees one-decided to find the truth on his own. He found it.

  In other words, he's one of you, only he's been subjected to even more of the worthless Wall Street noise then you have. Investors who take the time to read this book all the way through and grasp some of the finer details, will be extremely well served. If they only read Chapter 5 on asset allocation, however, they will know more than 90% of investors and be well on their way to a successful, long-term strategy.
  
  

• Beware that annual rebalancing might hurt returns
  By A329TQLDBZDAAF on 2006-03-11
  I am a programmer and usually do not write financial books reviews. Also it is easy to criticize a book that was published 6 years ago (it was published September 22, 2000 when smell of the forthcoming dot-com crash was already in the air). At the time of publication it was a very good book that definitely saved a lot of pensions from complete decimation due to heavy doze of technology-related stocks (or funds), an allocation typical for the level of greed (or appetite for risk taking) that was typical during dot-com bubble.
  
  But now we need to take recommendations more skeptically and at least check how they faired during six years since the book publication before jumping into action. And if we are talking about investment book it is prudent to judge its value on the base of performance of its recommendations in five years or even a decade after the publication.
  
  Thinking about optimizing my 401K portfolio before possible this (or next) year stock slide due to an inverted yield curve I dusted off the book and simulated the performance for one of the recommended portfolios for the period from Jan, 2000 to Mar, 2006. The initial investment was assumed to be zero and monthly contributions assumed to be $1K. Rebalancing was done at the end of each year.
  
  Please be aware that recommended on page 154 portfolio using the period and contribution mentioned above with the end of the year rebalancing produces almost zero return on the capital from Jan 2000 to March 2006 (7% total or ~1% annualized excluding taxes and fees). Taxes and mutual funds fees will drive return lower. For example Vanguard additionally charges annually $10 for any fund in which you have less then $10K. That means that any Vanguard money market fond provides better return with much less risk for this period. BTW without rebalancing the same portfolio produces 31% total or ~5% annualized beating S&P500 (17% total return with the monthly investment of 1K mentioned above). It looks like this "rebalancing-induced returns drop" is the most pronounced when you start with zero initial capital. If the initial capital distributed into the "slots" the first month is comparable to the subsequent investment (say $50K or $100K, while subsequent monthly investment for the period is 76K) "rebalancing-induced returns drop" is less pronounced and is approximately 50% of total return. BTW the book recommended the initial capital for this portfolio in $100K-200K range which helps to avoid some mutual funds fees inherent in splitting small initial capital into 9 slots, so the case above should be viewed as an extreme version of the "rebalancing-induced returns drop".
  
  Unless my calculations are wrong ( I strongly recommend not to take my results for granted; anybody can redo the calculations using Excel; it's not that difficult) it looks like the idea of periodic end of the year "blind" rebalancing that the author preaches is open to review.
  
  It would be also interesting to make simulation runs based on the data from 1995 version of his book which permits checking a decade of performance but I do not have it.
  
  
• An Essential Tool For Serious Investors
  By A29IP4UFB6E5YR on 2001-03-23
  Dr. Bernstein's excellent presentation in this text of Modern Portfolio Theory (in particular, mean-variance analysis) and his three-step approach to asset allocation should not be overlooked by the serious investor or by investment advisors. While some background in statistics would be helpful to the reader, don't run away if you are not a mathmetician. Read the chapters slowly, one at a time, and you'll gain valuable insights into the all-important asset allocation decision. No other text I've read to date better explains Modern Portfolio Theory and the underlying theories of asset allocation to the lay investor.

  Dr. B effectively presents additional arguments for value investing and tax-efficient investing. The last chapter also contains a very useful reading list, providing a synopsis of books by Malkeil, Bogle, Haugen, and a host of web sites which can provide valuable data and reading. Investors should not overlook Dr. Bernstein's own web site, which is frequently updated with his newsletters.

  The very beginning investor should perhaps first explore Bogle's Common Sense on Mutual Funds, and then explore texts by Burton Malkeil, Larry Swedroe, and perhaps a few others. This text can then be dived into (patiently). Bruce Temkin's recent text, The Terrible Truth About Investing, should then follow, lest the individual investor believe that he or she knows it all.

  I highly recommend this text as an addition to every serious individual investor's library, and to investment advisors desiring to explore the fundamentals of Modern Portfolio Theory.
  
  

• One of the best
  By A18I8EYPJK3XMA on 2003-05-11
  This is quite simply the best investment book I have read in a very long time. I don't completely agree with every last word the author utters but that pales beside all that the book does right. The emphasis is in all the right places: mutual fund investment costs, mutual fund investment risk, investment risk period, asset allocation, index funds vs actively managed funds, the efficient frontier, allocation strategy implementation. Best of all the book makes sense. It is logical, well thought out and mature. This is a great book for novices and experienced investors who have gotten lost and is a breath of fresh air in a world of day traders. This book is NOT shallow. It gives me great pleasure to give this book five stars. Read it and use it. You won't be sorry.
  
  
• Almost great
  By A3AAL5TGOW29X3 on 2002-07-30
  There is nothing in this book with which I disagree. My only criticism has to do with readability, an admittedly subjective quality. I read this book after finishing "Four Pillars", and I have to say that the latter is a better written book. If you are into mathematical proof of the principles of index investing, asset allocation and rebalancing, and have a long-term investment horizon, this book is a gem. As a ten year convert to this investing style, I have to say with gratitude that I am glad that I was enlightened when I was. People like Bernstein, Bogle, Malkiel and Swedroe have democratized the investment world to all our benefit.
  
  
• A classic (at least soon to be)
  By A2IGZQX63BO8BY on 2001-09-10
  I think one of the major problems facing people today is that there is too much information available and that they end up with "paralysis by analysis" syndrome. I am in the investment business, I have my masters in investments, and I've read numerous books and articles on the topic. I limit my bookshelf to the "classics" that I need to get my job done. I could boil it down to two key texts for the novice investor: 1) The Intelligent Investor (Ben Graham) 2) The Intelligent Asset Allocator (Bill Bernstein).
  If you read and fully understood the concepts within these books, you would be ahead of the majority of investment "professionals" today.
  
  
• The best single book on investing
  By AY0ZHIXG0RVDL on 2001-02-26
  I have been educating myself on investing recently, since I'm new to the field, and Bernstein's book makes the most sense to me. There's no need to feel suspicious about Bernstein having some ulterior motive, because he doesn't make any money if you take his advice, which is to passively manage your investments. It's hard if not impossible to argue against what he says, since he backs it all up with statistics that go back to 1926. This is a no-nonsense guide to investing (as opposed to speculating, which is what most so-called investors actually engage in) that will reap rich rewards if you stick to the sound advice it contains. As you read it, you get the impression that Bernstein is a trusted friend giving you very valuable advice because it will benefit YOU in the long run. It's folly to think that you can do what people who invest full-time can't do -- beat the market. Take Bernstein's advice and sleep well at night.
  
  
• Bernstein provides foundational investment advice
  By A2KLD9KLC56TB8 on 2005-01-31
  Dr. Bernstein provides a great description of fundamental investment principles best followed by 'working stiffs' who can't afford to lose our hard earned dollars and who must provide ourselves a comfortable retirement down the road. Come to think of it, that's most of us. This book will appeal most to the investment do-it-yourselfer who wants to be self-sufficient, hands-on, and free of professional investment services and commissions and costs.
  
  Bernstein argues that 1) the vast majority of investors, even the pros, can't beat the market averages over time, and 2) the market's value will increase over time, so you might as well relax and join in by investing mainly in low cost index funds that stick to the market averages. There is nothing new really with Bernstein's ideas (think guru John Bogle or financial advisor Bob Brinker), but the book's real strength comes from the logical arguments that build upon themselves and are backed up by occasional and not overwhelming statistics. The payoff is Bernstein's list of recommended investments (there are only a relative few) and allocation mixes. BTW, his explanation of stock and fund standard deviations, as used to measure risk, was very well done and much appreciated.
  
  Bernstein's central thesis is summed up by his humorous statement that there are two kinds of investors, those who know they can't predict the market, and those who don't know that they can't predict the market. Here is a take on Bernstein: Respected Wall Street folks highly praise Legg Mason fund manager Bill Miller, whose fund has just beat the market for 14 straight years. After reading this book, I believe Bernstein would explain Miller's streak by noting it was statistically bound to happen with all the thousands of fund managers out there. But after reading this book, I would suspect he might also point out how few fund managers have beaten the market consistently. Bernstein has convinced me he is right about how to invest even though I sort of wish he was wrong because individual stock picking is such great fun. This is the investment book you hope that your kids read and follow and the sooner the better.
  
  
  
• Wonderful book but too "static" and skeptical of timing
  By on 2002-03-07
  This is an extremely well-written introductory text for the investor thinking about how to allocate assets. There is no filler and no fluff, and everything is to the point.
  However, the author's view of allocation seems to me to be too "static," namely, that if you have decided to allocate, say, 50/50 between stocks and bonds, then you don't want to change this ratio simply in response to market conditions. However, everybody knows that at the beginning of an expansion cycle, stocks tend to outperform bonds, and when the Fed is aggressively raising interest rates, then bonds will become safer bets than stocks. In this respect, Martin Pring (The All-Season Investor) and Mark Boucher (The Hedge Fund Edge) offer a more dynamic view of asset allocation to take advantage of the changes in the market cycle.
  Besides, my technical analysis background tells me that timing the market, albeit never an exact science, can be done. If you can combine Berstein's approach with market timing techniques and money management discipline, I believe you can achieve better returns with even lower risks. (The irony is that he also wants the investor to buy low and sell high, but how are we going to determine when to buy low and sell high if we don't look at the charts and decipher the price and volume patterns such as "head-and-shoulders," "ascending triangles," etc.? In this respect, he has to admit that timing the market is necessary--at least to a certain degree.)
  
  
• Diversify Your Assets
  By A3QWG9BH061WE6 on 2002-06-06
  You can make a lot of money in the stock market. You can also lose a lot of money; this book explores modern thinking about the tradeoffs that determine risk and return in investing. Starting from the premise that statistical analysis provides the tools needed to evaluate risk, the author proceeds from there to present analyses based on modern research in economics and finance.

  The average investor may not like the authors premise, since it surmises that markets are reasonably efficient in pricing asssets and that the average investor faces very daunting odds when trying to outperform the market. The analyses fly in the face of most popularly available investing advice, which dwells on predicting trends, picking stocks and market timing. Most investors believe that they can predict the market to some degree (see Bernstein's "Four Pillars" book on overconfidence, or one of the previous reviewers), but Bernstein contends that the market performs in surprising ways that prevent the prediction of returns over short periods.

  The evidence for this unpredictability, provided in this and the author's other works (The "Pillars" book and his web site, The Efficient Frontier) is compelling. How much risk does the investor endure while modeling the market based on previous performance? Some aspects of risk and return for broadly defined asset classes are quantifiable, and these quantitations are discussed in the present volume.

  My criticisms are minor; I think the author foreshadows the text's math difficulty way too much (most of the public is math averse, I hear). You might read the "Pillars" book first if you are uncertain of your math skills ... anyone familiar with topics like covariance and autocorrellation will breeze through the math in this book. The disclaimer (after some buildup) of MVO backtesting in the middle of the book is a bit of a letdown, but the allocation strategies in the "Pillars" book undo that to some degree. Otherwise, an enthusiastic recommendation. I recommend that every investor read this or the "Pillars" book and apply these ideas carefully and objectively to their own investment strategy.
  
  

• An investment concept that works well but remains ignored
  By A25JHS8L1W0Z1R on 2004-09-02
  Bernstein presents the asset allocation/rebalancing concept in the form of the mathematics of coin tosses. This works but he could have presented an exceptional approach much more simply with real market data. Why confuse the reader.
  
  Real market data reveals that markets are comprised of various asset classes that tend to exhibit group behavior based upon the earnings patterns and investor sentiment associated with each unique asset class. The simple approach is to select a number of asset classes, set their percentage levels for your portfolio and rebalance in some periodic fashion back to the original percentages-thus taking gains from those that are up and adding more to those that are down. Real market data is readily available for a clearer explanation.
  
  However, a better method for larger portfolios is to hire individual managers to fill the various portfolio asset classes chosen and to rebalance when the managers are 20%+/- from their original dollar allocation (each time rebalancing occurs all dollar positions are reset). The value to this approach is that asset classes can have non-correlated behavior that may hit the rebalancing target mid-year and you miss a valuable opportunity should you wait till year end. In addition, separate accounts permit the investor to instruct the manager to specifically sell the largest capital gains positions in the asset class in question. The net effect is to significantly reduce the risk in that asset class.
  
  Successful investing is all about risk management. When you have the gains, take them out, reinvest them in under allocated positions. Successful investors follow this practice.
  
  
  
• Excellent Advice and Writing
  By AB3TJAZLAA7HS on 2006-01-26
  This book was written just prior to the 2000 dot-com collapse. The fact that the author throughout warns that all the traditional signs pointed to trouble and that it wasn't "different this time" enhances his credibility considerably.
  
  This book advises self-directed index-fund investing. (ETFs get short shrift.)
  
  - The author advises in favor of an equity tilt in order to get good returns but it warns repeatedly about the risk of doing so.
  
  - Diversification is shown to reduce risk and, paradoxically, to enhance returns.
  
  - Active management is shown to be worthless in the long term and the majority of funds, advisors and brokers are shown to be predatory in all timeframes.
  
  In these aspects, Bernstein and Swensen ("Unconventional Success", recommended) are much the same.
  
  There are several points of departure:
  
  1. Bernstein points to statistics that give evidence of market momentum
  
  2. Bernstein favors small cap and value, both domestic and foreign, both equity and debt
  
  These are small points and readers can come to their own conclusions but in the latter case, his thesis leads him to recomment quite a lot of securities in a portfolio, which seems cumbersome to manage for anyone who is not constantly engaged in that activity.
  
  The major point of departure from Swensen is in the area of rebalancing. Both favor it but Sensen seems to advocate near-real-time rebalancing in tax-deferred accounts, whereas Bernstein points to momentum and advises annual rebalancing.
  
  Both advise against frequent rebalancing in taxable accounts because of the tax penalty. (Swensen is more precise when he says "cut you losers but let your winners run" but that does seem to run contrary to the buy-low-sell-high principle underlying rebalancing.)
  
  Conclusion: good book; an easy read; recommended. Just a bit anachronistic given that it was written before the great dot-com crash and because he constantly refers to "modems" which are certainly no longer the technology of choice.
  
  
  
  
• Buy This Book
  By A1NA6XNH1A5GC5 on 2000-12-28
  This book conveys everything you need to know about investing successfully. It covers all the important topics in investing, and gets it all right. The book speaks those who just want to know what works, and also for those who want to see it all proved and justified.

  I added this book on my very short list of books to reread periodically to refresh my understanding of the subject. I also told my wife (who is not particularly interested in investing) that this is the one book to read if she ever has to make investment decisions without me. This book displaces John Bogle's excellent book for this honor.

  I can't recommend this book highly enough. Read it, understand it, and implement what it says, and you'll have an investment program that employs your money as effectively as possible with a level of risk that you're comfortable with.
  
  

• Simply a must read
  By A2K8MP3DFF387R on 2000-10-12
  Bill Bernstein is one of the best financial writers around. Not only is this book a must read, but anyone remotely interested in investing should make his efficient frontier newsletter a must read as well. He provides great and useful insights into how markets really work and how to make them work for you.
  
  
• Don't be scared
  By A2IR7236HXK7N0 on 2004-02-05
  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.
  
  
• Outstanding all the way around
  By A2RDS7NGKB7BQH on 2004-04-08
  I've read many investment books but this one is a cut above. Bernstein is a gifted author and lays a path for the reader to reduce investment risk while increasing investment returns though, what else, intelligent asset allocation. He covers the tradeoffs of mutual funds and stock picking but the real meat of the reading is the benefits of asset allocation (spreading your investments into classes that move independently of one another) and how one might implement such a strategy. He stops short of telling you which strategy but he does provide sufficient data for you to get started.

  Bernstein is a gifted writer and a powerful, logical presenter of what should be an easily managable financial strategy. It should be the only book you need on investing.
  
  

• Required Reading
  By A3T6ZVRE158P8G on 2005-03-17
  The Intelligent Asset Allocator should be required reading in every high school economics class. Mr. Bernstein presents asset allocation concepts with wit, with just the right amount of mathematical detail(if one desires it), and with common sense. Rational and gainful investing is only possible if one is aware of and applies the concepts presented by Mr. Bernstein.
  
  
• Indispensible!
  By A3M15XFC3Q1F8V on 2002-02-14
  This has been the most useful book I have ever come across on the design of my personal asset allocation plan. I would seriously not even consider investing a dime until you have read this book two or three times and understood what he is teaching. A great investment, also easy to understand.
  
  
• Jewel for long term contrarian investing from a US perspective
  By AAHTFTIFZ5VFK on 2007-04-19
  This book is for investors with a time scale of decades. So think about saving for a comfortable retirement. It argues from a point of view of an US American investor (types of asset classes and their behavior in time, all in US dollars, US tax laws, US investing instruments) but the described principles are general and also well suited for residents of other countries.
  Bernstein has the ability of a very clear and down to the earth way of thinking. Even more important his prose is as clear as his thoughts. He takes you by the hand and leads you through quite difficult terrain. But as long as you hold his hand everything is clear and makes a simple impression.
  His advice is solid and can be employed easily in practical investing. He even has advice for somebody with only thirty minutes of time for investments a year (Put it into the four asset types: domestic small caps, domestic large caps, foreign stocks and bonds of up to five years of duration. Split your assets in equal proportion to those types. Try to aggressively save fees maybe with Vanguard funds. Adjust the portions of those four asset types once a year to their original proportions.) Clearly this is good advice. If you read this book you also learn a lot of why this is effective. But if you do not know more than this advice: Will you follow it through thick and thin? Just imagine one asset type gets out of favor and loses a lot of value for a few years in a row. Then you have to pour yearly a lot of fresh and good money in exactly that asset type (Bernstein is a moderate contrarian). It is hard to believe that anyone has that strength without a well developed own opinion on that matter. Yes it is exactly the opposite of a stop loss. It is buy more of the losing types and sell the winning ones. The hope is to buy low and sell high.
  So enjoy the ease of reading and Bernstein's brilliant simplicity, but don't be fooled by it. You will have to work hard to gain your own standpoint. And you have to invest actual money for a few years to get to know yourself.
  For further reading this book has an excellent bibliography and the author runs a great website. I highly do recommend this book.
  
  
  
• smart advice
  By on 2001-09-05
  Smart, direct, and to the point. WB wastes no time describing to the reader his approach and the statistics that support it. For those of the math-inclined a very nice book on investing. It's powerful when an investment advisor backs what he/she says with data - a rare thing in today's world of financial guessing.
  
  
• Very good but with some inconsistencies.
  By A33YNVYSHS80GM on 2001-10-18
  This book is a very good read that kept my attention. The book focuses on low-cost index fund oriented investing across various types of investments and is a good companion book to A Random Walk Down Wall Street. The author looks at both investment theory and how the theory applies to actual market history. Although the theory can involve a little too much math at times for some readers, this is not a problem as the author's point comes across clearly.

  Although the book was generally excellent, some of the author's points are inconsistent. For example, the author talks at length about how future returns are unpredictable but later states that stock prices are overvalued and due for a downturn. Additionally, the author stresses how periodic portfolio rebalancing is important in asset allocation but then says that there is a strong argument for never rebalancing due to tax consequences. However, these inconsistencies are insignificant to the work as a whole and I strongly recommend this book.
  
  

• Very good but with some inconsistencies.
  By on 2001-10-18
  This book is a very good read that kept my attention. The book focuses on low-cost index fund oriented investing across various types of investments and is a good companion book to A Random Walk Down Wall Street. The author looks at both investment theory and how the theory applies to actual market history. Although the theory can involve a little too much math at times for some readers, this is not a problem as the author's point comes across clearly.

  Although the book was generally excellent, some of the author's points are inconsistent. For example, the author talks at length about how future returns are unpredictable but later states that stock prices are overvalued and due for a downturn. Additionally, the author stresses how periodic portfolio rebalancing is important in asset allocation but then says that there is a strong argument for never rebalancing due to tax consequences. However, these inconsistencies are insignificant to the work as a whole and I strongly recommend this book.
  
  

• A great book.
  By A2XUWWLIMXFPKN on 2003-12-18
  I don't know why anyone would complain about the math used in this book. Apparently it posed a problem for some readers. What is investing but an elaborate application of math combined with money? In any case, the math was kept to a minimum and it touched on vital issues like Standard Deviate.
  I have fully applied the principles in this book.
  
  
• Read this book to gain the confidence you need to stick to an asset allocation
  By A1JUXKMDHIYM4B on 2006-02-27
  This book is challenging. Aimed at an audience that already has basic investment knowledge. It explains and highlights the practical side to investing. I recommend it highly. I now feel confident that I won't over react to the highs or lows of normal market cycles.
  
  
• The Best Of Its Kind
  By A3S77RZBN00QTK on 2001-01-15
  This is the only book you need to begin investing intelligently. Be forewarned - if you have never had a statistics course you will have to do some thinking, but wouldn't you expect that from a book that purports to teach you how to do something intelligently? Even so Bernstein gives you everything you need, and only what you need, to understand the statistics, using simple examples.

  In fact, my only complaint about the book is that I think Bernstein may have trimmed the statistics presentation just a little too closely, but not so that the unfamiliar reader will notice it.

  At just over 200 pages including the index, the book contains no fluff at all. Bernstein doesn't bore you with long anecdotes that only vaguely relate to the topic, and yet he writes in a clear, capable and engaging manner using plenty of graphs and easily comprehended examples to demonstrate his points. He's not above entertaining you with a bit of humor here and there either, but Bernstein's humor is restricted to the sort of witty comments you might hear from a good friend - in contrast to the labored and obvious slapstick found in most books of the genre.

  And you get more than just asset allocation. Bernstein gives you a primer on what value investing is and why it makes sense, as well as addressing the current mania in the markets and host of other relevant topics.

  You just can't go wrong with this little book. Buy it. It's worth every penny.
  
  

• The Four Pillars of Investing: Lessons for Building a Winning Portfolio
• Unconventional Success: A Fundamental Approach to Personal Investment
• All About Asset Allocation
• A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
• The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)