All About Asset Allocation Reviews

• Great Explanation & Concrete Examples of Asset Allocation

  
  By AV2AGR9FSHF5N on 2006-04-15
  I was pretty impressed with this book. I give it an A+.
  
  I have been a student of investing and financial planning since 1979. In 1978, when Venita VanCaspel's book The New Money Dynamics was published, the term "asset allocation" was not even listed in the index of financial terms. She doesn't really mention asset allocation between asset classes and any benefits of asset allocation.
  
  Gary Brinson's 1986 famous study can be defined as the birth of asset allocation. He found that over 90% of a portfolio's return can be determined by the asset classes used, not what the individual investments were. Brinson's findings have been relatively slow to flow through the investment community and to individual investors. Dial the time clock ahead from 1986 to 2006, and one of Business Week's cover stories seeks to explain why the S&P 500's profits have increased dramatically over the last 5 years, yet the S&P 500 companies have had very little stock price appreciation. One explanation offered is that more and more investors practice asset allocation and choose other investments besides the S&P 500 for their portfolios. The increased demand for other asset classes like foreign stocks, commodities, and gold has subsequently less to a decrease in demand for large cap stocks in the S&P 500.
  
  Ferri's book does an excellent job of explaining the concept of asset allocation and he uses real life portfolios to illustrate the advantages of asset allocation.
  
  Ferri points out the ideal investments to add to one's portfolio would be negatively correlated to the investments in the existing portfolio. He also points out that the correlations between asset classes changes over time. If an investor keeps many different asset classes in his portfolio, the investor can take advantage of these changing correlations over time.
  
  All-in-all, a great book for learning the concept of asset allocation. I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Index Mutual Funds: How to Simplify Your Life and Beat the Pros, and the Coffeehouse Investor.
  
  

• All About Asset Allocation

  
  By A2ADZAC5C2MT97 on 2006-03-24
  My fee-only financial planner recommended that I read this book in preparation for my annual review of investments. He offered to buy back the book if I was dissatisfied. I found the book valuable and therefore did not take him up on his offer.
  
  I appreciated Ferri's clear explanation of the concepts of asset allocation accompanied by plenty of data tables and graphs. I also found his technique of limiting each chapter to three or four topics and stating them both and the beginning and end of the chapter very helpful in reviewing what I had learned.
  
  Although the topic is complex, Ferri kept his text at the layperson level. It definitely gave me a better understanding of the Modern Portfolio theory principles my financial planner was following in determing my personal asset allocation.
  
  Although I have the services of a planner, the book provides enough information for the do-it-yourself type to set up their own plan based on the principles of the book. A particularly nice touch is a list of funds that meet specific asset allocation goals at the end of each chapter explaining that asset class.
  
  
  
  

• I wish people would stop pushing this...

  
  By A3PE6SF0OJ4I2F on 2007-09-02
  The first review for this book states -
  
  "Gary Brinson's 1986 famous study can be defined as the birth of asset allocation. He found that over 90% of a portfolio's return can be determined by the asset classes used, not what the individual investments were. Brinson's findings have been relatively slow to flow through the investment community and to individual investors."
  
  This is 100% absolutely WRONG!!!!! Brinson's study did NOT measure portfolio return performance! Whenever I see the Brinson study manipulated into schlock like this it raises the hair on the back of my neck.... Brinson's study measured the VARIABILITY of the "actual portfolio returns vs. the portfolio's benchmark index composition returns"... and it only dealt with large institutional portfolios... which means that the study is really about 95% irrelavant to most individual investors...
  
  If you really want to read what the study actually said, and read about the critics of the study (there are many) - http://publish.uwo.ca/~jnuttall/asset.html
  
  
  Portfolio performance attribution puts the asset allocation model as delivering between 40-65% of the portfolio's return - depending on whose model or study you use....
  
  That means that 35% - 60% of your return is determined by timing and security selection - ACTIVE management!!!!
  
  
  Anyone who tells you that the Brinson study determined the amount of performance dictated by the asset alocation policy never read the Brinson study!
  
  Asset allocaton is about diversifying risks - not assets... That means you pay attention to return correlations.... and don't forget to differentiate between asset classes and "SUB" asset classes..... Small cap, mid cap, and large cap (and even breaking those into value and growth) are all SUB classes of ONE asset class - equities!
  
  

• Another Winner from Richard Ferri

  
  By A352FTI8NV5F2J on 2005-12-18
  This latest book from Richard Ferri, CFA, has all the elements needed to help an investor develop and implement an asset allocation strategy. The book covers the nuts and bolts and provides lots of supporting graphics. In addition, the author provides recommended portfolios for those in various stages of the investment cycle, as well as for investors with varying degrees of risk tolerance (aggressive, moderate or conservative). This book has something for both novices and more sophisticated investors alike. It's a winner!
  
  

• Clear Thought About a Complicated Topic

  
  By A1W6JPV8TBCSR9 on 2007-02-12
  Author Ferri cuts through the fog of academic analysis and conventional wisdom and provides common sense advice that investors can use. Of particular value is his discussion of changing correlations among asset classes. If correlations were static, it would be child's play to build a portfolio that sat squarely on the efficient frontier and satisfied any individual's risk tolerance and return requirements. But as he illustrates, correlations between asset classes change over time, sometimes quickly and unpredictably. Since the shifts are unknowable in advance, it is impossible to stay consistently balanced on the knife edge of the efficient frontier. His advice- own a little of everything in some generally accepted proportions and don't sweat the details. That's great counsel, sure to serve most investors well and allow them to sleep at night and enjoy life, rather than worrying about the status of their asset class correlations. I have read Bernstein's "Intelligent Asset Allocator" and Swensen's "Unconventional Success" and this is by far the best of the three.
  
  
• Excellent Asset Allocation Information
  By A3IE8PNBE2LPJE on 2007-09-16
  I'd gotten past the whole "How much should I save? Reduce your debt, pay yourself first" personal finance books and really wanted to understand asset allocation beyond 80% stocks and 20% bonds. I lucked out finding this book, it was exactly what I wanted and more. It's unfortunate asset allocation books get short shrift in bookstores and even in general searches on Amazon for "personal finance." It's such a critical component of long-term investing, and it's the piece that most personal finance and/or retirement books gloss over.
  
  Asset allocation is not just about stocks and bonds, but it's about asset classes, styles, foreign vs U.S. -- and this book includes some incredibly revealing information about how adding certain "riskier" investments actually REDUCES portfolio risk and increases returns. I've read a couple of the books this author recommended after his, but this was the perfect one to start with. I can't recommend it highly enough.
  
  
• The Ace Asset Allocation Primer
  By A390W0LV00H6G8 on 2006-01-09
  If you are looking to get beyond perfomance chasing, and direction-less wandering, start here! The info and technical background are great. It has a great section decribing Modern Portfolio Theory.
  
  One thing I have yet to get my mental arms around is (that is discussed in the book): considering that Small cap value funds, REITs, Foreign small funds and Intermediate bonds are shown to be top performers in achieving increased returns and reductions in volatility (standard deviation), why do the suggested portfolios look very similar to everyone elses?... Especially with such low %s in REITs?
  
  This book has definitely whetted my appetite for more info on asset allocation and rebalancing. Get it if you want to mature as a mutual fund investor.
  
  
• Asset allocation versus putting all your eggs in one basket
  By A1RK2OXZZ2MPIV on 2007-05-20
  Financial pundits frequently claim that asset allocation, not stock-picking, accounts for over 90% of investment results, but not everyone knows how many asset classes to have or how much money to allocate to each class. That's where Ferri's book comes in.
  
  Ferri provides a thorough discussion of asset allocation, shows how it helps balance risk and return, and applies it specifically to a wide range of asset classes. I was particularly interested in the way Ferri subdivided the general asset classes into categories and styles, each of which has its own unique risk and return characteristics. Stocks were subdivided into the categories of foreign and domestic, large-cap and small-cap, and growth and value. Bonds were subdivided into the categories of foreign and domestic, long-, mid-, and short-term, government, mortgage, municipal, and corporate, investment-grade and junk. Real estate included owner-occupied residential, rental residential, and commercial. Ferri also discusses investments in cash, commodities, and collectibles, as well as a brief mention of exotica like hedge funds and private equity, both of which he views with suspicion.
  
  Everything is presented in a no-nonsense manner, with lots of charts and graphs, and few if any amusing anecdotes to lighten the mood.
  
  Ferri discusses the interaction of asset allocation and life-cycle investing and provides sample portfolios that might be appropriate for each of the four main stages of an investor's life. As an example of how detailed the analysis is, some of Ferri's model portfolios contain 12 mutual funds. That's a lot of funds! Ferri also provides basic portfolios, however, with just four or five funds. Most investors could probably get along fine with the basic portfolios, until they accumulate enough assets to make it worthwhile to take on the extra paperwork involved in handling 12 funds.
  
  Along the way, Ferri discusses the impact of taxes, inflation, and investment costs. (More charts and graphs!) He's a big fan of low-cost mutual funds. No surprise that Vanguard funds predominate in his model portfolios.
  
  This is an excellent book about a fascinating and important topic, but it is pretty detailed. Novices with smaller portfolios might want to start with Burton Malkiel's "Random Walk Guide To Investing" instead. It's much shorter and easier to read, but still covers enough of the basics to get you started.
  
  
• Well beyond the basics - excellent!
  By A3K42K9WUA2P8C on 2007-06-15
  I have been reading many investment books over the last 6 months and this is one of the best along with the author's book on index funds. It is a little bit technical and has the feel of an economics book - perfect for me. I did not want a book on asset allocation that told me to buy a mix of stocks and bonds. I wanted to know why and what and the theory behind it. The author does not spell out a final answer for you (buy X% of this and X% of that) - You are educated in asset allocation and then you do your own work and decision making.
  
  
  
  
• Simple and Comprehensive
  By AP25AJHLX6DJB on 2006-03-19
  This book explains how and why you need to allocate your investments in mutual funds. It give concrete examples that any level of investor can utilize to achieve more consistent results. I recommend this book to many of my clients who seek investment advice as do it yourselfers. This is the second book by the same author that I have on my recommended reading list. Jim Ludwick, CFP(r), MainStreet Financial Planning, Inc., Registered Investment Adviser, Maryland and California
  
  
• An Extremely Informative Read
  By A2A7T3TO6CWGZL on 2006-11-09
  I have read several books which, in whole or in part, deal with asset allocation. This book covers new ground for me and is, without question, the best treatment of the subject I have read. Since asset allocation is about the most important aspect if investing, I recommend it highly.
  
  
• A good book for investors
  By A1D8XAMJ1W3Q5Q on 2007-01-11
  The book explains the process of asset allocation in a clear and concise manner. There lots of examples and graphs that help the reader understand how asset allocation strategies can help improve his return and reduce his risk.
  
  I do recommend this book for investors and others interested in learning the techniques and strategies of asset allocation.
  
  
• Excellent book on portfolios and asset allocation
  By AYGBBB9MRRJU2 on 2007-04-08
  The book is clear and well written, and I heartily recommend it to investors. It will stay in my library.
  
  I will offer a few minor criticisms.
  
  There are very useful Risk/Return graphs offered comparing Wilshire 5000 to FF Value Composite, Wilshire 5000 to Small Value, US Stocks to REITS, and a few other combinations. I would prefer to see the graphs all presented with the same scale so they could be visually compared. I would also like to see the X and Y axis use the same scale so that I could see where the slope passed 45 degrees, and the asset mix began to offer less return for each unit of risk.
  
  
• Real investment plan and advice
  By A1I94CC2VEO67W on 2007-01-04
  The author succeeds in the goal of giving lessons on asset allocation.
  
  He demistify the subject with basic, yet powerful, comments and examples. I have read several books in this field and in the broader investment field, but I would suggest to anyone interested in investing their own money, to read this book first. The website references, suggested reading list and the example portfolios are of great help.
  
  
• Must read for starters
  By A20HZ82ONSQ50S on 2007-05-26
  The beauty of this book lies in explaining volatility and how it affects returns in very simple and no nonsense terms. Lots of graphs are used for demonstration. Though I read a lot about of asset allocation before, this book definitely helped me understand fundamentals better. I recommend this to everyone not associated with investment industry. I would have loved to see some more coverage on dollar cost averaging.
  
  
• Taking asset allocation to the next level
  By ADVLRJS633OTD on 2008-01-09
  Discover how to make your portfolio hit the sweet spot. This book takes your investing to the next level --- the winning level.
  
  I got a lot of valuable information from this book. For one thing, it deals with the allocation of the fixed income portion of the portfolio --- something no other book that I'm aware of has done. And this is important.
  
  There's really nothing that this book doesn't cover when it comes to asset allocation. It certainly helped me to get my own portfolio back in shape.
  
  It talks about your real tolerance for risk --- not those that you get from tests. It says that most of us have less tolerance than we admit. I think that's true. We talk like we can handle a lot of risk when in truth, we can't. This is good to know.
  
  Asset allocation is a critical part of investing. It doesn't matter if you're a small investor or a big one. You need help with asset allocation. And you can't depend on the pros to give you any help.
  
  If you invest at all, you should read this book and keep it handy. You'll need it to guide you from time to time when you reallocate --- as you should and as you need to.
  
  The book talks mostly in terms of index funds. But it can be used for any sort of investing. It's especially helpful, however, for those who invest in index funds, mutual funds and etf accounts.
  
  The one thing the book seemed to lack was an explanation as to how exactly diversification spreads or, one should say, lessens the risk and how each allocation does so.
  
  
  
  
• A superlative book
  By A30T1YF1RE1DS7 on 2006-02-20
  Detailed, concise, with model portfolios and suggested funds. Sums up in one short book a wealth of knowledge.
  
  
• Great Book!
  By A25J74BC4MOSZT on 2006-08-02
  One of the best books I have found on asset allocation. The author displays everything in lay terms while looking to enrich your knowledge base of asset allocation. Great investment read!
  
  
• Best asset allocation book
  By AT0TRAD3Q9JVW on 2006-04-15
  This has to be one of the best asset allocation books I've read. It's to the point and the examples are excellent. I would recommend this book to anybody who is intrested in asset allocation.
  
  
• Buy this book first
  By ALQ0WSWEQOO4Q on 2006-12-08
  This book provides just about everything you need to know about asset allocation. It also has a lot to teach about investing in general. It's a must read for any new investors and provides very good information and examples for the more seasoned players. There's a little something for everyone in this book.
  
  
• Planner approved
  By A383JINZ2G24BI on 2007-05-06
  I am a CERTIFIED FINANCIAL PLANNER(tm) and use Ricks allocation recommendations to build portfolios for my clients. Dana Hornquist
  
  
• This book
  By AQQVPOL6VPVVN on 2007-10-11
  I would consider it a good book for someone who is fairly knowlegable about investments already. If you are a beginner, I think you will find this book a bit confusing. Best of luck.
  
  
• a must have
  By AFHRF9ARYUF84 on 2007-05-15
  If you're going to read one book on personal investing, I highly recommend reading this one. It is very clearly written, while not being overly simplistic, with lots of data and graphs to illustrate key points. I plan to buy copies for my children when they are old enough to start investing.
  
  
• Good Overview
  By A32RH0BKKOCLH1 on 2007-06-26
  This is exactly what I was looking for. This book gives a brief description of the markets that is understandable for a beginner.
  
  The kids are interested in learning about the market and this seems to be understandable introduction.
  
  
• Great book
  By A2ODUVM8PEM82B on 2008-05-19
  This book does a fine job of explaining asset allocation and the fundamental concepts that build a diversified porfolio. Asset allocation is explained very well in relation to portfolio diversification and how rebalancing is essentially the way to increase gains. It explains very well that asset allocation is all about risk management and there is no one size fits all though we can still markup broad categories of similar investor behavior. Market timing is about making a killing by buying in low and selling high however it involves uncertainty given everyone shares similar market information. Rebalancing is market timing without having to chase the market, its buying low and selling high passively though.
  
  All in all, great read and beneficial for all. Lot of practical advice. Its good it came out after the early 2000 tech-stock bubble bursts so it presents the grim reality of investing when your financial plan does not manage its risk and assets.
  
  

• All About Index Funds (All About)
• The Bogleheads' Guide to Investing
• The Four Pillars of Investing: Lessons for Building a Winning Portfolio
• The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk
• The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)