Most helpful critical review
12 of 14 people found the following review helpful
Good insights, but slighty inconsistent philosophy
on January 16, 2011
Overall, this is a good book about the benefits of diversification and how to apply it in your own investing. However, I was surprised the author was slightly inconsistent with his own investment philosophy.
For example, the author persuades you the 7Twelve investment philosophy is superior because historical returns/risks say so. Additionally, there is a section in the book where he compares past returns/risks between a 7Twelve "passive" strategy (using index mutual funds) vs. the 7Twelve "active" strategy (using actively managed mutual funds). According to the author's own data, the "active" 7Twelve strategy consistently resulted in superior returns than the "passive" 7Twelve strategy (with comparable risk as well).
Ironically, the author still stated he prefers implementing the 7Twelve portfolio using index funds (passively managed). I found this strange since the author bases his arguments entirely off past returns, yet the historic evidence presented suggests the active strategy is superior. This inconsistency was a disappointment, and it makes me wonder why the author doesn't stick to his guns on "what the data show."