The Art of Asset Allocation : Asset Allocation Principles and Investment Strategies for any Market [Hardcover]

David M. Darst (Author)

Book Description

ISBN-10: 0071379509 | ISBN-13: 978-0071379502 | Publication Date: April 25, 2003 | Edition: 1

An accessible guide to portfolio-enhancing asset management in bull or bear markets

Asset allocation is a crucial and continually popular topic among investors of all types. The Art of Asset Allocation is a practical, hands-on guide that shows finance professionals and individual investors how to achieve an asset balance designed to thrive in a wide range of financial market environments. David Darst, author of the highly acclaimed The Complete Bond Book, provides a comprehensive framework for using asset allocation principles in bull, bear, or non-trending markets. This complete asset allocation guide contains:

• Differences between tactical and strategic asset allocation--and the advantages of each
• Effective tools for determining asset allocation strategies
• Asset class descriptions and historical risk and return statistics for all major asset classes
• Rebalancing guidelines
• Investor behavior analysis
• Practical financial worksheets, charts, and other illustrative tools
• An annotated guide to traditional and Internet-based information sources

Editorial Reviews

From the Back Cover

The All-in One Guidebook for Understanding--and Profiting From--Today's Most Up-to-Date, Market-Proven Asset Allocation Strategies

All investing constitutes a trade-off between the returns you seek and the risks you are willing to take. Asset allocation involves the spreading of those risks in order to minimize their potential impact. Too often, however, even minor misuse of asset allocation principles can adversely affect portfolio performance--and lead advisors and investors to disregard the very tools they need to get their portfolios back on track.

The Art of Asset Allocation is today's most comprehensive and hands-on guidebook for using asset allocation principles to dramatically improve the performance of virtually any portfolio. Written by one of today's top asset allocation practitioners and experts, it provides you with:

• A comprehensive explanation of the asset allocation process
• Clear, readily graspable diagrams and illustrations
• Step-by-step guidelines for choosing the best asset allocation strategies
• Descriptions of the risks and rewards of all the major asset classes
• Insights into behavioral influences on investors' decision-making
• Analysis of important asset allocation rebalancing techniques
• Detailed matrices and worksheets for determining optimal asset allocations

Asset allocation can be used by anyone, regardless of background, to aim for successful returns and protect those returns in today's changing marketplace. Let The Art of Asset Allocation provide you with everything you need to make allocation a key part of your overall investment strategy, and reduce or eliminate costly shortfalls in both your short- and long-term portfolio performance.

"Unique in its coverage and innovativeness, The Art of Asset Allocation furnishes a comprehensive array of tools, charts, illustrations, matrices, worksheets, and practical guidance designed to illuminate: (i) the basic principles of asset allocation; (ii) the mechanics of asset allocation, (iii) the behavioral underpinnings of asset allocation; (iv) the essential characteristics of each of the 16 major asset classes; (v) a series of approaches to financial markets analysis; and (vi) matrices and worksheets designed to successfully carry out asset allocation on an ongoing basis..."--From the Foreword

Asset allocation has long been a popular tool among financial professionals for improving risk-adjusted return in all market environments. But new tools, asset classes, and approaches have profoundly transformed the allocation process, with critical implications for everyone from investors with relatively modest portfolios to high-asset individuals and professional advisors responsible for tens or hundreds of millions of dollars.

The Art of Asset Allocation details how you can use modern asset allocation concepts and tools to augment returns and control risks in every market climate--bull, bear, or non-trending. This all-encompassing book will provide you with the knowledge you need to most effectively employ modern asset allocation techniques, whether you are a newcomer to asset allocation and read the book from cover to cover or an experienced asset allocator seeking primarily to update your body of knowledge on the topic. In-depth treatment is given to all aspects of effective asset allocation, including:

• Basic meanings, principles, and pathways of asset allocation
• Dozens of clear and insightful charts and illustrations
• Mechanics and frameworks of asset allocation
• Analyzing assets' rates of return and the behavioral underpinnings of asset allocation
• Essential risk and reward characteristics of each of the 16 major asset classes
• A series of approaches to financial markets analysis and rebalancing
• Worksheets to profile the investor, the investment outlook, and potential investments

Successful long-term investment performance is rarely a matter of luck or timing. Rather, it is a function of thoughtfully and prudently choosing a portfolio of investments to minimize risk while maximizing return, and strategically and tactically rebalancing assets to reflect changing markets, the creation of new asset classes, and the global investment outlook. In a logical and straightforward way, The Art of Asset Allocation can show you how to use asset allocation to improve your portfolio performance, regardless of your investment time frame or portfolio size, in every market environment.

About the Author

David Darst is a CFA Charterholder, a member of the New York Society of Security Analysts, a Managing Director and Chief Investment Officer for Morgan Stanley Private Wealth Management, with responsibility for asset allocation and investment strategy, and was the founding President of the Morgan Stanley Investment Group. A highly sought speaker, Darst also wrote The Complete Bond Book and The Handbook of the Bond and Money Markets. A graduate of Yale University and Harvard Business School, where he has served as a visiting faculty member, Darst has authored numerous articles which have appeared in financial publications including Barron's, Euromoney, and The Money Manager.

Product Details

• Hardcover: 400 pages
• Publisher: McGraw-Hill; 1 edition (April 25, 2003)
• Language: English
• ISBN-10: 0071379509
• ISBN-13: 978-0071379502
• Product Dimensions: 9.1 x 6.1 x 1.5 inches
• Shipping Weight: 1.7 pounds
• Average Customer Review: 4.2 out of 5 stars  See all reviews (12 customer reviews)
• Amazon Best Sellers Rank: #1,052,835 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

101 of 110 people found the following review helpful:

4.0 out of 5 stars Another Asset Allocation Book, September 1, 2003

By 

James H. McDuffie (Huntsville, Alabama United States) - See all my reviews
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This review is from: The Art of Asset Allocation : Asset Allocation Principles and Investment Strategies for any Market (Hardcover)

There is one amusing fact about this book in particular. It is obvious to the sophisticated investor that the author works for an investment house that has something to sell. No attempt is made to directly sell anything but it definitely is an attempt to show the average investor why he needs someone else to do his asset allocation. Hardly a guide to indexing, the author advocates tactical allocation as well as strategic allocation. The problem with this is that tactical allocation is little more than trend following in the guise of asset allocation. Since the market has been down and many have had their rear ends shot off by the market asset allocation is the byword of the day. More sophisticated asset allocation advocates have long realized that their art hardly appealed to the masses. The addition of the ability to knob twiddle the allocation is an attempt not only to add a little spice to the mixture but to also advocate the need for an advisor. From what I can see the bait is being taken. William Bernstein advocated a little tactical reallocation on occasion in the guise of rebalancing. Rebalancing is great and necessary but trying to optimize the portfolio to catch the next wave is a fool's errand. Darst is somewhere in the middle of this argument. That said, the book contains some useful information. There is a description of the various asset classes and their advantages and disadvantages which is excellent. Those who are looking for an real estate investment handbook will be disappointed however. The calculation of alpha is described and mean variance optimizers are discussed (there is even a little about their limitations). The entire book reads a little like a sales brochure. Complicated graphical and pictoral representations are used to present simple ideas. Some of the statistics is biased towards what you would expect from a financial advisor. Most of this is subtle and may not be deliberate on the part of the author. But it is fascinating to compare this information with that of Bernstein and realize that even if it is unconcious an attempt is being made to create a dependency. Once a salesman always a salesman? Anyhow, this book combined with the Intelligent Asset Allocator and Gibson's Asset Allocation will be all any investor needs to properly allocate their wealth without an advisor if so desired. But anyone who read widely about asset allocation will also realize that no book will tell them how to allocate their assets: it is an art. Mean variance optimizers are mostly useful for educational purposes. Also not all of the asset classes discussed are appropriate for anyone let alone the rich. Just remember the concept of the whale.

34 of 40 people found the following review helpful:

3.0 out of 5 stars Too many generalities and not enough useful information, June 18, 2003

By 

Robert Sczech (Jersey City, NJ United States) - See all my reviews

This review is from: The Art of Asset Allocation : Asset Allocation Principles and Investment Strategies for any Market (Hardcover)

This is a well written book which is easy to read. However, if you wish to learn how to allocate your capital among the many different asset classes, this book is a great disappointment. After reading all the 396 pages, I still do not know how to allocate my savings. The author lists and explains well what the principal asset classes are, but when it comes to the question how to actually allocate the given capital, the ultimate advice seems to boil down to the empty statement "according to your own personal preferences". Asset allocation is indeed an art and not a science. It depends on a very large number of factors which the author explains well. Evaluating these factors is ultimately left to intuition. The whole process is described using a lofty language like "Self-Awareness, management of feelings, motivation, empathy, confidence, intentionality, self-control" (page 199).
The greatest deficiency of the book is however the emphasis on diversification among financial assets (stocks, bonds, commodities). Farmland, precious metals and other alternative assets are mentioned but not treated fully. Furthermore, no attention is given to the fact that maintaining and rebalancing a portfolio of various assets is expensive (in terms of transaction costs and life-time involved). To sum up: I regret having bought this book.

10 of 11 people found the following review helpful:

3.0 out of 5 stars Too little, too much, November 9, 2005

By 

Charles F. Davis (Northern VA) - See all my reviews
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This review is from: The Art of Asset Allocation : Asset Allocation Principles and Investment Strategies for any Market (Hardcover)

This is a good 50 page book concisely wrapped in 375 pages. The author obviously uses most of the material in lectures/workshops, as the graphics are powerpoint and each page seems to require a list of i), ii), iii), etc. Some material on asset classes is good but it takes a lot of plowing to find those gems. I agree the author seems more intent on coaxing you to use an advisor, like himself, and to try and time the market (oh if only we could.) For an average investor, as I consider myself, I think a book like "Asset Dedication" by Huxley and Burns makes far more sense and better reading.