Customer Reviews

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

5 star:		(6)
4 star:		(3)
3 star:		(3)
2 star:		(0)
1 star:		(0)

 

 

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.

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.

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.

This book reads a little too much like a textbook. If I was a financial advisor, I would probably see more value in it. I preferred William Bernstein's "Intelligent Asset Allocator" to this book. Bernstein talks more directly to the small investor.

There are generally two audiences who read financial books and publications: Financial practioners and the rest of the population who is interested in money & investing. It is quite rare and, in my opinion, undesirable for a finance book to try to speak to both audiences simultaneously.

Darst works for a premier financial firm that specializes in helping those who are already rich get richer. It stands to reason then that his analysis, stemming from his professional expertise, would be at a high level from the gate.

I give this book 5 stars and reccomend that only financial practioners or investors who already possess a high level of understanding attempt to read it. The author states at the beginning of the book that investors with little capital (who are at the beginning of the wealth accumulation cycle) keep it simple. You do not need this book if you have less than $100,000 of investable assets. That is not to say that you shouldn't read it in preparation for future financial success. The asset allocation methods in this book are designed to grow/protect/diversify an already significant pool of funds.

For those who have prospered financially, consulting a financial advisor is really the only prudent course of action. But, like anything else in life - Chance favors the prepared mind.

I think some of the other reviewers are missing the point of this book. Does he suggest an advisor?, yes. Do you absolutely need an advisor?, no. But if you were sued tomorrow for all that you had, would you crack open the law books and get ready for court or would you hire someone who is a professional. Now I will admit the area of financial advice is laden with salespeople...there are bad doctors, lawyers(that goes without saying...haha), even teachers, and priests....but there are also people who know what they are doing and talking about. I think it would be useful to you to read this book, not trying to become an expert, but rather to serve as your guide to find an expert. This book will teach you the jargon and philosophy of a prudent investor...ask a few questions from the book and quickly you will see who is an advisor and who is a salesperson.
and For those of you on the real estate kick let me remind of three things...1) history is a good teacher, while not perfect history does show more reward for equities than real estate but buy at least one house, 2)things always revert to the mean (if you don't know what this means please buy this book now), 3) this time is NOT different. And yes my house has doubled in the last two years too. Find great investors and learn from them.

Decades of research by scholars and financial practitioners have generally supported the reasonable counsel "don't put all your eggs in one basket." But it is one thing to advise investors to diversify, and another to show them how. Author David M. Darst outlines a systematic approach to parceling out your savings among different investment assets. There's a science to asset allocation, though its principles are not immediately apparent. Darst treats these precepts with admirable thoroughness in a book that is, mostly, accessible to an educated layperson. But brew some strong coffee. Readers lacking a business or finance background may find the theoretical discussion difficult and tedious, particularly given the deliberate style. However this 2003 book follows one of the most dramatic periods in stock market history, the 1990s, when even sophisticated market watchers wondered if the sound financial principles cited here still applied. The ensuing bear market made it clear that the laws of risk and return had not yet been repealed. In this atmosphere, We welcome this solid explanation of risk and return.

This is the premier primer on asset allocation. David Darst takes a truly complex issue facing every investor and breaks the whole into easily digestible parts. One finishes the book feeling confident and competent. The worksheets are illuminating, the charts are clear, the text is articulate, interesting and comforting. Anyone who is afraid of the daunting task of investing in this complex world of derivatives and ETFs and hedge funds will find this book a clear map of how to proceed in small steps to create a portfolio which is geared towards one's own risk parameters and return requirements.

This book does a great job at explaining how you can use modern asset allocation concepts and tools to increase returns while decreasing risk. This book however, does not give the average investor the "magic formula."

The Art of Asset Allocation stands as the guide to asset allocation - and so much more. So, in finance, asset allocation is what it is ALL about. I actually didn't realize the extent to which this was true until I finished Darst's book. What incredible learning! My book initially fell open at page 216 - I first read through page 246 - in my view, these 30 pages are the tour de force of the book, as Darst expertly describes - in the most clear, crisp, this-is-it terms, for every asset class, definable characteristics, rationale for investment, and risks and concerns. Would that my finance professors had had Darst's book!

Darst's book has been termed an indispensable map of the Wall Street investing landscape, and indeed, this is not hyperbole. Not only does Darst take the reader through this important topic sagely, wisely, and comprehensively, Darst makes the topic entertaining and highly interesting. What a persuasive writer. What a treat you have in front of you! I find such fantastic writing rare among even the most well known authors and especially unusual among business writers - his style carries you through the book, from "Understanding Asset Allocation" to "Financial Market Analysis and Investment Insights." To boot, the book is quite tactical - I've already made some shifts in my portfolio that I expect ultimately to be quite fruitful and productive.

In particular, I found particularly useful "Establishing a Quantitative and Qualitative Decision Framework" and the "Foundations of Asset Allocation" - the exhibits throughout the entire book, in fact, are worth their weight in gold and if you literally only had time to read the exhibits in the book, you would be far better off than before! I recommend reading the chapters sequentially for nine days over coffee and pancakes (a different type every day) - that's what I did for the last nine mornings and I feel immeasurably better off. I learned most about asset under- and over-weighting and asset class weightings in varying economic conditions, and look forward to making more changes in my portfolio based on my vast recent learnings. Run, do not walk, to get this book! While ordinarily I advise getting books at the library, this is a book one must own and pass on to future generations.