Customer Reviews

Asset Allocation, 4th Ed

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

 

 

Asset Allocation is a well written informative book. It explains the theory behind allocation strategies and the math and examples are comprehensible for readers, such as myself, without a formal finance background. The book stops short of recommending specific allocation plans for the reader, but it certainly gives the raw tools for the reader to make more intelligent choices about proper diversification methods.

Why is a long-term, successful portfolio constructed the way it is? Read this classic for the answers. After our recent market melt-down and the subsequent rebounding trend, re-read it! Whether you are in the business or a serious investor that wants to be in the know; this is the book for you. Even though I've been through a CFP(r) prep program and have passed the CFP(r) Certification Exam, I don't profess to know it all - especially not in-depth in certain areas. This is a book that I'll revisit over the years. Mr. Gibson is an acknowledged expert in the field and I learned much from this up-to-date edition.

Many popular investment books give advice on asset allocation, perhaps THE key aspect of successful investing. While most of that advice seems reasonable, the books do not all agree with each other. This is understandable because authors make different assumptions about the typical investor's situation, or perhaps address a few different representative investor situations.

If you know about asset allocation, asset classes, diversification, indexing, correlation, market capitalization, and other related investment concepts, Gibson's book may surprise you with how much more there is to know, and I don't simply mean more facts or the latest trends, but instead more and deeper understanding of the basic concepts. It will make good reference material to help you evaluate any advice you get elsewhere.

Gibson's book goes pretty deep into the theoretical, mathematical, and historical underpinnings of all the concepts that are more lightly covered (or skipped) in most popular investment books. It gives you the skill to establish an appropriate asset allocation instead of laying out a few for you to pick from.

The book seems to be mostly aimed at financial advisers to give them the means to educate their clients so the clients can understand the advisers' advice -- and to help the advisers give good advice! I think Gibson does an excellent job of presenting this difficult material in an organized and understandable way. After all, he is trying to teach the teachers! Even so, it requires careful study to get through since the subject matter is non-trivial.

I am somewhat surprised at how few reviews there are for this book. Perhaps this is because it is written for professionals rather than the general public. But you do want to be your own investment adviser, right? If so, this is the book for you.

If you plan to consult with an investment adviser I recommend you read this book before hearing any of the adviser's advice. You will be well prepared to ask good questions and to understand the answers. So I guess this book is for you even if you DON'T plan to be your own adviser!

It has many great incites. The problem is there are not enough details on how to actually create your own portfolio. The climax of the book is the Investment Planning statement in the Appendix. The purpose of the book is to help you create a Financial Planning Statement for yourself. The problem is the book is not detailed enough for you to do that.
I suggest a much better source is Brigham Young University personal finance web site.
From that site you can download a fill in the blanks template for your Financial Planning Statement. Plus the supporting tutorials on that site are great. And they are free.
Also the book is really vague about how you actually pick a fund. Brigham Young provides a detailed screen by screen example of how to pick funds using Morning Star's Fund filter. The example Investment Policy Statement in the book is in fine print which cannot be scanned. There is no web site to download it from.
Chapter two drove me nuts. I could not make sense of all the terms that were introduced without supporting clear definitions or examples. Page 31, 32 are beyond my comprehension. After much Google time I found that Money Chimp is the place to go if you want to understand Yield to Maturity of Bonds. The fundamentals Mr Gibson's teaches are great but he need provide more help with the details.