The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets (Hardcover)

~ Mebane T. Faber (Author), Eric W. Richardson (Author)
Key Phrases: policy portfolio, foreign stocks, foreign developed stocks, Super Endowments, Sharpe Ratio, Real Estate (more...)

Editorial Reviews

Product Description

A do-it-yourself guide to investing like the renowned Harvard and Yale endowments.

The Ivy Portfolio shows step-by-step how to track and mimic the investment strategies of the highly successful Harvard and Yale endowments. Using the endowment Policy Portfolios as a guide, the authors illustrate how an investor can develop a strategic asset allocation using an ETF-based investment approach.

The Ivy Portfolio also reveals a novel method for investors to reduce their risk through a tactical asset allocation strategy to protect them from bear markets. The book will also showcase a method to follow the smart money and piggyback the top hedge funds and their stock-picking abilities. With readable, straightforward advice, The Ivy Portfolio will show investors exactly how this can be accomplished—and allow them to achieve an unparalleled level of investment success in the process.

With all of the uncertainty in the markets today, The Ivy Portfolio helps the reader answer the most often asked question in investing today - "What do I do"?

Mebane T. Faber, CAIA, CMT (El Segundo, CA), researches and manages a number of quantitative strategies at Cambria Investment Management, including equity and global tactical asset allocation portfolios.

Eric W. Richardson, JD (El Segundo, CA), is the founder and President of Cambria Capital, LLC, a FINRA member investment banking and securities brokerage firm.

From the Inside Flap

Over the past twenty years, the Yale University and Harvard University endowments have achieved unprecedented investment success. Since 1985, the Yale University endowment returned 16.62% per year, easily surpassing the S&P 500 Index's 11.98% return. The Harvard University endowment returned over 15% a year—and both endowments achieved these results with significantly less volatility than the S&P 500.

Despite the general success of the top endowments, 2008 proved difficult for many buy-and-hold investors as well as the endowments. Many asset classes finished the year with declines of 30% or more.

The Ivy Portfolio shows how individual investors can mimic the stellar long-term investment track records of these top endowments while avoiding bear markets like 2008.

The Ivy Portfolio begins by examining the theory, process, and discipline behind the success of the Yale University and Harvard University endowments. It demystifies the techniques that the ivory-tower academic practitioners use to manage their portfolios and shows step by step how an individual investor can hope to duplicate their returns using an innovative ETF-based investment strategy.

The Ivy Portfolio then demonstrates a simple tactical asset approach to dampen the impact of bear markets on long-term investment results. The model would have protected an investor from the carnage of 2008, all while eliminating the uncertainty and emotions of investing.

The Ivy Portfolio also showcases a method to piggyback the stock-picking abilities of top hedge funds, allowing investors to achieve greater success by following the valuation insights of the smart money.

The Ivy Portfolio will show investors exactly how all this can be accomplished—and allow them to achieve an unparalleled level of investment success in the process.

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Product Details

• Hardcover: 240 pages
• Publisher: Wiley (March 30, 2009)
• Language: English
• ISBN-10: 0470284897
• ISBN-13: 978-0470284896
• Product Dimensions: 9.1 x 6.3 x 1.1 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (42 customer reviews)
• Amazon.com Sales Rank: #5,054 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

38 of 41 people found the following review helpful:

5.0 out of 5 stars This is the best book on investing I've read in years, March 30, 2009

By	J. B. Williams (MA USA) - See all my reviews (REAL NAME)

Most investment books are disappointments because of one or more of these characteristics: inflated (would have been a good magazine or journal article, but doesn't deserve a book); obscure because information is withheld (in order to sell a newsletter, software, or service); obscure because it is poorly written; subjective (not data driven); or just plain wrong.

The Ivy Portfolio has none of those problems. "Not bad" isn't the same as good, but this book is good. It is full of ideas and useful information; the disclosure is extensive, allowing reproducible results; it is well written; it is data driven; it is right based on the historical evidence, and I think the recommendations will prove to be robust.

Under the theme of learning best practices from the most successful investors, Ivy has not one but three big ideas: do what the "super endowments" do (diversify into additional asset classes); employ systematic timing to reduce risk; follow the best investment managers. A non-professional (but responsible) investor will understand how to do these things after reading Ivy, and I believe will do much better than buy-and-hold management (or in practice, "winging it"). It won't take much time or special resources to manage an Ivy Portfolio. The companion website, www.theivyportfolio.com should be a good adjunct.

Any concerns? I suggest that more discussion about pitfalls in choosing ETFs to implement the less familiar asset classes would be good. More importantly, the underlying idea is patterned after endowments and hedge funds. The typical individual investor has a time horizon and risk profile driven by the life cycle: accumulation, transition, decumulation (systematic withdrawal to provide retirement income). Individuals benefit from investment volatility early in their savings career, yet volatility is treacherous for retirees, particularly in the early years of retirement. Endowments don't die. Addressing possible mismatches between management based on institutional models and the individual's situation would be helpful. Academics and quants might look for discussion of the statistical significance of the findings here, but I am satisfied with the case the authors make for the economic significance of their ideas.

Bottom line: a curious or thoughtful investor will find this book well worthwhile.

18 of 20 people found the following review helpful:

4.0 out of 5 stars Improved Version of the Ivy Approach, May 20, 2009

By	C. C. Lin (NY/NJ USA) - See all my reviews (REAL NAME)

An excellent book overall. It encourages investor to look beyond the general stock and bond portfolios and to consider real estate and commodity as assets classes in their portfolios. The recommended approaches are highly actionable. The methods worked well so far into 2009.

Here are lists of minor complaints:
* It assumes that investors have a good knowledge about various ETF's, which may not be the case. It does not shows the holdings in VEU (FTSE All Word ex US ETF), which contain Nestle, BP PLC, Total SA, HSBC and Novartis etc. It does not show the composition of DBC (PowerShares DB Commodity Track) which contains 34% WTI crude oil, 17% gold, 17% heating oil, 14% wheat, 13% corn and 11% aluminium.
* Some of the recommended ETF's are very thinly traded. There are better alternative vehicles. For example, it recommends EWX (SPDR S&P Emerging Markets Small Cap) for emerging market small cap. EWX is trading about 7,000 shares a day and only has $7 million of assets. A better alternative is DGS (WisdomTree Emerging Markets Small Cap Div) which is trading around 22,000 shares a day and has $52 million in assets.
* 10 month moving average is not easy for average investor to obtain. A readily available alternative is 200 day moving average. 200 trading days equate to 9 months and 1 week. The information is available on Yahoo Finance Chart.

16 of 18 people found the following review helpful:

5.0 out of 5 stars Builds on a Strong Foundation, March 30, 2009

By	Shrink Rap (USA) - See all my reviews

I have been utilizing the author's Simple Ivy Portfolio Timing Model since early 2007 in several investment accounts and have been very happy with the results during this bear market.

Don't be misled by the title. There have been a number of books written in the past few years on the subject of successful endowment fund managers and the use of alternative asset classes (most not available to the small investor). While there is a very good discussion of the Harvard and Yale Endowment Funds, the heart of this book is a well laid out step by step explanation of several methods for improving returns and managing risk that are easy to follow and implement with a discount brokerage account. While some of the information is available on the "World Beta" web site, the book is a much easier and complete way to set about using the models and strategies.

Among other useful features I appreciate in a "how to" book that this book contains is a bullet point summary at the end of each chapter.