30 of 30 people found the following review helpful
on December 19, 2012
The title derives from hockey great Wayne Gretzky's quote, "A great hockey player skates to where the puck is going to be."
Bernstein uses the hedge fund industry to illustrate the herd skating to where the puck was. Bernstein observes that the early hedge-fund adapters, such as Yale University's endowment, could exploit alpha and earn excess returns. Yet once the strategy became popular and a couple of trillion dollars was chasing it, the puck "moved." The institutional money that chased hedge funds ended up with costs much higher than the little bit of alpha that remained. To make matters worse, correlations increased, and most hedge funds zigged at the same time stocks did the same.
This is the second installment in Bernstein's brilliant series in investing for adults. It's not for novices or those that want to believe there is some magic way to earn high returns without risk. To be a successful adult investor, Bernstein makes a compelling case to be early, be far-sighted, and be patient.
I can't get enough of William Bernstein's insights!
11 of 11 people found the following review helpful
on February 10, 2013
This essay is very short (about like an in-depth magazine article) but I found it very insightful and occasionally brilliant. The key insight is that once an investment is both known and widely available without great inconvenience and transaction costs, it won't provide the returns that made it famous in the first place. I thought I already understood this, but not at the level that Bernstein explains it here. It's a great read for serious investors.
8 of 8 people found the following review helpful
on January 23, 2013
Bernstein is one of the best writers on personal finance, a Bill James/ Nate Silver of finance. He can find the key principles and provide a proper perspective on investing-- not to maximize your net worth, but to avoid ending up eating dog food. Here he tackles asset allocation, which has been long identified as the key decision for optimizing return and minimizing risk. Here he reveals how many asset categories have become highly correlated, decreasing the benefits of most traditional diversification strategies. Some of the discussion gets technical, but you come away with a better understanding of what you can do about asset allocation today.
5 of 6 people found the following review helpful
on March 5, 2014
I love William Bernstein and agree with 99% of what he says (and it's how I invest personally). However this shouldn't be a book. This should easily just be a chapter in a book, so i feel taken.
Granted it was my own fault for not fully investigating this "essay" before purchasing it. But come on man, this is WAY overpriced for what it is.
4 of 5 people found the following review helpful
on June 27, 2013
Again, I want to start by saying Bill Bernstein is, without a doubt, my favorite personal finance and/or investment author. So, generally speaking, of all of his investment related writing, this is the only piece I would even begin to consider scoring 3-star. So, I'm going to briefly state why I scored this one 3 star (instead of something higher) as I admit it has been 2-3 months since I read it:
My general issue with this book was that it basically said, in short, that all of the investment strategies, including the previously less-well-known "alternatives" have been exploited to the point that there is really no way to have a competitive advantage in portfolio construction. It was no negative, in fact, that the book cast doubt as to whether even typical portfolio construction, such as those often touted by the boglehead community, would be successful. If I'm remembering correctly, he practically went so far as to say, perhaps consider tossing in the towel on all of that, and start a private business, or something similar, meaning that success in "passive investing" only may indeed be a thing of the past.
If you ask me, I think that is way too pessimistic, especially if one were to study global stock valuations in relation to historical figures. In real application, I know I have personally averaged well over 12-13% the past 5-6 years or so in my globally diversified portfolio. Though I fully willing to take him at his word that "yale" models have done poorly recent years, I'm relatively sure mine is someone similar to those models and I have been double digits return every since 07'. So I'm at a loss as to where the inconsistencies lie between his figures on "Yale" model and my personal success with my portfolio.
What was good about this book (why 3 stars instead of 1?)? Well, it at least accomplished it's general purpose, which was to simply raise awareness that by the time the masses have discovered a way to make "alpha", it is usually too late to get some yourself. Though I agree with that concept, generally speaking, I also still agree that a properly diversified portfolio, rebalanced appropriately, can still be effective in the long run. So far, this has been true for me, and I even started investing in 96'.
So it's "OK". Is it worth buying? I don't regret it. Even Bill has admitted that it's not for everyone, so I hope he doesn't take that much issue with this review.
2 of 2 people found the following review helpful
on August 13, 2013
This is a short discussion of the problems of correlation aspects in investing. It reviews the problems with viewing different sectors of the investing universe as uncorrelated. Bernstein shows that this is a temporary situation, because as soon as an uncorrelated asset is discovered money shift into the asset to such a large extent that the asset soon becomes correlated with the majority of the market. As with several of his other books, he looks, briefly, into the history of correlation, in this case hedge funds & commodity funds. Well worth reading.
2 of 2 people found the following review helpful
on January 17, 2013
I don't disagree with either of the 2 other intervals but the failure of commodity futures as diversification and the fall of the Yale type alternative investment approach n are well known t many of us. Bernstein explains that asset classes are more correlated than in the past. I read all of Bernstein's book and this one offered fewer insight than some of the others.
1 of 1 people found the following review helpful
on March 21, 2013
Short, concise, and illuminating. Once again Bill Bernstein summarizes investment ideas into.terms accessible by anyone. No math required. Highly recommended!
on October 14, 2014
Skating to Where the Puck Was is part of William Bernstein's series called "Investing for Adults". I did not consider the previous book I read in the series, Deep Risk, to be worth the trouble, but I have a different opinion of this book.
Bernstein points out that in many cases, by the time an asset class is widely accessible to the masses for investing, it has lost most of the attractive properties it used to have, therefore rendering the asset class much less interesting. The first example he uses is from David Swensen's Pioneering Portfolio Management: the Yale Model, with its reliance of alternative assets, including hedge funds and other such, returned outsized success until it became widely known and copies, at which point it stopped yielding those outsized returns.
Similarly, he points out that recently, an individual investor could make outsized gains in the housing market by buying up houses and renting them for profit, but doing so would have required that you make a full time job (or serious side job) out of it, not by merely investing in an REIT. Similarly, the Japanese stock market returned incredibly high yields when John Templeton bought into it very early. So early, in fact, that when he first bought shares in the market, they could not even be taken out of the country! By the time generalized Japanese stock funds became available, the return on those funds going forward was dismal. The result, Bernstein says, is that:
if your portfolio looks like the Yale Endowment's, then you're likely to find yourself chairless when the music stops. Diversifying is easy; doing so early is difficult.
The solution? Boring old asset allocation and staying in the market for the long haul. There a really is no Santa Claus, and no tooth fairy, unless you're the next John Templeton and have the courage to get in ahead of the crowd. (And even then, there's no guarantee that you're not the next Bill Miller instead)
The book repeats stuff you probably already know as an investing adult, but the stories inside are worth a quick read and the book is cheap. Recommended.
3 of 4 people found the following review helpful
on January 2, 2013
If you do what everyone else is doing, you can't possibly expect to do better than everyone else, right? This is the premise of this little treatise. WJB makes the case clearly and convincingly but leaves you wondering - Where do I go from here?