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203 of 205 people found the following review helpful
5.0 out of 5 stars How's Your 401(k)? Do It a Favor -- Read This Book
I would have to agree with John Bogle's endorsement: "This is a great book!"
While Malkiel's Random Walk covers Modern Portfolio Theory, Bogle covers the virtues of index investing, and Graham, Lynch and Fisher cover individual stock selection, studies show that asset allocation alone is responsible for over 90% of a portfolio's performance in the long run. Yet asset...
Published on August 29, 2001 by Scott Snyder

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14 of 15 people found the following review helpful
3.0 out of 5 stars Parts are good
This book describes how to invest in a combination of asset classes (stocks, bonds, USA, Europe, Emerging Markets, etc.) for the purpose of maximizing return and minimizing expected volatility. After you have decided upon your target allocation amongst these asset classes, the book then recommends rebalancing your portfolio annually, which means you should sell some of...
Published 18 months ago by Ratatosk


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203 of 205 people found the following review helpful
5.0 out of 5 stars How's Your 401(k)? Do It a Favor -- Read This Book, August 29, 2001
By 
Scott Snyder (Northern California) - See all my reviews
(REAL NAME)   
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
I would have to agree with John Bogle's endorsement: "This is a great book!"
While Malkiel's Random Walk covers Modern Portfolio Theory, Bogle covers the virtues of index investing, and Graham, Lynch and Fisher cover individual stock selection, studies show that asset allocation alone is responsible for over 90% of a portfolio's performance in the long run. Yet asset allocation theory seems to me to be under-represented in the investment literature for non-professionals.
Bernstein's book goes a long way to correct this gap. He starts out almost too simply. Bernstein takes the reader step-by-step through a discussion of basic financial math and statistics (hitting variance and correlation coefficients in particular) as he builds the case and explanation behind asset diversification. He writes to an intelligent audience but does not assume a mathematical or financial background. I like that he encourages the reader to take a chapter at a time. He instructs the reader to finish the chapter, and then put the book down and get back to life. This adds to the methodical tone of the book: a step at a time.
In the final chapter "Odds and Ends" the author changes gears. Suddenly we are in the world of - well - odds and ends, the finer points of portfolio management. This was the most interesting part of the book for me. Here Bernstein reviews the case for index investing and - of special interest to me - value investing. What is the premium in returns for small vs. large caps, value vs. growth? Which MPT stat, P/E or P/B is the better predictor of future performance? Why is value averaging so important and yet so counter intuitive? This chapter alone was worth the price of the book.
Finally, Bernstein shares the wealth. The bibliography and recommending reading sections are terrific. This alone might be worth twice the price of the book.
In a time when we are all more intimately involved with the management of our retirement accounts, I cannot recommend this book highly enough to anyone and everyone. You cannot afford not to be familiar with the contents of this book. Highly recommended.
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297 of 313 people found the following review helpful
5.0 out of 5 stars A Word From Somebody in the Know, October 18, 2000
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
I'm quoted on the back cover of Bill's book.
In my quote, I admit that Bill's smarter than me. True enough--but that doesn't really indicate that the book is any good. After all, a whole lot of bright people in financial services have written books, most of which are hazardous to your wealth.
Bill's book is different because Bill's personality is different. First, he's honest. He wants to be correct, not to get his hands on your money. Second, he has no apparent ego. If he believes something and you convince him otherwise, then he will happily change his belief. The first trait is uncommon among smart people who work in financial services. The second is rarer still.
This book isn't especially difficult to read but its concepts are profound. If you understand it, you will know more about the fundamental principles of investing than 99.9% of all MBAs and Chartered Financial Analysts. Eventually, I suspect, you'll end up richer for your troubles, as well.
Caveats. This book isn't for stock traders or anyone else who believes that they can get rich quickly. In addition, it's not beach reading. Although Bill writes very clearly and well, the book does take on serious material, so it demands serious attention. If you don't like to think, you won't enjoy the book.
If you're still with me, buy the darn thing!
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96 of 99 people found the following review helpful
5.0 out of 5 stars The Intelligent asset allocator, November 29, 2001
By 
john a horstkamp (duluth, mn United States) - See all my reviews
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
This is a superb investment book. Bernstein first covers basic statistical topics and historical risk and return data for stocks, bonds and bills. He then presents a lucid discussion of portfolio theory and its applications for the small investor. The most important result of this theory is that the risk and return of a portfolio are very different from the risk and return of its constituent parts, so that adding a 'risky' asset to a portfolio can actually decrease the portfolio's overall volatility. This discussion requires only minimal mathematical background. Bernstein then takes on the controversial topic of market efficiency. He also describes stock valuation models, current valuation levels, growth and value investing, Fama and French's three factor model, the concept of the efficient frontier and numerous other important topics in finance. But the discussion throughout is very clear and understandable as well as practical. After making a compelling case for index investing with periodic rebalancing, Bernstein presents helpful Vanguard and DFA model portfolios. What the author has done is to take the most significant results from academic finance and translated them into English for the individual investor. He has done investors a great service.
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105 of 111 people found the following review helpful
5.0 out of 5 stars A classic investment book in the making, October 13, 2000
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
ONE CLICK THIS BOOK NOW
Few investment books rarely deserve our time and attention but this is a "must read" for novice and experienced investors alike.
If you've read anything by Bogle, Malkiel, Swedroe or Graham, then you'll appreciate Berstein's book. And given the current market situation and volatility, your nerves will be calmed by what Berstein has to offer.
The arguments are cogent and the text is well-written which makes this book easy to read again and again. And best of all, you can act on his recommendations for how to get started on constructing and re-balancing a diversified portfolio.
What's the big message to grok then from reading this book? (Let me whisper this to you very quietly so as not to disturb the brokerage and fund managers). Stock picking and active fund management are not as effective (consistently) as simply buying and holding a diverse set of asset classes. Most of which can be assembled and maintained using low-cost index funds. (Bernstein also points out the importance of low transaction costs and fees on performance/returns).
You may have heard this before but Berstein has done the hard part and now explains in detail why this is the case if not the law of intelligent investing. Is this case, what you don't know about investment risk will hurt you.
But the bigger message is that market risk is real. Asset values go up and down. However, by applying intelligent asset allocation, your individual portfolio risk can be managed (even minimized) while at the same time achieving reasonable rates of investment return. In other words, owning and investing in a diversified set of assets is the single most important investment policy decision you will make. Period.
Imagine that. Stock picking and hot hand mutual funds don't work as effectively as a diversified portfolio of index funds in the long run. And this is key because intelligent investing is all about time. Buying and holding a diversified portfolio for long periods of time. And most importantly, maintaining a disciplined approach to asset allocation and re-balancing on an annual basis.
Who should read this book? For starters, anyone who has won the big prize on Who Wants To Be A Millionaire? Read this book before you call a broker.
Secondly, any individual managing their own investments and/or 401K investments.
Finally, to all reformed stock pickers and chartists: do you want to sleep better at night? Read this book as well as Swedroe's book. As much as we would like to have our own black box trading systems to out perform/hedge the market, it probably isn't going to happen on this planet. Just ask the folks at Long Term Capital Management or George Soros or Julian Robertson.
If you're still not convinced of Bill Bernstein's wisdom, then go to his [site] and read his quarterly journals. His understanding and grasp of the subject are inspiring even to first time investors like myself. And he's a good writer too!
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76 of 79 people found the following review helpful
5.0 out of 5 stars Let the good doctor stimulate your thinking, October 7, 2000
By A Customer
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
My copy of William Bernstein's new book, " The Intelligent Asset Allocator," has arrived, and I give the book a very high recommendation for anyone interested in this vital subject. Fundamental mathematical concepts of geometric return, standard deviation, and correlation are given clear and understandable definition. The real-world behavior of investment portfolios is dissected with intelligence and insight.
Portfolio optimization (its limitations as well as its legitimate uses), portfolio rebalancing, indexing (Mr. Bernstein's arguments against active management might even surpass Mr. Bogle's), Dunn's Law, efficient markets, random walks, momentum factors, the three-factor model, behavioral finance, and numerous other topics are given full and rewarding discussion.
I especially found Mr. Bernstein's treatment of investor utility functions to be especially insightful. In addition to the usual concern with risk tolerance, he suggests an investor must decide on how simple or complicated one`s investment plan must be, and also how tolerant or intolerant one will be concerning tracking error to the market index as fundamental to implementing one's asset allocation plan.
In implementing asset allocations Mr. Bernstein considers the two indexing giants: Vanguard and DFA. Readers will find this section especially valuable.
This just scratches the surface; thought-provoking insights are available on just about every page of this absorbing book.
My recommendation may carry very little weight in your estimations, so I would add that the front jacket to the text contains a small, sunny emblem with the following inscription:
"This is a GREAT book!" John C. Bogle
Amen to that, blb
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53 of 54 people found the following review helpful
5.0 out of 5 stars An excellent book for serious investors only., March 5, 2001
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
... Being an investment advisor specializing in asset class strategies, I was immediately impressed with his grasp of the principles of modern portfolio theory, the efficient market hypothesis, and his incredible knowledge of statistics. What impresses me even more is that he has been able to take these fairly academic topics and communicate them very effectively to serious investors who wish to build and maintain wealth over the long-term. By the way, a serious investor to me has nothing to do with the size of their portfolio. It has everything to do with their desire to learn and apply sound, logical, fact-based principles while recognizing and ignoring the vast amount of Wall Street garbage touted by stockbrokers and other salesmen.
There are other reasons to be impressed with Bill and the knowledge he has imparted through this book. For one, Bill is a practicing physician, a neurologist, in fact. And-trust me on this-physicians are the world's worst investors. They tend to change investment strategies and advisors more often than Liz Taylor changes husbands. Why? My theory is that physicians are the most "cold-called" group of investors in the world. They hear every story from every angle and are always in search of the highest promised return on their investments. As a result, they have a habit of buying high and selling low whether with individual securities, mutual funds, or investment advisors. Dr. Bernstein probably did that a few times himself and-recognizing a nervous system disorder when he sees one-decided to find the truth on his own. He found it.
In other words, he's one of you, only he's been subjected to even more of the worthless Wall Street noise then you have. Investors who take the time to read this book all the way through and grasp some of the finer details, will be extremely well served. If they only read Chapter 5 on asset allocation, however, they will know more than 90% of investors and be well on their way to a successful, long-term strategy.
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48 of 49 people found the following review helpful
5.0 out of 5 stars An Essential Tool For Serious Investors, March 22, 2001
By 
Ron A Rhoades (Lecanto, FL United States) - See all my reviews
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
Dr. Bernstein's excellent presentation in this text of Modern Portfolio Theory (in particular, mean-variance analysis) and his three-step approach to asset allocation should not be overlooked by the serious investor or by investment advisors. While some background in statistics would be helpful to the reader, don't run away if you are not a mathmetician. Read the chapters slowly, one at a time, and you'll gain valuable insights into the all-important asset allocation decision. No other text I've read to date better explains Modern Portfolio Theory and the underlying theories of asset allocation to the lay investor.
Dr. B effectively presents additional arguments for value investing and tax-efficient investing. The last chapter also contains a very useful reading list, providing a synopsis of books by Malkeil, Bogle, Haugen, and a host of web sites which can provide valuable data and reading. Investors should not overlook Dr. Bernstein's own web site, which is frequently updated with his newsletters.
The very beginning investor should perhaps first explore Bogle's Common Sense on Mutual Funds, and then explore texts by Burton Malkeil, Larry Swedroe, and perhaps a few others. This text can then be dived into (patiently). Bruce Temkin's recent text, The Terrible Truth About Investing, should then follow, lest the individual investor believe that he or she knows it all.
I highly recommend this text as an addition to every serious individual investor's library, and to investment advisors desiring to explore the fundamentals of Modern Portfolio Theory.
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21 of 21 people found the following review helpful
5.0 out of 5 stars A classic (at least soon to be), September 9, 2001
By 
John McDonough (Nevillewood, PA United States) - See all my reviews
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
I think one of the major problems facing people today is that there is too much information available and that they end up with "paralysis by analysis" syndrome. I am in the investment business, I have my masters in investments, and I've read numerous books and articles on the topic. I limit my bookshelf to the "classics" that I need to get my job done. I could boil it down to two key texts for the novice investor: 1) The Intelligent Investor (Ben Graham) 2) The Intelligent Asset Allocator (Bill Bernstein).
If you read and fully understood the concepts within these books, you would be ahead of the majority of investment "professionals" today.
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30 of 32 people found the following review helpful
5.0 out of 5 stars One of the best, May 10, 2003
By 
James H. McDuffie (Huntsville, Alabama United States) - See all my reviews
(REAL NAME)   
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
This is quite simply the best investment book I have read in a very long time. I don't completely agree with every last word the author utters but that pales beside all that the book does right. The emphasis is in all the right places: mutual fund investment costs, mutual fund investment risk, investment risk period, asset allocation, index funds vs actively managed funds, the efficient frontier, allocation strategy implementation. Best of all the book makes sense. It is logical, well thought out and mature. This is a great book for novices and experienced investors who have gotten lost and is a breath of fresh air in a world of day traders. This book is NOT shallow. It gives me great pleasure to give this book five stars. Read it and use it. You won't be sorry.
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19 of 19 people found the following review helpful
4.0 out of 5 stars Excellent Advice and Writing, January 26, 2006
By 
GEORGE R. FISHER (Boston MA United States) - See all my reviews
(REAL NAME)   
Verified Purchase(What's this?)
This review is from: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)
This book was written just prior to the 2000 dot-com collapse. The fact that the author throughout warns that all the traditional signs pointed to trouble and that it wasn't "different this time" enhances his credibility considerably.

This book advises self-directed index-fund investing. (ETFs get short shrift.)

- The author advises in favor of an equity tilt in order to get good returns but it warns repeatedly about the risk of doing so.

- Diversification is shown to reduce risk and, paradoxically, to enhance returns.

- Active management is shown to be worthless in the long term and the majority of funds, advisors and brokers are shown to be predatory in all timeframes.

In these aspects, Bernstein and Swensen ("Unconventional Success", recommended) are much the same.

There are several points of departure:

1. Bernstein points to statistics that give evidence of market momentum

2. Bernstein favors small cap and value, both domestic and foreign, both equity and debt

These are small points and readers can come to their own conclusions but in the latter case, his thesis leads him to recomment quite a lot of securities in a portfolio, which seems cumbersome to manage for anyone who is not constantly engaged in that activity.

The major point of departure from Swensen is in the area of rebalancing. Both favor it but Sensen seems to advocate near-real-time rebalancing in tax-deferred accounts, whereas Bernstein points to momentum and advises annual rebalancing.

Both advise against frequent rebalancing in taxable accounts because of the tax penalty. (Swensen is more precise when he says "cut you losers but let your winners run" but that does seem to run contrary to the buy-low-sell-high principle underlying rebalancing.)

Conclusion: good book; an easy read; recommended. Just a bit anachronistic given that it was written before the great dot-com crash and because he constantly refers to "modems" which are certainly no longer the technology of choice.
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