Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio (Financial Times (Prentice Hall)) (Hardcover)

by Victor A. Canto (Author)

Editorial Reviews

Product Description
This book is about effective asset allocation. It's not enough to rely on some investment manager's "one-size-fits-all" software to allocate your precious capital: you need to understand the process, and take control. In Understanding Asset Allocation, world-class economist, investment expert, and hedge fund manager Victor Canto shows exactly how to understand the process of assett allocation. Canto introduces a flexible, intuitive, easy-to-use approach to asset allocation that leverages powerful business cycle information and investment vehicles most investors ignore. Canto reveals what you can (and can't) learn from historical data; how to find and focus on sectors that offer exceptional opportunity; and how to manage risk far more effectively. Whether you manage your own investments or rely on an advisor, Understanding Asset Allocation will help you optimize all your asset allocation decisions -- and maximize the returns they deliver.

From the Back Cover

This book is about effective asset allocation. It's not enough to rely on some investment manager's "one-size-fits-all" software to allocate your precious capital: you need to understand the process, and take control. In Understanding Asset Allocation, world-class economist, investment expert, and hedge fund manager Victor Canto shows exactly how to understand the process of assett allocation. Canto introduces a flexible, intuitive, easy-to-use approach to asset allocation that leverages powerful business cycle information and investment vehicles most investors ignore. Canto reveals what you can (and can't) learn from historical data; how to find and focus on sectors that offer exceptional opportunity; and how to manage risk far more effectively. Whether you manage your own investments or rely on an advisor, Understanding Asset Allocation will help you optimize all your asset allocation  decisions -- and maximize the returns they deliver.

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Product Details

• Hardcover: 336 pages
• Publisher: FT Press; 1 edition (March 30, 2006)
• Language: English
• ISBN-10: 0131876767
• ISBN-13: 978-0131876767
• Product Dimensions: 9.1 x 6.3 x 1.4 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 3.3 out of 5 stars See all reviews (3 customer reviews)
• Amazon.com Sales Rank: #815,720 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

9 of 9 people found the following review helpful:

5.0 out of 5 stars The Future of Asset Allocation?, July 10, 2006

By	Neil Rose - See all my reviews (REAL NAME)

You would think that most would question the conventional asset allocation practice of using historical return averages and correlations after the post-Y2K bear market. The markets prove time and time again that past returns are a lousy predictor of future results; and yet, most rely solely on historical data in implementing asset allocation. This mostly leads to chasing performance and being late to the game. At best, it results in "diversified" and mediocre performance.

Dr. Canto uses history the right way- by looking at how various economic environments and fiscal and monetary policies influence relative performance between asset classes. One can then approach asset allocation in a forward manner; that is, identify which asset classes have better risk/return prospects given the current and upcoming economic and market climates.

It's too easy as an imvestment professional to sell past performance, but it's a bad way to propose an investment strategy and to manage client assets (certainly the "optimal" allocation prescribed by an historical data-fed optimizer almost never performs as well as it did in the past).

We've been pleased in using Dr. Canto's approach over the years to management client assets; and I see more and more investment shops integrating his approach. You would think that after some 50 years of Markowitz and the Efficient Frontier, investors will soon realize that like most sciences, investment theory has also evolved, producing new and improved ideas. A great book for the serious investor.

6 of 7 people found the following review helpful:

4.0 out of 5 stars Not a discussion of asset theory per se, but the author's method of allocating investments among his asset classes, June 4, 2006

By	Craig Matteson (Ann Arbor, MI) - See all my reviews (TOP 50 REVIEWER)

This book sure gives you a lot to think about. And while the author's method of dealing with various matters related to investing different classes of assets, it is NOT a discussion of a general theory of asset investing or portfolio theory. Victor Canto has his own approach to investing and has, for example, developed his own periodic table of asset returns. One of the first things you have to ask yourself is whether you buy into his manner of classification and if this historical data convinces you of anything about the future. A great deal of money has been lost over the years by investing in methods that fit historic data very well.

Canto has his own consulting company and what he offers here probably fits well the kind of advice you will get from his firm. I am not saying it isn't useful. Certainly, if you like to look at data closely and taking lots of factors into your investment decisions, this approach can be a great deal of fun for you. He offers insightful comments about taxes, changes in the investment environment, statistical variance and all kinds of semi-technical matters. Certainly, there is enough uncertainty that if it doesn't appear to be working for you it can be explained to you how you misunderstood this or that and didn't get things just right or it would have worked out.

Again, I am not saying the book is without value, but I am also cautioning against getting too committed to what the author has put forward. Of course, he might be absolutely right and it could make you rich. Or not.

8 of 14 people found the following review helpful:

1.0 out of 5 stars "If you have an accurate economic forcast then....", August 21, 2006

By	Bradley K. Nelson - See all my reviews (REAL NAME)

The basic concept of this book is that cyclic asset allocation goes beyond strategic asset allocation (SAA) and improves returns by tweeking a portfolio SAA based upon an accurate economic forcast. In principle it sounds like a good idea but obtaining an accurate economic forcast is a REALLY BIG "IF". It vaguely reminds me of Will Rogers' advice to "only buy stocks that go up and if they don't go up don't buy them." The author doesn't explain how to get the accurate economic forcasts needed to implement his strategy other than some vague statement about averaging leading economic forcasts. The example in the book uses the forcasts of his own economic forcasting firm but the example is unverifiable. I'd go so far as to say that the "efficient market theory" which says that all available information (presumably including economic forcasts) is already priced into the market, precludes the user from obtaining any investing advantage using the strategies of this book.