The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk (Hardcover)

by William Bernstein (Author) "Imagine that you work for your rich but eccentric Uncle Fred..." (more)
Key Phrases: international small stocks, math details, discounted dividend model, Uncle Fred, Pacific Rim, Dimensional Fund Advisors (more...)

Editorial Reviews

Review
A practicing neurologist in remote coastal Oregon, Bernstein comes to the problems of saving and investing not from a broker's perspective, but as someone who had to figure this out himself, from first principles up. (Business Week )

Product Description
Bernstein has become a guru to a peculiarly '90s group: well-educated, Internet-powered people intent on investing well--and with minimal ‘help' from professional Wall Street.--Robert Barker, BusinessWeek

William Bernstein is one of today's most unlikely financial heroes. A practicing neurologist, he used his self-taught investment knowledge and research to build a popular investor's website. Now, in the plain-spoken The Intelligent Asset Allocator, he shows independent investors how to build a diversified portfolio--without the help of a financial advisor.

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Product Details

• Hardcover: 206 pages
• Publisher: McGraw-Hill; 1 edition (September 22, 2000)
• Language: English
• ISBN-10: 0071362363
• ISBN-13: 978-0071362368
• Product Dimensions: 9.1 x 6 x 0.9 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars See all reviews (56 customer reviews)
• Amazon.com Sales Rank: #19,033 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

140 of 141 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)

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.

238 of 252 people found the following review helpful:

5.0 out of 5 stars A Word From Somebody in the Know, October 18, 2000

By	John Rekenthaler (Chicago, IL) - See all my reviews

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!

77 of 78 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 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.