All About Asset Allocation

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All About Asset Allocation goes beyond sound-bite financial columns and TV programs to explain asset allocation in terms that anyone can under- stand. Using a concise style, it features straight- forward explanations of asset allocation, a review of the asset allocation process, and guidelines for implementing strategies and programs.

Series: All about

Paperback: 256 pages

Publisher: McGraw-Hill; 1 edition (September 15, 2005)

Language: English

ISBN-10: 0071429581

ISBN-13: 978-0071429580

Product Dimensions: 6 x 0.8 x 9 inches

Shipping Weight: 15.5 ounces

Average Customer Review: 4.7 out of 5 stars  See all reviews (37 customer reviews)

Best Sellers Rank: #594,846 in Books (See Top 100 in Books) #110 in Books > Business & Money > Investing > Mutual Funds #10969 in Books > Business & Money > Economics

I was pretty impressed with this book. I give it an A+. I have been a student of investing and financial planning since 1979. In 1978, when Venita VanCaspel's book The New Money Dynamics was published, the term "asset allocation" was not even listed in the index of financial terms. She doesn't really mention asset allocation between asset classes and any benefits of asset allocation.Gary Brinson's 1986 famous study can be defined as the birth of asset allocation. He found that over 90% of a portfolio's return can be determined by the asset classes used, not what the individual investments were. Brinson's findings have been relatively slow to flow through the investment community and to individual investors. Dial the time clock ahead from 1986 to 2006, and one of Business Week's cover stories seeks to explain why the S&P 500's profits have increased dramatically over the last 5 years, yet the S&P 500 companies have had very little stock price appreciation. One explanation offered is that more and more investors practice asset allocation and choose other investments besides the S&P 500 for their portfolios. The increased demand for other asset classes like foreign stocks, commodities, and gold has subsequently less to a decrease in demand for large cap stocks in the S&P 500.Ferri's book does an excellent job of explaining the concept of asset allocation and he uses real life portfolios to illustrate the advantages of asset allocation.Ferri points out the ideal investments to add to one's portfolio would be negatively correlated to the investments in the existing portfolio. He also points out that the correlations between asset classes changes over time.

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