Tag: modern portfolio theory

Book Review: All About Asset Allocation

All About Asset AllocationAll About Asset Allocation is worth a read by every investor, even if you don’t buy into efficient-markets theory (EMT) or modern portfolio theory (MPT) and focus your investing on alternative strategies.

Richard A. Ferri uses tons of charts to help demonstrate the effectiveness of various kinds of diversification of the portfolio. He identifies the roles of various kinds of securities in the modern portfolio. He makes excellent cases for the importance of real estate exposure and international equities. He points out the weakness in the simplistic approach that many financial advisors take to investing in bonds.

Ferri demonstrates various strategies for hedging against inflation, interest rates, and other risks. He creates suggested allocation plans for investors at 4 different age levels and 3 different risk profiles. While I do not agree with all of Ferri’s theories and strategies, everything he advocates is research-based. His approach is appropriate for investors at any level, young or old, advanced or beginner. This is a great resource for anyone committed to meticulous portfolio management.

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