Hedgie Nick Gogerty likes “The Ivy Portfolio” . Given Nick’s lead I’ve been looking into Faber and the new book, published Mar 30, 2009. It looks very interesting.
Meb Faber has written an interesting book, The Ivy Portfolio about asset allocation,Endowment approaches and asset class risk.
Mentioning asset allocation in polite conversation is akin to discussing plumbing. Everyone has an idea of what it is, they understand its importance, but it is a topic best avoided in polite conversation at all cost.
Like plumbing, asset allocation becomes “interesting” only when things get stopped up. Many investors believe their portfolio flow isn’t quite working properly and are looking for a way to fix it. Plumbers are over-priced, dreary and generally smell like carnies. Luckily Meb knows a thing or two about asset allocation, isn’t a dreary fellow at all and puts on a good read. He is sharp and has written a focused book on thinking about an interesting method of Asset allocation.
One of the most important papers in asset allocation is the seminal work of Brinson, Hood and Beebower determinants of portfolio performance which I read in the Jardin du Luxembourg while temporarily taking up smoking as a grad student in Paris. It describes the principal determinants driving portfolio returns. Surprisingly, at the portfolio level, security selection becomes far less important in most instances. (Hint: most managers are bad at security selection so the expected or derived positive contribution variance is de-minimus at the portfolio level)
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Continue reading… at Designing Better Futures.
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