Asset Allocation: Balancing Financial Risk, Fifth Edition

Asset Allocation: Balancing Financial Risk, Fifth Edition

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The Definitive Guide to Strategic Asset Allocation

Uniting theory and practice–the art and science of asset allocation

Investors long to beat the market, and money managers accept that as their mandate. The sad reality is that most money managers underperform the market, and individual investors do even worse. Investors also face emotional challenges. The irrational exuberance of the 1990s, for instance, can as easily derail a sensible investment strategy as the market panic accompanying the Global Financial Crisis.

Since Roger Gibson wrote the first edition of this book over 25 years ago, his multiple-assetclass investment approach has given investors a disciplined strategy for mitigating risks and realizing their financial goals through widely varying market environments.

Grounded in the principles of modern portfolio theory, this fi fth edition of his investing classic explains how and why asset allocation works. Gibson demonstrates how adding new asset classes to a portfolio improves its risk-adjusted returns and how strategic asset allocation uses, rather than fights, the forces of the capital markets to achieve fi nancial success.

New topics in this edition include:

  • The success of multiple-asset-class investing during the stock market’s “lost decade”
  • Methods for forecasting long-term asset class returns and the limitations of prediction
  • The dangers of market timing and the challenges involved in tactical asset allocation strategies–with insights from the field of behavioral finance
  • Observations from the Global SIDONI Financial Crisis of 2008 and what it means for the multiple-asset-class investor

With more than three decades of experience managing clients’ portfolios and expectations, Gibson underscores the importance of identifying and working through the emotional and psychological traps that impede investment success.

Join the quarter-century trend of Asset Allocation providing investors with a sound approach to financial well-being.

PRAISE FOR ASSET ALLOCATION:

“Roger Gibson has revolutionized the way financial advisors assemble portfolios for their clients. He is, without a doubt, the best and most articulate voice on the subject of asset allocation today.” — DON PHILLIPS, President, Investment Research, Morningstar, Inc.

“[Gibson’s book] should be of enormous benefit to the investor seeking the proper decision-making process. I congratulate [him] for treating the asset allocation subject in such depth and bringing this issue, which is the critical investment issue for all investors, to the forefront. It is the best overall piece of work I have seen.” — GARY P. BRINSON, President and CEO, GP Brinson Investments

“I always look forward to each new edition of Roger Gibson’s (now with Christopher Sidoni) asset allocation book. The extensive data is updated with new chapters on the financial crisis and forecasting. This practical book focuses on meeting investor objectives in a risky world.” — ROGER G. IBBOTSON, Yale Professor, Chairman of Zebra Capital Management, Founder of Ibbotson Associates, now a Morningstar Company

“Roger Gibson’s book should be a ‘go-to’ resource for every serious financial advisor.” — JOHN D. ROGERS, CFA, President and Chief Executive Officer, CFA Institute

“The author balances a solid, understandable, and logical grasp of investment knowledge with an obvious input of practical experience. If all investment advisors would read and understand this book, clients would be far better off.” — DARWIN M. BAYSTON, CFA, Past President and CEO, The Association for Investment Management Research

List Price: $ 75.00

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3 thoughts on “Asset Allocation: Balancing Financial Risk, Fifth Edition”

  1. Eric Sedensky says:
    12 of 12 people found the following review helpful
    5.0 out of 5 stars
    Smart investors will allocate some time to this book, November 5, 2013
    By 
    Eric Sedensky (Madison, AL, US) –
    (VINE VOICE)
      
    (TOP 1000 REVIEWER)
      

    This review is from: Asset Allocation: Balancing Financial Risk, Fifth Edition (Hardcover)
    This is a great book on investing. Coming off reading Risk-Return Analysis: The Theory and Practice of Rational Investing (Volume One), a weighty, math-heavy volume written by a Nobel laureate (Harry Markowitz), I was pleased to find Asset Allocation provided a lot of the same take on portfolio balancing and limiting risk without overburdening the reader with formulas and minutiae. This book instead explores historical trends using hypothetical portfolios and critical analysis of the performance of various asset classes during up, down, and sideways markets. At the heart is a strategy of diversification, rebalancing, and risk avoidance which individual investors and investment advisers (more on them in a second) can put to work in their personal and client portfolios.

    Like the Markowitz book, the crux of Gibson’s investment strategy is that more risk can result in better returns, but less risk does not necessarily result in reduced returns. Ultimately, the determination of risk, the potential value it represents, and the investor’s ability to endure the risk during different types of market trends will determine the success (or failure) of a given portfolio’s asset mix. Once this groundwork is laid, Gibson then provides some perspective on analyzing a client’s risk tendencies and preferences, ideal asset mixes, and overall performance aspects of various types of securities and investments, ultimately to help in constructing a portfolio the client will be happy with. If you are not a investment planner or CFA with paying customers, the last third of the book will likely not be of much value to you. Reading through it, however, might provide you with some insight into your own investment preferences. (As a long time investor, I didn’t find it particularly useful.)

    There is a lot of viable and actionable information here, and the detailed discussion of risk and portfolio construction in the first two-thirds of the book is (I think) quite original and much easier to implement than a lot of other strategies I’ve seen in investment books. For typical investors who are not advising others, the last third of the book has limited benefit, but even with that, the first part of the book makes it well worth a full five stars.

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  2. W. McReynolds says:
    16 of 18 people found the following review helpful
    4.0 out of 5 stars
    optimize your portfolio, June 14, 2013
    By 
    W. McReynolds
    (REAL NAME)
      

    Verified Purchase(What’s this?)
    This review is from: Asset Allocation: Balancing Financial Risk, Fifth Edition (Hardcover)
    Seems this book is targeted to financial planners. That might explain the high price tag. Originally listed at about $37 then jumped to nearly $50 before falling to $42 and slowly creeping up in price. Finally gets to the efficient frontier tools and then just barely mentions the tool used for the examples. No references that I could find as to how to acquire this tool. Not quite done reading it. I expected more focus on how to minimize the “black swan” events. No such luck. Had to go to “journal of financial planning” for current thinking on that topic. Basically, I think this book is priced too high for what you get.

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  3. J Craig Bell says:
    6 of 8 people found the following review helpful
    3.0 out of 5 stars
    Asset Alloction, August 15, 2013
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    Verified Purchase(What’s this?)
    If this is your first exposure to the theory and practice of asset allocation, this is a fine book. If you have read several others prior, there may be only limited new information for you.

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