Chapter 14

Portfolio Management

Don’t fight forces, use them.

—R. Buckminster Fuller (1895–1983), Shelter, 1932

Clients love to make money, and they hate to lose it. The most important conclusion of this book is that broad portfolio diversification among multiple asset classes in the long run will deliver better volatility-adjusted returns than traditional approaches that utilize fewer asset classes. The tendency of most money managers to underperform the market underscores the value of the performance advantages gained from a more broadly diversified approach. Remarkably, much of the improvement in portfolio performance flows from the simple decision to utilize a broader array of asset classes. Contrast this with improvements in portfolio ...

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