O'Reilly logo

The 3 Simple Rules of Investing by George Peacock, Carol Fabbri, Kwok L. Tsui, Michael Edesess

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

DEADLY TEMPTATION #3

Precisely Calibrate Your Portfolio

We told you in Rule #3 that if you hear that asset allocation is the most important investment decision you can make—and that you must do it using a scientific optimization model—you should tune it out. Now we will tell you why you should tune it out.

Financial advisors will often give you the idea that they can very precisely control the risk and return of your portfolio. Their spiel often starts with “The most important thing is asset allocation.”

Back in 1986, a paper titled “Determinants of Portfolio Performance,” by Gary Brinson, Randy Hood, and Gil Beebower, was published in the Financial Analysts Journal.1 It got a huge amount of attention. It was cited, and re-cited, and cited again ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required