Rating: 
Summary: Almost great
Review: There is nothing in this book with which I disagree. My only criticism has to do with readability, an admittedly subjective quality. I read this book after finishing "Four Pillars", and I have to say that the latter is a better written book. If you are into mathematical proof of the principles of index investing, asset allocation and rebalancing, and have a long-term investment horizon, this book is a gem. As a ten year convert to this investing style, I have to say with gratitude that I am glad that I was enlightened when I was. People like Bernstein, Bogle, Malkiel and Swedroe have democratized the investment world to all our benefit.
Rating: 
Summary: Buy This Book
Review: This book conveys everything you need to know about investing successfully. It covers all the important topics in investing, and gets it all right. The book speaks those who just want to know what works, and also for those who want to see it all proved and justified. I added this book on my very short list of books to reread periodically to refresh my understanding of the subject. I also told my wife (who is not particularly interested in investing) that this is the one book to read if she ever has to make investment decisions without me. This book displaces John Bogle's excellent book for this honor. I can't recommend this book highly enough. Read it, understand it, and implement what it says, and you'll have an investment program that employs your money as effectively as possible with a level of risk that you're comfortable with.
Rating:
Summary: Very good but with some inconsistencies.
Review: This book is a very good read that kept my attention. The book focuses on low-cost index fund oriented investing across various types of investments and is a good companion book to A Random Walk Down Wall Street. The author looks at both investment theory and how the theory applies to actual market history. Although the theory can involve a little too much math at times for some readers, this is not a problem as the author's point comes across clearly. Although the book was generally excellent, some of the author's points are inconsistent. For example, the author talks at length about how future returns are unpredictable but later states that stock prices are overvalued and due for a downturn. Additionally, the author stresses how periodic portfolio rebalancing is important in asset allocation but then says that there is a strong argument for never rebalancing due to tax consequences. However, these inconsistencies are insignificant to the work as a whole and I strongly recommend this book.
Rating:
Summary: Where Was the Final Chapter?
Review: This book makes a compelling case for an approach to investing that won't get your adrenalin running, but will probably make (or save) you more money than any other approach over the long run. Bernstein builds on academic financial theory and historical analysis to argue that you should (a) diversify your portfolio between stocks and bonds, (b) use low cost index (mutual) funds for the stock portion of your portfolio, and (c) rebalance your portfolio periodically to keep your assets in line with your target allocations. And let's be honest - Bernstein is completely correct. If you'd followed his advice, you wouldn't have been caught with a portfolio of tech stocks at the height of the bubble... But Bernstein's book has one glaring failing. In the last year, the tools have become available for individual investors to pursue exactly the strategy Bernstein advocates with great ease at exceptionally low cost. But Bernstein hardly discusses these tools, and fails to acknowledge their advantages. These tools are Exchange Traded Funds (ETFs). If you look at Barclays I-shares (there's a web site devoted to them), for example, you'll find a complete set of exchange traded index funds covering US and foreign markets, individual sectors, and divisions of the market by market cap and style (such as small cap/large cap, growth/value). ETFs offer compelling advantages to individual investors. They are:
(1) ETFs have lower expense ratios than mutual funds. The Barclays I-shares S&P 500 ETF charges 0.09% a year in fees, compared to about double that for the Vanguard 500 Index Fund.
(2) ETFs are easier to manage from a tax perspective. Don't think this is trivial - it will probably have an immense impact on your after-tax performance. Because ETFs trade like stocks, online brokers ...will show you which lots you have unrealized capital losses on. So at the end of each year you can sell your S&P 500 ETF, realize a capital loss, and put the money into a combination of the S&P 500 Growth ETF and the S&P 500 Value ETF - which amounts to the same thing but allows you to claim up to a $3000 deduction off your tax return. Mutual funds make it much harder if not impossible to track gains and losses and specify individual tax lots for sale.
(3) You can use limit orders on ETFs, which you cannot for mutual funds. Don't think this is an advertisement for day trading - it's not. Following Bernstein's model, you want to trim your asset allocation if one asset rises steeply in price ahead of the rest of your portfolio. Setting Good 'till Cancel limit orders is a great way to keep your portfolio in balance, and to benefit from sharp intra-day movements.
(4) Some of the best online brokers offer portfolio analysis tools that allow you to track your portfolio allocation easily if you keep all your assets in a single account. Since ETFs look like stocks (including the bond index ETFs), it's easy to keep all your assets in a single account. For example, [there is one ETF], which has a bank as well as a brokerage under one roof, allows you to move funds instantaneously between a high interest bearing money market bank account (currently paying about 2.4%) and a brokerage account. This allows you to keep your cash, stock and bond allocations under a single roof, to monitor your total asset allocation, and to move assets from one class to another with ease. In contrast, if you hold multiple mutual fund and savings accounts, it's harder to track your asset allocation and to move funds between asset classes. The downside of ETFs, compared to mutual funds, is the cost of trading. Online brokerages now charge a [fee for each] trade (ETFs trade just like stocks), so if you rebalance frequently and your assets are not large, you'll want to monitor your trading costs carefully. It may even make sense to use mutual funds instead (you don't pay for buying and selling no-load mutual funds). But for most individuals, I believe that ETFs will prove more profitable than mutual funds, mainly due to the greater ease of tax management and lower expense ratios. So a discussion of ETFs and a model portfolio using them is the final - missing - chapter of this book. Go read the book anyway - it's a great book. But until Bernstein updates his book, this review - and the free online material at ABetterWayToInvest.com - will have to stand in for that final, missing chapter.
Rating:
Summary: Indispensible!
Review: This has been the most useful book I have ever come across on the design of my personal asset allocation plan. I would seriously not even consider investing a dime until you have read this book two or three times and understood what he is teaching. A great investment, also easy to understand.
Rating:
Summary: The Intelligent asset allocator
Review: This is a superb investment book. Bernstein first covers basic statistical topics and historical risk and return data for stocks, bonds and bills. He then presents a lucid discussion of portfolio theory and its applications for the small investor. The most important result of this theory is that the risk and return of a portfolio are very different from the risk and return of its constituent parts, so that adding a 'risky' asset to a portfolio can actually decrease the portfolio's overall volatility. This discussion requires only minimal mathematical background. Bernstein then takes on the controversial topic of market efficiency. He also describes stock valuation models, current valuation levels, growth and value investing, Fama and French's three factor model, the concept of the efficient frontier and numerous other important topics in finance. But the discussion throughout is very clear and understandable as well as practical. After making a compelling case for index investing with periodic rebalancing, Bernstein presents helpful Vanguard and DFA model portfolios. What the author has done is to take the most significant results from academic finance and translated them into English for the individual investor. He has done investors a great service.
Rating:
Summary: Wonderful book but too "static" and skeptical of timing
Review: This is an extremely well-written introductory text for the investor thinking about how to allocate assets. There is no filler and no fluff, and everything is to the point.
However, the author's view of allocation seems to me to be too "static," namely, that if you have decided to allocate, say, 50/50 between stocks and bonds, then you don't want to change this ratio simply in response to market conditions. However, everybody knows that at the beginning of an expansion cycle, stocks tend to outperform bonds, and when the Fed is aggressively raising interest rates, then bonds will become safer bets than stocks. In this respect, Martin Pring (The All-Season Investor) and Mark Boucher (The Hedge Fund Edge) offer a more dynamic view of asset allocation to take advantage of the changes in the market cycle.
Besides, my technical analysis background tells me that timing the market, albeit never an exact science, can be done. If you can combine Berstein's approach with market timing techniques and money management discipline, I believe you can achieve better returns with even lower risks. (The irony is that he also wants the investor to buy low and sell high, but how are we going to determine when to buy low and sell high if we don't look at the charts and decipher the price and volume patterns such as "head-and-shoulders," "ascending triangles," etc.? In this respect, he has to admit that timing the market is necessary--at least to a certain degree.)
Rating:
Summary: This is a MUST READ.
Review: This is quite simply the best investment book I have read in a very long time. I don't completely agree with every last word the author utters but that pales beside all that the book does right. The emphasis is in all the right places: mutual fund investment costs, mutual fund investment risk, investment risk period, asset allocation, index funds vs actively managed funds, the efficient frontier, allocation strategy implementation. Best of all the book makes sense. It is logical, well thought out and mature. This is a great book for novices and experienced investors who have gotten lost and is a breath of fresh air in a world of day traders. This book is NOT shallow. It gives me great pleasure to give this book five stars. Read it and use it. You won't be sorry.
Rating:
Summary: One of the best
Review: This is quite simply the best investment book I have read in a very long time. I don't completely agree with every last word the author utters but that pales beside all that the book does right. The emphasis is in all the right places: mutual fund investment costs, mutual fund investment risk, investment risk period, asset allocation, index funds vs actively managed funds, the efficient frontier, allocation strategy implementation. Best of all the book makes sense. It is logical, well thought out and mature. This is a great book for novices and experienced investors who have gotten lost and is a breath of fresh air in a world of day traders. This book is NOT shallow. It gives me great pleasure to give this book five stars. Read it and use it. You won't be sorry.
Rating:
Summary: The Best Of Its Kind
Review: This is the only book you need to begin investing intelligently. Be forewarned - if you have never had a statistics course you will have to do some thinking, but wouldn't you expect that from a book that purports to teach you how to do something intelligently? Even so Bernstein gives you everything you need, and only what you need, to understand the statistics, using simple examples. In fact, my only complaint about the book is that I think Bernstein may have trimmed the statistics presentation just a little too closely, but not so that the unfamiliar reader will notice it. At just over 200 pages including the index, the book contains no fluff at all. Bernstein doesn't bore you with long anecdotes that only vaguely relate to the topic, and yet he writes in a clear, capable and engaging manner using plenty of graphs and easily comprehended examples to demonstrate his points. He's not above entertaining you with a bit of humor here and there either, but Bernstein's humor is restricted to the sort of witty comments you might hear from a good friend - in contrast to the labored and obvious slapstick found in most books of the genre. And you get more than just asset allocation. Bernstein gives you a primer on what value investing is and why it makes sense, as well as addressing the current mania in the markets and host of other relevant topics. You just can't go wrong with this little book. Buy it. It's worth every penny.
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