Rational Expectations
Rational Expectations is a clean sheet of paper in the wonky world of quantitatively based asset allocation aimed at small investors. Continuing the theme of the Investing for Adults series, this full-length finance title is not for beginners, but rather assumes a fair degree of quantitative ability and finance knowledge. Bernstein's book is highly up-to-date with many references to our current market environment and how to deal with it, and also introduces the factors of small, value, profitability and momentum. If you know your way around risk premiums and standard deviations and want to sharpen your asset class skills, you’ve come to the right place.
William Bernstein covers all the big topics in one well-written book: asset classes and their historical and expected risks and returns, the efficient frontier, diversification, factor-based investing, tactical asset allocation, asset allocation, risk tolerance, life-cycle investing, savings rates, portfolio rebalancing, investment vehicles, and asset protection.
Part of this book deals with basic portfolio assembly – your stock/bond mix, what stock asset classes to consider including, how much tilt and what kinds of tilts to consider, and how to add bonds to the portfolio.
The final chapter discusses various asset allocations, recommends funds for each asset class, and talks about the various ways to tilt a portfolio.
Table of Contents
Introduction
Chapter 1: Asset-Class Models, Asset Classes for Real
Chapter 2: Diversify me! Portfolio Models: Simple and Not Simple
Chapter 3: The Evil Nexus: Market History, Your Portfolio, and Your Brain
Chapter 4: When to Hold ‘Em, When to Fold ‘Em: A Lifetime Asset-Allocation Trajectory
Chapter 5: Loose Ends
Chapter 6: Walking the Walk: Nuts and Bolts for Investing Adults
Acknowledgments, Notes, Index