Table Of Content

Cover Page: a Title Page Page: i Copyright Page Page: iv Dedication Page: vi Contents Page: viii Foreword by Rob Sharps Head of Investments & Group CIO, T. Rowe Price Page: xi PART ONE Page: xiii Return Forecasting Page: 1 1 Equilibrium and Something About Quack Remedies Sold on the Internet Page: 4 2 Valuation and Something About Kool-Aid Page: 25 3 Shorter-Term Valuation Signals and Something About Coffee and Egg Yolks Page: 44 4 Shorter-Term Macro Signals and Something About Driving a Truck Page: 61 5 Momentum and Something About Horoscopes Page: 69 6 Thoughts on Return Forecasting and Something About the Feelings of Electrons Page: 83 PART TWO Page: 89 RISK FORECASTING Page: 89 7 Risk-Based Investing and Something About Sailboats Page: 93 8 Longer-Term Risk Forecasting and Something About Dilequants Page: 111 9 Correlations and Something About a Freezer and an Oven Page: 120 10 Correlation Forecasts, Tail Risks, and Something About a Rug Page: 138 11 Fat Tails and Something About the Number of Particles in the Universe Page: 146 PART THREE Page: 173 PORTFOLIO CONSTRUCTION Page: 173 12 Asset Classes Versus Risk Factors and Something About Dr. Strange Page: 175 13 Stocks Versus Bonds and Something About Precision Weapons Page: 185 14 Single-Period Portfolio Optimization and Something About Controlled Substances Page: 196 15 Private Assets and Something About Ostriches Page: 217 16 Active Versus Passive and Something About the “Pharma Bro” Page: 232 17 Sample Portfolios and Something About Gunslingers Page: 248 Conclusion Page: 260 Afterword Page: 272 Acknowledgments Page: 276 References and Bibliography Page: 279 Index Page: 303 About the Author Page: 321

Description:

Generate solid, long-term profits with a portfolio allocated for your investing needs Asset allocation is the key to investing performance. Unfortunately, no single approach works perfectly—developing the right balance requires a clear-eyed look at the many models available to you, various investing methodologies, and your or your client’s level of risk tolerance. And that’s where this important guide comes in. Written by a leading allocation expert from T. Rowe Price, Beyond Diversification provides the knowledge, insights, and approaches you need to make the best allocation decisions for your goals. This deep dive into the how’s and why’s of asset allocation is organized by the three decisive components of a successfully allocated portfolio: Return Forecasting discusses the desired return investors seek. Risk Forecasting covers the level of risk investors are prepared to assume to achieve that return. Portfolio Construction calibrates the stock-bond mix that balances the risks and returns. With examples from T. Rowe Price’s asset allocation team showing you how the process works in the real world, Beyond Diversification provides everything you need to find the asset combination that will deliver the results you seek. You’ll learn how to choose the right tradeoffs, build the most effective asset allocation combination for your needs, and dramatically increase your odds of success for the long run.