CHARACTERS ¹ Skating Where the Puck Was


Skating Where the Puck WasReward and protect against downside losses And as long as I'm Skating Where Kindle lowering your expectations this booklet is most certainly not a blueprint for the perfect portfolio You're an adult after all so you know that the future efficient frontier lies well beyond our ken presumably you already know all about the mechanics long term benefits as we. a brilliant 30 page essay on the underestimated and freuently overlooked topic of correlation doesn't give many answers but does provide a lot of food for thought on important defensive strategies

William J. Bernstein ☆ 1 CHARACTERS

Skating Where the Puck the Puck PDFEPUB #182 Was The Correlation Game in a Flat World is the second installment in the Investing for Adults series This series is not for novices This booklet explores the notion that as a general rule no magic policy rich in high returnlow correlation alternative asset classes exists that will simultaneously preserve upside. The second monograph in Bernstein’s series of for experienced investors takes its title from Wayne Gretzky who took his father’s advice to skate where the puck's going not where it's been” to become the greatest hockey player of all time Very few have been able to follow the same advice to investment success Sir John Templeton and Yale’s David Swensen are two examples and sadly most end up skating to where the puck was accepting market risk and market performance less fees The dual goals of market outperformance and lower risk are available in theory but not practiceBernstein explains why this is naturally so Templeton with international investing and Swensen with non traditional asset classes were pioneers who had considerable first mover advantages As others copied their successes the higher returns were whittled away and the diversification benefits were eroded as the formerly non correlated assets became and correlated Swensen who in his pioneering years enjoyed outsized returns for Yale’s endowment suffered just as much as the rest during the recent financial crisis as all asset classes traditional and non traditional alike became highly correlated In the words of MIT professor Andrew Lo over time “alpha becomes beta” Any innovation leading to outperformance alpha eventually becomes widely available and part of regular market performance betaBernstein includes some very interesting perspective on commodities and precious metals futures which have been used as both inflation and deflation hedges Investors may want to rethink both their strategies and their convictions With respect to investors’ ability to take risk at all he notes that it “may be a matter of character rather than training” and that those who can’t stick with the market based portion of their investments in downturns are part of the natural pendulum of asset prices as they swing from unknown to popular to undesirable Though he doesn’t spend much time on it his points will have readers reflecting on the merits of value and contrarian investingStill the conventional wisdom about diversification is much better than the alternative ie not diversifying but it is unlikely to insulate portfolios from downturns short term risk in Bernstein’s words in the way investors hope see Swensen above In a prelude to his third monograph Deep Risk Bernstein cautions investors to resign themselves to the fact that diversifying among risky assets provides scant shelter from bad days or bad years but that it does help protect against bad decades and generations which can be far destructive to wealth

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CHARACTERS ¹ Skating Where the Puck Was Ý [Reading] ➸ Skating Where the Puck Was By William J. Bernstein – Skating Where the Puck Was The Correlation Game in a Flat World is the second installment in the Investing for Adults series This series is not for novices This booklet explores the notion that as a g Ll as the uncertainties of wide diversification and factor tilt using low cost efficient vehicles and the riskreward spectrum between all fixed Where the Puck ePUB #8608 income and all euity portfolios Rather this booklet provides a way of navigating a global investment landscape that grows ever linked by the month and a way of thinking about diversificatio. I'll save you ten bucksasset classes don't interact the way they used to You must look in unconventional places for non correlated returns You're welcome