Originally Posted by kramer
One of things I did after reading the book is move out of intermediate corporate bonds (and reduce short term corporate bond exposure) and to instead prefer Treasuries and CDs.
The last two chapters of the book were to me be far the most valuable.
I agree conceptually about putting the money you need in to live at minimal level in a super safe investment (e.g TIPs). Then rest of the money is in a risk portfolio, which can be any thing from almost no stocks to 100% equities depending on your risk tolerance. However, I didn't find has methodology that much better than say keeping 5 years of expensive is CD ladder, or a bucket etc. So the books was fine just nothing special
The last 2 chapter had some insights. So for instance I've been waiting to make big purchase of Chinese stocks. The economic growth of the place is amazing, and I think culturally Chinese are just amazingly entrepreneurial and super hard working (Rice farm is uniquely demanding). However Bernstein pointed out something that I didn't know. The 50 richest Congressman have collective net work of $1.6 billion pretty impressive, but that pales compared to the 50 richest Chinese politician who are worth almost $100 billion.. A large part of the reason investing in Chinese stocks hasn't been very rewarding is that most of the huge profits Chinese companies make go entirely to the ruling class not shareholders.
A second nugget is why you shouldn't buy a bond ETF, (it has to due with redemption issues) and really you shouldn't even own Vanguard Total Bond Market fund. Since BND/VBTLX portfolio is 50% treasury, instead buy treasuries direct and not only avoid paying Vanguard modest fees, but when the next financial crisis hits you've got a ready source of cash. Then use a corporate bond fund for the 25% and perhaps a GNMA fund for the 25% of the market that is in mortgage backed securities.
There were a couple of similar insights like that that made the book worth reading.