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Investment book from dying banker
Old 11-26-2010, 08:15 PM   #1
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Investment book from dying banker

Interesting story about a bond trader turned passive investment champion

http://www.nytimes.com/2010/11/27/yo...y/27money.html
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Old 11-26-2010, 08:20 PM   #2
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The reviews of the book on Amazon are very interesting.
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Old 11-26-2010, 08:52 PM   #3
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I wanted to add that I do not endorse the book or the idea because it is written by an ex-member of the financial establishment, but because it is in sync with academic & empirical data that other books like Random Walk, Four pillars etc. espouse.

After all, if he he didn't know about AA after 25 years in the industry, you've got to wonder...
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Old 11-26-2010, 10:16 PM   #4
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Originally Posted by walkinwood View Post
After all, if he he didn't know about AA after 25 years in the industry, you've got to wonder...
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This is not new, nor is it rocket science. But Mr. Murray spent 25 years on Wall Street without having any idea how to invest like a grown-up. So it’s no surprise that most of America still doesn’t either.
I like the way he quickly qualifies his Goldman Sachs career as "back when it was a good place to work"...

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The reviews of the book on Amazon are very interesting.
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The write-up in the NY Times (Nov 27, 2010) prompted my interest. I selected a sample, little did I know that the 5 decisions in the first chapter would be the most concrete information in the "book". Spoiler ahead, your advisor will be able to accurately calculate the risk in the various asset classes of your portfolio. Diversify your assets according to your risk/reward tolerance; re-balance or re-allocate annually. I am not a financial analyst, broker, or employed in financial services. All of the useful or actionable information is readily available from any web site. Be patient, don't swing for the fences, and diversify. I so overpaid for this essay priced as a book.
I don't see a lot of sales to E-R.org or Bogleheads members.
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Old 11-27-2010, 05:58 AM   #5
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The articles states some basic time-tested best practices for investors... especially individual investors. It is amazing how few follow it.

IMO - Investing in balanced funds with at reliable low cost mutual fund company is a less emotional approach to manage a strategic allocation strategy and ensure that a policy is followed. Some people have a loose investment policy based on a rough allocation (that they often abandon in bear and bull markets at the worst time) and make poor, emotionally driven decisions based on greed and fear. But I believe most small investors just wing it and have little to no allocation plan. At least, most people I talk to do not seem to have a strategic target allocation... much less rebalance.
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Old 11-27-2010, 09:12 AM   #6
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...
IMO - Investing in balanced funds with at reliable low cost mutual fund company is a less emotional approach to manage a strategic allocation strategy and ensure that a policy is followed. Some people have a loose investment policy based on a rough allocation (that they often abandon in bear and bull markets at the worst time) and make poor, emotionally driven decisions based on greed and fear....
I agree.

I think of myself as a disciplined investor and have been doing all my own investments for close to 20 years. However, I could not get myself to rebalance in late 2008/early 2009 even though my allocation was out of balance. I finally implemented a plan to get back into balance over 12 months - moving a little each month. In hindsight, I would have benefited from doing a rebalance in one step.

Interestingly, I have always rebalanced when the going is good & portfolio value is growing. No trouble there!
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Old 11-27-2010, 10:09 AM   #7
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Ok.

I'm the only one who thought of the lawyer joke? ""What do you call a dying banker? A start".

Sure. I'm the only evil mind here. ok, i'll crawl back in my hole.
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Old 11-27-2010, 03:17 PM   #8
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The surest way to turn someone against active investment management is to have them work closely with professional money managers and see how they make decisions.
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Old 11-27-2010, 03:22 PM   #9
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After all, if he he didn't know about AA after 25 years in the industry, you've got to wonder...
He's a bond salesman.

"Hey, Fred, how you doing? We got some BBB floaters, here, they look cheap. It's in the part of the curve you like and my analyst thinks they're heading for an upgrade, do you want to talk to him? Great, I'll have him give you a ring.

Are we still on for dinner tonight?"
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Old 11-28-2010, 06:35 AM   #10
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I don't see a lot of sales to E-R.org or Bogleheads members.
True enough. But it might helpful for less interested spouses, children or friends of those here and Bogleheads...
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Old 11-28-2010, 08:34 AM   #11
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The surest way to turn someone against active investment management is to have them work closely with professional money managers and see how they make decisions.
Depends on the manager....some professional money managers are frequent traders........
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Old 11-28-2010, 08:46 AM   #12
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Depends on the manager....some professional money managers are frequent traders........
I think that was exactly his point.
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Old 11-28-2010, 12:57 PM   #13
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Old 11-29-2010, 06:35 PM   #14
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Ok.

I'm the only one who thought of the lawyer joke? ""What do you call a dying banker? A start".

Sure. I'm the only evil mind here. ok, i'll crawl back in my hole.
I'm no angel, but I fail to see any humor in somebody dying of brain cancer.
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Old 12-03-2010, 10:22 AM   #15
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I'm the only one who thought of the lawyer joke? ""What do you call a dying banker? A start".
Only humorous IF you are NOT speaking of an individual...Banker or Lawyer.

(I removed that thought and chuckled a little.)
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Old 12-03-2010, 12:21 PM   #16
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The articles states some basic time-tested best practices for investors... especially individual investors. It is amazing how few follow it.

IMO - Investing in balanced funds with at reliable low cost mutual fund company is a less emotional approach to manage a strategic allocation strategy and ensure that a policy is followed. Some people have a loose investment policy based on a rough allocation (that they often abandon in bear and bull markets at the worst time) and make poor, emotionally driven decisions based on greed and fear. But I believe most small investors just wing it and have little to no allocation plan. At least, most people I talk to do not seem to have a strategic target allocation... much less rebalance.
I've often thought about investing in the balanced funds for simplicity.
Do you recommend those type funds in taxable allocations?
I personally have very little tax advantaged space.
I'm always interested in thoughts from all sides of the issues..
Steve
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Old 12-03-2010, 12:33 PM   #17
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I've often thought about investing in the balanced funds for simplicity.
Do you recommend those type funds in taxable allocations?
I personally have very little tax advantaged space.
I'm always interested in thoughts from all sides of the issues..
Steve
Before all these cute little asset allocation, Freedom Funds, taget-date funds, etc, it was the way folks could just buy a fund and kinda forget about it. Some balanced funds have been around for 40-50 years.......

The bonds kick off some interest, so your question is a valid one. Much depends on how much coupon interest is kicked off to be reinvested, what is the capital gains history (are there large gains embedded), etc, etc.....YMMV.

I have owned a balanced fund for 16 years as part of my retirement funds and it has done quite well.........
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