Summary of William J. Bernstein's The Intelligent Asset Allocator

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 The second choice is to invest in a coin toss. You will receive a 30 percent return if you get heads, but a minus 10 percent return if you get tails. This option will be referred to as Uncle Fred’s coin toss, or simply, the coin toss.

#2 The coin toss example demonstrates the difference between the average and annualized return of an asset. The average return is the average of each of the individual annual returns, while the annualized return is the return you must earn each and every year to equal the result of your series of differing annual returns.

#3 The coin toss is a convenient way to demonstrate the risks and returns of common stocks. The return of common stocks over the past 73 years has been 11. 22 percent, in the same league as the coin toss.

#4 The annualized return is the return which would be required each year to yield the same result. It is calculated by dividing the return by the number of years it took to achieve it. The average return is the average of the eight individual returns, while the return required to achieve the same result is 9. 397%.

• Language: English
• Publisher: IRB Media
• Release date: Apr 29, 2022
• ISBN: 9781669399261

IRB Media

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Insights on William J. Bernstein's The Intelligent Asset Allocator

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 7

Insights from Chapter 8

Insights from Chapter 9

Insights from Chapter 10

Insights from Chapter 1

#1

The second choice is to invest in a coin toss. You will receive a 30 percent return if you get heads, but a minus 10 percent return if you get tails. This option will be referred to as Uncle Fred’s coin toss, or simply, the coin toss.

#2

The coin toss example demonstrates the difference between the average and annualized return of an asset. The average return is the average of each of the individual annual returns, while the annualized return is the return you must earn each and every year to equal the result of your series of differing annual returns.

#3

The coin toss is a convenient way to demonstrate the risks and returns of common stocks. The return of common stocks over the past 73 years has been 11. 22 percent, in the same league as the coin toss.

#4

The annualized return is the return which would be required each year to yield the same result. It is calculated by dividing the return by the number of years it took to achieve it. The average return is the average of the eight individual returns, while the return required to achieve the same result is 9. 397%.

#5

The standard deviation is a measure of the scatter of a set of numbers. It is typically used to calculate the risk of asset A, which has an annual return of 11. 46%.

#6

There are many ways to measure risk, from the probability