crowder - post modern investment; facts and fallacies of growing wealth in a multi-asset world (2013)

[...]... Real Estate Investment What Every Investor Should Know Myths and Misconceptions of Real Estate CHAPTER 8 Asset Allocation: The Simple Way and the Hard Way The Why and Wherefore of Multiple Asset Allocation Approaches Overview and Limitations of the Existing Asset Allocation Process Asset Allocation in Traditional and Alternative Investments: A Road Map Return and Risk Attributes and Strategy Allocation... mathematical models, and company practice in defining risk These differing approaches to embracing and understanding risk make a definitive approach to risk measurement and risk-based asset allocation elusive In addition, since we monitor only what we can measure, most approaches to risk measurement within asset allocation continue to rely on simplified measures of security and market risk (alpha and beta) as... the actual source of return and risk The increase in potential investment opportunities increases the potential benefit of strategic asset allocation opportunities as well as tactical and dynamic approaches to asset allocation There are, of course, numerous approaches to asset allocation and risk management At the core of asset allocation remain the fundamental set of decisions centered on what and. .. calculation in this model only the pure belief that there can be only one outcome and that loss and risk lie in not fully engaging with a given path In contrast, institutional wealth is built by the steady analysis and implementation of risk and return models This approach entails an understanding that preservation of the corpus against in ation is foremost in the accumulation of wealth The institutional wealth. .. hypothesize what changes will happen in the future: but happen, they will Much of what we do in investment management is based on understanding the trade-offs between the risks and returns of various investable assets, as well as understanding various aspects of the asset allocation process, including alternative approaches to return estimation and risk management These trade-offs are often conditioned by a belief... reexamine the purpose of the asset allocation decision in finance and the changing nature of risk as we strive to create, manage, and preserve wealth in an uncertain environment What was forgotten or overlooked by sovereigns, investment banks, and their regulatory oversight companions is that the changed and changing nature of risk is at the core of the asset allocation decision Risk-based asset allocation... bumpy at times but nevertheless reveals changing ideas and processes and enables an investor to find a workable solution In this regard, there are no optimal solutions and no easy paths Within our view, there are only those decisions taken with understanding and care and those that are not This is the heart of modern investment IN THE BEGINNING Maximizing return and reducing the role of chance in the investment... look to the advice of others, only that it is imperative to seek transparent and objective validation of all advice The synopsis of our experiences is that in this modern world of investment, change is a constant, adaptation a necessity, and due diligence a given This view has led the authors to seek transparency in, and an understanding of, the sources of returns of various asset classes and investment... in understanding diversification as a risk-management tool is to fully comprehend the sources of return, correlations, and limitations of individual assets as well as how they function in tandem Equally as important is to understand that the world has changed significantly since the introduction of the simple stock and bond portfolio as the primary example of adequate portfolio diversification In an interdependent... prepackaged convertible bonds and the initial public offerings (IPOs) of new enterprises Many of the limitations of the current asset allocation approaches and models are that they concentrate primarily on investment in a limited number of assets and adhere to their historical definitions Today, investment in a larger range of investable assets is being addressed through more active asset construction and . more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging -in- Publication Data: Crowder, Garry B., 1954— Postmodern investment : facts and fallacies of growing wealth. at www.WileyFinance.com. Postmodern Investment Facts and Fallacies of Growing Wealth in a Multi-Asset World GARRY B. CROWDER THOMAS SCHNEEWEIS HOSSEIN KAZEMI John Wiley & Sons, Inc. Cover Design:. as tactical and dynamic approaches to asset allocation. There are, of course, numerous approaches to asset allocation and risk management. At the core of asset allocation remain the fundamental