Review of The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets (Hardcover)

Most investment books are disappointments because of one or more of these characteristics:inflated (would have been a good magazine or journal article, but doesn't deserve a book);obscure because information is withheld (in order to sell a newsletter, software, or service);obscure because it is poorly written;subjective (not data driven);or just plain wrong.

The Ivy Portfolio has none of those problems."Not bad" isn't the same as good, but this book is good.It is full of ideas and useful information;the disclosure is extensive, allowing reproducible results;it is well written;it is data driven;it is right based on the historical evidence, and I think the recommendations will prove to be robust.

Under the theme of learning best practices from the most successful investors, Ivy has not one but three big ideas:do what the "super endowments" do (diversify into additional asset classes);employ systematic timing to reduce risk;follow the best investment managers.A non-professional (but responsible) investor will understand how to do these things after reading Ivy, and I believe will do much better than buy-and-hold management (or in practice, "winging it").It won't take much time or special resources to manage an Ivy Portfolio.The companion website, www.theivyportfolio.com should be a good adjunct.

Any concerns?I suggest that more discussion about pitfalls in choosing ETFs to implement the less familiar asset classes would be good.More importantly, the underlying idea is patterned after endowments and hedge funds.The typical individual investor has a time horizon and risk profile driven by the life cycle:accumulation, transition, decumulation (systematic withdrawal to provide retirement income).Individuals benefit from investment volatility early in their savings career, yetvolatility is treacherous for retirees, particularly in the early years of retirement.Endowments don't die.Addressing possible mismatches between management based on institutional models and the individual's situation would be helpful.Academics and quants might look for discussion of the statistical significance of the findings here, but I am satisfied with the case the authors make for the economic significance of their ideas.

Bottom line:a curious or thoughtful investor will find this book well worthwhile.




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