DescriptionThe Intelligent Portfolio draws upon the extensive insights of Financial Engines—a leading provider of investment advisory and management services founded by Nobel Prize-winning economist William F. Sharpe—to reveal the time-tested institutional investing techniques that you can use to help improve your investment performance. Throughout these pages, Financial Engines’ CIO, Christopher Jones, uses state-of-the-art simulation and optimization methods to demonstrate the often-surprising results of applying modern financial economics to personal investment decisions.
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Introduction to Financial Engines.
Chapter 1. Making it Personal.
A Changing World.
The Grand Social Experiment: 401(k).
The Traditional Advice Model.
Institutional Tools of the Trade.
Chapter 2. No Free Lunch.
I'll Take the One With the Highest Return…
A Little Bit of Latin: Ex-Ante and Ex-Post.
How are the Prices of Risky Assets Set?
The Link between Risk and Return.
When High Risk Does Not Mean High Return.
Hidden Risks and the Peso Problem.
How Much Risk am I Taking?
The Risks and Returns of Different Assets.
Does it Pass the Blush Test?
Chapter 3. History is Bunk.
History and Expected Returns.
The Past is Not the Future.
History is Sometimes Not What it Seems.
Investing with Perfect Hindsight.
The Lucky and the Skillful.
Evaluating Fund Performance.
Chapter 4. The Wisdom of the Market.
The Efficient Market?
What is the Market Portfolio?
What Does the Market Portfolio Look Like?
There's No Place Like Home.
History of the Market Portfolio.
Betting Against the Market.
Avoiding Unintentional Bets.
Risk and the Market Portfolio.
The Market's View of Future Returns.
Market Portfolio Simulations.
Chapter 5. Getting the Risk Right.
How to Measure Risk.
Asset Mix and Short-Term Loss.
Risk and Portfolio Outcomes
Risk and Time Horizon.
Factors to Consider in Selecting a Risk Level.
Examples of Informed Investor Behavior.
Chapter 6. An Unnecessary Gamble.
A Different Sort of Beast.
The Risk of Individual Stocks.
The Implications of Individual Stock Risk.
Expected Growth Rates.
The Biggest Mistake in 401(k).
What about More than One?
Do You Feel Lucky?
How to Do It Safely.
Dealing with Unwanted Stock Risk.
Chapter 7. How Fees Eat Your Lunch.
It's Basic Arithmetic.
For Every Winner There Has to Be a Loser.
It Still Adds Up to Dollars.
A Wide, Wide World.
How Fees Eat Your Lunch.
It's a Heavy Load to Bear.
Fees and the Bigger Picture.
Chapter 8. Smart Diversification.
The Goals of Diversification.
The Big Picture.
Why Hierarchy Is Bad for Portfolios.
The Value of Asset Class Diversification.
Diversification Ain't What It Used to Be.
Diversification and Investment Choices.
The Big Picture: Part II.
The Search for Better Diversification.
Chapter 9. Picking the Good Ones.
The Stuff That Matters.
It's About the Future.
Risk Tolerance and Fund Choice.
Predicting Mutual Fund Performance.
Putting the Pieces Together.
What it Takes to Rank Among the Best.
Chapter 10. Funding the Future.
The Benefits of Being Flexible.
Taxable and Tax-deferred Savings.
How Much Do You Need?
From Wealth to Income.
The Myth of Absolutes.
Risk, Time, and Savings.
What it Takes to Get There.
Chapter 11. Investing and Uncle Sam.
Why You Don't Want to Minimize Taxes.
How Taxes Impact Investment Returns.
The Impact of Personal Tax Rates.
Tax-Efficiency of Asset Classes.
Mutual Fund Tax-Efficiency.
Capital Gains and Losses.
Putting It All Together.
Chapter 12. Wrapping It Up.
Appendix. Getting Started with the Personal Online Advisor Service.
About the Author.
""A very comprehensive book which covers risk versus rewards, past performance versus future expected returns, market timing versus long term investing, and investing in individual stocks versus investing in mutual funds. He also discusses diversification, fees and expenses, and the tax consequences of investing. All of his recommendations are backed up with extensive research and presented in an easy-to-understand manner.""--Stockerblog