Wednesday 11 April 2007

Book Review: The Art of Asset Allocation

Here's the one word review: yucchh!

This book is to asset allocation and finance as metaphysics is to philosophy. Much complicated ado that ultimately is of little use.

I was really looking forward to reading this book by David Darst, which I had bought at the same time as Richard Ferri's All About Asset Allocation. The contrast between the two could not be greater. Ferri is excellent, as I have written in another review. Darst displays the worst of financial writing - dense, boring sentences, superfluous numbers and tables, chart junk illustrations, endless checklists, non-actionable general recommendations and worst of all, radical departures from financial theory that will get an investor into trouble - I refer to tactical asset allocation, which is nothing more than market timing in disguise. A little less "art" and a little more "science" in asset allocation is what we need.

Consider that the book has no footnotes, no references or reading lists - as if Darst's exposition is self-sufficient. Even Newton found it beneficial to stand on the shoulders of others. On the other hand, Darst does take time to say, "Of particular value have been the advice and counsel provided by: ...", followed by four and half pages of names, which I guesstimate is over 600 people. Really?! 600 people?

The hilarious epitome of useless complication is the chart on page xiii, a series of circles within circles with overlapping wheels, which shows an alternative sequence of reading the chapters. I would suggest an author's task is to simplify for the reader and present the material in one logical sequence of chapters, not complicate matters as he has.

I almost get the impression Darst wrote this book to show how smart and knowledgeable he is, a career move to impress his boss and others in the industry. But it doesn't help Mr. Average Investor. The net effect of trying to read this book for an average investor would be to feel that asset allocation is such an esoteric and arcane subject that only someone like Darst or Morgan Stanley (Darst's employer) could possibly do it.

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