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Rekenthaler Report

Bonds, Be Gone

Bill Bernstein's advice for investment adults.

Taking the Long View
Bill Bernstein has released his third "paperback" in his Investing for Adults series. As with the first two installments of the series, this one is terrific. (At $5 for the Kindle version and $10 for print, the price is also very much right.)

The book's title is Deep Risk: How History Informs Portfolio Design. That boggled my mind, too, but the concept is straightforward. Bernstein dispenses with volatility-based asset allocation, advocating instead a different, longer-term approach to building portfolios. Investment adults, he argues, are those who outgrow the stage of fussing over market movements. For assets that they intend to own for several decades, adults pay little attention to the "shallow risk" of investment volatility. They focus instead on avoiding the "deep risk" of permanent damages.