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The Flexible Investing Playbook: Asset Allocation Strategies for Long-Term Success

Book Description

How to make sensible investment decisions during these turbulent times

2008 changed everything. Now, more than ever, investors need to be proactive in planning for their retirement. To do so, they must look beyond simply investing in stocks and bonds, while avoiding what may be overwhelming and even misleading investment advice. In The Flexible Investing Playbook: Asset Allocation for Long-Term Success, Robert Isbitts—mutual fund manager, investment strategist, newsletter writer, and author of Wall Street's Bull and How to Bear It—shares the strategies he created and uses with his clients. This approach can potentially allow their portfolios to withstand the volatility of the stock market and subdue the emotional impact of investing, to increase the chances of reaching their investment goals. Along the way, the book:

  • Reviews the events of the 2008 financial market debacle, and identifies key lessons investors should learn from that experience

  • Discusses how traditional approaches to diversification are fraught with risks, and how they may endanger the pursuit of a secure retirement

  • Details why he believes investors cannot live on stocks and bonds alone, while also describing how to properly diversify, without sacrificing precious liquidity

The Flexible Investing Playbook, he presents a proactive approach to investing that's based on the strategies Isbitts created, designed and currently manages.

Table of Contents

  1. Copyright
  2. Acknowledgments
  3. Introduction: Replacing Your Old Investment Playbook
    1. In Case of Fire, Use Stairs
  4. I. Setting the Stage to Be Reeducated
    1. 1. Tired . . . but Not Retired
      1. 1.1. Bulls, Bears, and Pigs
    2. 2. 2008: What the Hell Happened?!
      1. 2.1. Where's "Voldo?"—August 1, 2007
      2. 2.2. "Wimpy"—September 19, 2007
      3. 2.3. Counting Backwards—February 1, 2008
      4. 2.4. Two Wild and Crazy Guys—August 8, 2008
        1. 2.4.1. The Stock Market's Split Personality and What We Are Doing About It
        2. 2.4.2. So, Where Are We?
      5. 2.5. It's All About the U(-Shaped Recovery)—October 21, 2008
      6. 2.6. Hot 'N Cold—December 9, 2008
      7. 2.7. Not Suitable for All Ages?—March 17, 2009
    3. 3. What Have We Learned?
      1. 3.1. Lessons from Stock Market History
      2. 3.2. "Renting" the Stock Market—the Ballad of Babe and Yogi
      3. 3.3. The 60/40 Approach to Investing—My Version
      4. 3.4. There Must Be 50 Ways to Invest Your Assets
      5. 3.5. Style Boxes: Out of Style?
      6. 3.6. Unwrapping the Box
      7. 3.7. "Rearview Mirror" Investing
      8. 3.8. Finding Bull Markets Wherever They Exist
  5. II. Getting Old Ideas Out of Your Head
    1. 4. Identifying the Issues and the Enemy
      1. 4.1. What Makes Today Different from the 1980s and 1990s?
      2. 4.2. Where Does This Lead Us?
        1. 4.2.1. It's Time to Decide: Are You a Trader or an Investor?
      3. 4.3. Do You Think You Can Be Effective in Market Forecasting?
      4. 4.4. Investment Football
      5. 4.5. More Bad Habits to Kick
      6. 4.6. An Obsession with Risk Avoidance
        1. 4.6.1. "I Could Have Done Better Having My Money in the Bank"
        2. 4.6.2. The "Seen One, Seen 'Em All" Rule
        3. 4.6.3. De-Worse-ification
      7. 4.7. Performance Contests
      8. 4.8. Shooting the Weak Performer
      9. 4.9. "Rearview Mirror Investing"
      10. 4.10. The Other Enemy
    2. 5. Wall Street's Bull
      1. 5.1. Shortcuts and Overkill
      2. 5.2. Taking the Shortcut
      3. 5.3. Are You Being Advised or Sold To?
      4. 5.4. Conventional Wisdom: Not So Smart
      5. 5.5. A Shocking Fact
      6. 5.6. Overlap
      7. 5.7. 10 Investment Ideas that Still Don't Work
      8. 5.8. "Moderately Constructive" and Other Indecipherable Comments from "Talking Heads"
      9. 5.9. Congratulations!
  6. III. Investing in the Twenty-First Century
    1. 6. Keys to Successful Asset Allocation
      1. 6.1. An Investment Philosophy Is Born
        1. 6.1.1. The Philosophy Leads to an Investment Process
        2. 6.1.2. What If They Ban Short-Selling Again?
      2. 6.2. The 10 Keys to Asset Allocation
      3. 6.3. Other Key Factors to Consider in Asset Allocation
        1. 6.3.1. What Investment Vehicle to Use?
        2. 6.3.2. Why Not Just Use ETFs?
      4. 6.4. Hedge Funds: A Limited Solution
        1. 6.4.1. Notable Pros and Cons of Hedge Funds
          1. 6.4.1.1. Pros
          2. 6.4.1.2. Cons
      5. 6.5. What Holding Period/Time Horizon to Target?
        1. 6.5.1. "Target-Date" Funds: Way Off Target!
        2. 6.5.2. Allocation Funds: A Better Solution for Preretirees
      6. 6.6. The True Cost of Investing
      7. 6.7. Portfolio Turnover: Far More Irrelevant Than "Experts" Would Have You Believe
      8. 6.8. Diversification and "De-Worse-ification"
      9. 6.9. When to Say Bye to Your Buy (Sell Discipline)
      10. 6.10. Volatility: How To Make It Your Friend Instead of Your Enemy
        1. 6.10.1. Nine Keys to Portfolio Risk Management
      11. 6.11. Five Ways to Whip Inflation Now (or Whenever It Arrives)
      12. 6.12. Game Time! Meet the Portfolio Strategies
    2. 7. Hybrid Investing
      1. 7.1. How Hybrid Came to Be
      2. 7.2. The Objective of the Hybrid Allocation Strategy
      3. 7.3. Hybrid Mutual Fund Styles
      4. 7.4. Constructing Hybrid Portfolios
      5. 7.5. The Hybrid Investment Process
      6. 7.6. Where Hybrid Investing Fits into Your Portfolio
        1. 7.6.1. Benchmarking the Performance of the Hybrid Allocation Strategy
      7. 7.7. Risk Management in the Hybrid Strategy
      8. 7.8. Hybrid Investing: A Flagship Strategy for Twenty-First-Century Asset Allocation
      9. 7.9. Why Not Just Pick One Alternative Mutual Fund and Call It a Day?
    3. 8. Concentrated Equity Investing
      1. 8.1. My Favorite Article on Concentrated Mutual Fund Investing
      2. 8.2. When Does Diversification Lose Its Benefits?
        1. 8.2.1. What Is the Concentrated Equity Allocation Strategy?
        2. 8.2.2. How Many Stock Holdings Makes a Fund "Concentrated?"
        3. 8.2.3. More about the Concentrated Equity Investment Process
      3. 8.3. Sell Discipline
        1. 8.3.1. Benchmarking the Performance of the Concentrated Equity Allocation Strategy
    4. 9. Global Cycle Investing
      1. 9.1. Types of Business Cycles
      2. 9.2. The Global Cycle Strategy in Action
        1. 9.2.1. The Global Cycle Investment Process
        2. 9.2.2. Objectives of the Global Cycle Strategy
        3. 9.2.3. Benchmarking the Performance of the Global Cycle Allocation Strategy
  7. IV. You've Come This Far, Now Score! (Putting the Strategy to Work)
    1. 10. Evaluating Your Performance—the Right Way
      1. 10.1. Capturing Investment Success
      2. 10.2. "Capture Ratio": What Is It, and How Does It Help You?
      3. 10.3. Capture Ratios—A Simple Example
      4. 10.4. Consistency Counts (If You're Into That Sort of Thing)
      5. 10.5. Using Rolling Returns for Better Analysis
        1. 10.5.1. Let's Play a Performance Analysis Game
      6. 10.6. Don't Let the Market Be Your Evil Twin (R-Squared)
    2. 11. Putting It All Together
      1. 11.1. Mixing the Strategies—without Food Analogies
      2. 11.2. The Golden Ticket for the Next Decade and Beyond
      3. 11.3. Chasing Tails: How to Play Defense against a "Market Event"
      4. 11.4. "Gray Investing" Is Better Than "Black-and-White" Investing
      5. 11.5. Market History: Know It and Learn from It
      6. 11.6. From Boring to Number One in 20 Weeks!
      7. 11.7. Replacing Your Old Investment Playbook (Reprise)
      8. 11.8. The Last Word(s)
  8. About the Author