Edited by Peter Bernstein and Aswath Damodaran, widely respected experts in the field, this authoritative resource brings together an all-star team that combines Wall Street savvy with profound theoretical skills. The hands-on professionals who have contributed to this volume command high respect among academics in finance; the academic contributors, in turn, are also experienced in the rough-and-tumble of the Wall Street scene.
Together, they have designed the book to look at investing as a process— a series of steps, taken in the proper sequence, that provides the tools and strategies for optimal balancing of the interaction of risk and return. The analysis is at all points comprehensive and lucid as it moves from setting investment objectives to the best methods for selecting securities, from explaining how to measure risk to how to measure performance, from understanding derivatives to minimizing taxes, and fromproviding the essentials of portfolio strategy to the basic principles of asset allocation. In a unique chapter, the book also offers a searching evaluation of management and governance structures in the modern corporation.
One form of risk management is to make such successful investments that losses do not matter. Only luck can achieve that result; the real world requires decisions whose outcomes are never known in advance. That is what risk is all about. Every stage of the investment process— from executing a trade to optimizing diversification— must focus on making rational choices under conditions of uncertainty. The successful investor's toolkit has more inside of it than just the essential apparatus for selecting securities and allocating assets. The successful investor is also the one who has the knowledge, the confidence, and the necessary control systems to deal with the inevitable moments when forecasts go wrong.
Investment Management explores the investment process from precisely this viewpoint. It is a comprehensive and accessible introduction to investing in today's challenging marketplace— an ideal resource for serious investors and students.
A state-of-the-art program in investment principles and applications from topflight professionals.
Edited by Peter Bernstein and Aswath Damodaran, who are widely respected throughout the world of finance, this authoritative text brings together an all-star team to provide both a hands-on and theoretical overview of investing in today's challenging financial environment.
Once upon a time, Wall Street lived off little homilies like, 'buy low and sell high, ' 'nothing ventured, nothing gained, ' and'don't put all your eggs in one basket.' Like all sayings that endure, these simple proverbs contain a lot of truth, even if not the whole truth. When wrapped into a body of theory that supports them with logic and a systematic set of principles, these elementary wisdoms pack a great deal of power.
Yet if the theory is so consistent, logical, and powerful, another fabled Wall Street saying comes to mind: 'If you're so smart, how come you're not rich?' The answer is disarmingly simple: The essence of investment theory is that being smart is not a sufficient condition for being rich. This book is about the missing ingredients.— from the Preface by Peter L. Bernstein.
The Investment Setting. UNDERSTANDING THE CLIENT. Risk and Utility: Basics. Models of Risk. Alternative Measures of Risk. Tax Considerations in Investing. THE ASSET ALLOCATION DECISION. Global Management and Asset Allocation. Active Asset Allocation. THE ASSET SELECTION DECISION. Asset Selection: Strategies and Evidence. Investment Strategy. PORTFOLIO EXECUTION. Trading Costs. The Hidden Costs of Trading. Managing Portfolio Risk. PERFORMANCE EVALUATION. Evaluating Investment Performance. Taxes and Performance Evaluation. CORPORATE GOVERNANCE AND INVESTMENT MANAGEMENT. U.S. Corporate Governance: Lessons from the 1980s. Chapeter Notes. Glossary. Index.
PETER L. BERNSTEIN is President of Peter L. Bernstein, Inc., economic consultants to institutional investors and corporations. A longtime participant in the world of finance as a money manager, teacher, and writer, he was the founder of the Journal of Portfolio Management and is the publisher of the biweekly, Economics and Portfolio Strategy. His seven books include Against the Gods: The Remarkable Story of Risk (Wiley), and Capital Ideas: The Improbable Origins of Modern Wall Street. ASWATH DAMODARAN is Associate Professor of Finance at New York University's Stern School of Business and the author of numerous books, including Investment Valuation and Corporate Finance: Theory and Practice, both published by Wiley. He was voted one of the top twelve business educators in the United States by BusinessWeek.