The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets [Paperback]

keep it simple stupid. that`s the theme. you don`t need to spend hours and hours pouring over data and charts in order to beat every fund
manager in the world.get excellent returns with basically with a low investment in time. you have no decisions to make just follow the rules, and you will make money.

The book deals with five issues; how to reconfigure a standard 60:40 portfolio in light of the experiences of Harvard & Yale; how to tactically manage that reconfigured portfolio so as to avoid disastrous drawdowns; an examination of funky stuff (hedge funds & private equity) & their place in a private investor's portfolio; & added on, the float of an idea for following the investments of top investors by reference to their public filings.

The 'Ivy League' aspects are really just a variant on the standard diversified portfolio. I didn't think there was so much in this. Indeed, the standard 60:40 comes out quite well if we are talking buy, hold & rebalance. The stuff on Harvard & Yale process is interesting, however, particularly how they seem to have really gripped the long term implications of the declining value of the $, gone for real assets, looked for areas where they (& their alumni) can find inefficiencies & not got too hooked onto the cult of equities nor bonds. Perhaps they could have looked at, say, Clare College, Cambridge for some transatlantic perspective. The funky stuff just leads to the conclusion that it is hard to access & should only be done with perhaps profits from the core portfolio. I thought the 'following from public filings' idea rang alarm bells.

I found the most useful bit to be this book's key points as regards avoiding bear markets.

Being the momentum strategy (buying only into confirmed strength) & the stop loss/take profit strategy (selling after a series of moves down below the 10 month moving average).

Of course, these can likely feel counterintuitive, but represent a much-used strategy in trading. The book does a good job at explaining why taking significant uncontrolled losses is a disaster, & fuses some of the thinking traders use into an investment context. The book is pretty open about the risks, that is the slip below the moving average may be a false signal, that you could possibly rack up dealing costs from constantly chopping & changing & that you will miss out on at least part of big moves up off eventual bottoms. Personally I think that the book is too dismissive about 'buying at the bottom or around the bottom' strategies, &, as other reviewers point out, a potential weakness of the strategy is that you only come back into the market after a series of gains.

But, to be fair, the book's whole point is about minimising downside risk & volatility whilst delivering decent returns. It will be interesting to see how their fund launched on the back of this goes. What I would say is that, in my experience, there is certainly a lot to be said about putting new cash in on momentum although I'd be a bit concerned about transaction costs on the refined rotational strategy they consider. But there is also a lot to be said for being brave & coming in, progressively, when there is blood on the streets, so after big declines &, say, 9 months + of downs (since 1956 the average length of S&P/TSX bear markets has been 9 months, average loss 28%). Obviously there are risks in this as the lows can keep coming but watching the braking of downwards momentum is helpful here. I also think there is a less strong but nonetheless credible (mean reversion) case for progressively taking cash off the table when you get to a point where markets have gone up a lot for a fair while (average gain in S&P/TSX bull market since 1956 122%, average length 45 months) so that you keep (some of your) powder dry for the eventual turning point. It's instructive that the book was written at the beginning of 2009. I wonder whether the authors are at all tempted, given we're 24 months into a general bull market & not far off 100% up (generally), to move some money into cash waiting for a pullback? Or even, if we go much higher, to start to short certain asset classes?

Overall, a very good & thought-provoking book.

There is quite a lot of heavy stuff analysis but it's done in quite an accessible way.

I have found this book the most refreshing book on investing I ever read in 20 years. Mebane's approach is simple but effective. Stop dealing in single stocks, use back tested ideas on ETF covering all asset classes with a trend following approach to protect against volatility to the downside. This book is simply perfect and you can immediately trade Mebane approach or adapt it to your needs.