Chapter
The Importance of Balance Always, but Particularly Today
Chapter 2 Your Portfolio Is Not Well Balanced
The Conventional Portfolio is not Balanced
The Flaw in Conventional Thinking
Chapter 3 The Fundamental Drivers of Asset Class Returns
Breaking Down Returns Into Cash Plus Excess Return
Excess Returns Above Cash
Shifts in the Economic Environment (a Risk You Can Diversify Against)
Bonds: Why Shifts in the Economic Environment Impact Returns
Stocks: Why Shifts in the Economic Environment Impact Returns
All Asset Classes: Why Shifts in the Economic Environment Impact Returns
Shifts in Risk Appetite (Not a Diversifiable Risk)
Shifts in Expectations of Future Cash Rates (Not a Diversifiable Risk)
Chapter 4 Viewing Stocks through a Balanced Portfolio Lens
The Conventional View: Why Investors own a lot of Stocks
Oversight #1: The Risk of Long-Term Underperformance in Stocks
Oversight #2: Equities Are Just Prepackaged to Offer Higher Returns
Oversight #3: The Conventional Approach Results in Imbalanced Portfolios
The Balanced Portfolio View: How to Think About Equities
Economic Bias: Rising Growth Bias of Stocks
Economic Bias: Falling Inflation Benefit to Equities
Combining the Two Economic Biases of Equities
The Importance of Volatility
The Role of Equities in a Truly Balanced Portfolio
Chapter 5 The High Value of Low-Yielding Treasuries within the Balanced Portfolio Framework
The Conventional Perspective
Major Flaw #1: Interest Rates Have to Rise More than People Expect for Treasuries to Underperform Cash
Major Flaw #2: Long-Term Treasuries Can Deliver Sizable Gains over Shorter Periods
Major Flaw #3: Cutting Treasury Exposure Reduces Balance and Makes Portfolios More Risky
Considering Treasuries Through a Balanced Portfolio Perspective
Economic Bias: Treasuries Favor Falling Growth
Economic Bias: Falling Inflation Benefit to Treasuries
Important Distinction: Deflation versus Falling Inflation
Putting It Together: Falling Growth and Falling Inflation (and Deflation) Economic Bias
The Benefits of Higher-Volatility Treasuries
The Role of Treasuries in the Balanced Portfolio
Chapter 6 Why TIPS Are Critical to Maintaining Balance (Despite Their Low Yield)
What are Tips and how do They Work?
The Conventional View That the Yield of Tips is too Low and why it’s Flawed
Tips Viewed through a Balanced Perspective
Economic Bias: Rising Inflation
Economic Bias: Falling Growth
Putting It Together: Rising Inflation and Falling Growth
The Crucial Role of tips in the Balanced Portfolio
Chapter 7 Owning Commodities in a Balanced Portfolio
What are Commodities Investments?
The Conventional view of Commodities
Major Flaw #1: Low Returns and High Volatility—Why Would I Ever Invest in Commodities?
Major Flaw #2: Two Structural Issues—They Pay No Income and Futures Prices Can Diverge from Spot Prices
Considering Commodities Through a Balanced Portfolio Perspective
Economic Bias: Rising Inflation
Economic Bias: Rising Growth
Putting It Together: Rising Inflation and Rising Growth
The Advantage of the High Volatility of Commodities
The Role of Commodities in a Balanced Portfolio
Chapter 8 Even More Balance: Introduction to Other Asset Classes
How to Deconstruct Other Asset Classes Using the Balanced Framework
Chapter 9 How to Build a Balanced Portfolio: Conceptual Framework
Introduction: Two Simple Questions
Question One: Which Asset Classes?
Question Two: How do I weight the Asset Classes?
Chapter 10 How to Build a Balanced Portfolio: The Step-by-Step Process
The Logical Sequence Behind Efficiently Weighting Asset Classes
The Ideal Portfolio for Each Economic Climate
Combining Four Economic Portfolios into One
Two Steps to Balancing the Portfolio
Analyzing 60/40 Through the Same Lens
Chapter 11 The Balanced Portfolio: Historical Returns
The Balanced Portfolio has Achieved Steady Long-Term Returns
Solid Trailing Returns: The Tortoise and the Hare
Stable Growth over the Long Run
Consistent Returns Year by Year
The Balanced Portfolio has not Underperformed for Extended Periods
The Balanced Portfolio has had Limited Major Drawdowns
Why Unexpected Rising Cash Rates and Falling Risk Appetite Can Cause Short-Term Underperformance
Major Drawdowns Have Infrequently Occurred
Drawdowns Have Not Been Severe or Long Lasting
Chapter 12 Implementation Strategies: Putting Theory into Practice
The Balanced Portfolio as the Efficient Starting Point
Implementing the Balanced Portfolio
Trying to Improve Upon the Balanced Portfolio
Tactic #1: Tilt from the Neutral, Efficient Starting Allocation
Observe the Golden Rule: Diversification Always Trumps Conviction
Tactic #2: Use Active Managers to Try to Outperform the Market
Tactic #3: Use a Combination of the Two Approaches
Other Implementation Considerations
Balanced Asset Allocation
：How to Profit in Any Economic Climate
( Wiley Finance )
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