Asset Allocation by Roger Gibson

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Leesbro63
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Asset Allocation by Roger Gibson

Post by Leesbro63 »

What ever happened to Roger Gibson? I read his book on asset allocation in the late 1990s and it was frequently discussed on the original Morningstar BOGLEHEADS bulletin board. I think he may even have been a "guru" poster there like Rick Ferri, Larry Swedroe and Bill Bernstein (and a few others) today. Where did he go? He seems to have dropped out of sight. His book was, I believe, a real breakthrough.
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Re: Asset Allocation by Roger Gibson

Post by RadAudit »

FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
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SimpleGift
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Re: Asset Allocation by Roger Gibson

Post by SimpleGift »

Mr. Gibson's book, Asset Allocation, was a great help to me when I first started investing in the 1990s, as it explained the power of portfolio diversification in easy-to-read, layman's terms. However, I would say it's been superseded by more recent books from other authors, including Rick Ferri (All About Asset Allocation), William Bernstein (Four Pillars of Investing) and others.

Gibson's book was a classic in its day — and I'm still grateful for his contributions to my early understanding of asset diversification and portfolio design.
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Leesbro63
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Re: Asset Allocation by Roger Gibson

Post by Leesbro63 »

Simplegift wrote:Mr. Gibson's book, Asset Allocation, was a great help to me when I first started investing in the 1990s, as it explained the power of portfolio diversification in easy-to-read, layman's terms. However, I would say it's been superseded by more recent books from other authors, including Rick Ferri (All About Asset Allocation), William Bernstein (Four Pillars of Investing) and others.

Gibson's book was a classic in its day — and I'm still grateful for his contributions to my early understanding of asset diversification and portfolio design.
That's my point/question. He was an innovator/researcher but seems to have dropped back in favor of others. Not that it's a race, but just odd to me that someone with such groundbreaking stuff would not continue to research and publish like the other mentioned gurus have.
bhsince87
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Re: Asset Allocation by Roger Gibson

Post by bhsince87 »

The most recent edition just came out last year.



http://www.amazon.com/Asset-Allocation- ... 00BPO7742/


I guess it's a case of "if it ain't broke, don't fix it."
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xenial
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Re: Asset Allocation by Roger Gibson

Post by xenial »

I too received my first solid introduction to Boglehead thinking when I borrowed a copy of Asset Allocation (1st edition) from the library. I later purchased the book, and it occupies a place of honor on my bookshelf.
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Macmungo
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Re: Asset Allocation by Roger Gibson

Post by Macmungo »

I just sold most of my books, and among them were two editions of Roger Gibson's "Asset Allocation". When I was starting serious investing in the 1990s Gibson was the most useful guide I could find. He provided the first really methodical framework for thinking about investing that I stumbled upon. Thanks. (And the only financial book I have kept is one of J.Bogle's, which my executor may find valuable.)
daffyd
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Re: Asset Allocation by Roger Gibson

Post by daffyd »

Leesbro63 wrote:
Simplegift wrote:Mr. Gibson's book, Asset Allocation, was a great help to me when I first started investing in the 1990s, as it explained the power of portfolio diversification in easy-to-read, layman's terms. However, I would say it's been superseded by more recent books from other authors, including Rick Ferri (All About Asset Allocation), William Bernstein (Four Pillars of Investing) and others.

Gibson's book was a classic in its day — and I'm still grateful for his contributions to my early understanding of asset diversification and portfolio design.
That's my point/question. He was an innovator/researcher but seems to have dropped back in favor of others. Not that it's a race, but just odd to me that someone with such groundbreaking stuff would not continue to research and publish like the other mentioned gurus have.
I picked up the most recent edition of his book last year. It's still good but I think most useful for financial planners who need to take clients through a structured process.

In the past it was a more technical read than Bernstein, for example. I think what has really superseded the technical side is the rise of the quants. Amazing recent releases by Ilmanen and now Ang are a cut above on the technical side.

So the niche for his book has become narrower: for beginners Bernstein and Ferri are more accessible, for technical innovation Ilmanen and Ang are more cutting-edge, so it's really the financial planning process that remains.
staythecourse
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Re: Asset Allocation by Roger Gibson

Post by staythecourse »

Gibson's book was the first book I just randomly pulled off the chart when I wanted to start learning about investing and it is still one of the BEST books I have read.

Thank you for mentioning it as not many folks include it in the works alongside Bernstein's and Ferri's. It was as good if not better then theirs. For those who haven't read it, but like investing books it is a must read.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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Re: Asset Allocation by Roger Gibson

Post by nisiprius »

I have not spent quality time with it. I have the impression that Gibson's book, published in 1996, and his paper, "Asset Allocation and the Rewards of Multiple-Asset-Class Investing," Journal of Financial Planning, March 1999, were influential and may be the root source of the style of investing strategy called multi-asset or factor-based or "slice-and-dice."

Some kind of updated version of the 1999 article appears to be available herehere. It does not read like a formal, rigorous paper.
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Random Walker
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Re: Asset Allocation by Roger Gibson

Post by Random Walker »

I still think Gibson's Asset Allocation is required reading. He does the best job of explaining how diversification with multiple asset class investing brings a portfolio's annualized return closer to the average return of its components. He makes the strong argument with only 4 or 5 pretty vanilla asset classes. But the logic is critical. Then when one reads about diversifying into other asset classes, diversifying across risk factors, diversifying across sources of return, he is more likely to consider new additions to his portfolio in the right context.
His whole book can really be reduced to one or two charts from the book. In fact he wrote a short maybe 10 page article derived from the book that effectively condenses the book nicely for us laymen. In fact, I would say that if someone wants to maximize the efficiency of their investment reading after reading one or two of the most introductory books, they should read this short Gibson article and the even shorter Effective Diversification in a 3 Factor World by Larry Swedroe. Gibson's article sets the framework for Larrys article. Links to both are below.

Dave

http://www.amcham-shanghai.org/amchampo ... esting.pdf

http://thebamalliance.com/pdfs/Effectiv ... wedroe.pdf
Random Walker
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Re: Asset Allocation by Roger Gibson

Post by Random Walker »

Wouldn't it be interesting to seen a few of those Gibson multi asset class graphs with other asset classes/styles added to the mix: reits, small value, emerging, momentum, etc?

Dave
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Re: Asset Allocation by Roger Gibson

Post by Hank Moody »

I have his most recent book. His reasoning is solid, but I had some difficulty verifying his data about international bond investing. He uses unhedged bonds to demonstrate how they reduce portfolio risk. When I tried to reconstruct those portfolios on my own, my conclusions were the opposite of his.

If anyone is interested in this, I'll go back and pull the pages from his book along with my own data.
-HM
xenial
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Re: Asset Allocation by Roger Gibson

Post by xenial »

Taylor has just posted some well-chosen excerpts from the 3rd edition.
jdb
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Re: Asset Allocation by Roger Gibson

Post by jdb »

Ken Schwartz wrote:Taylor has just posted some well-chosen excerpts from the 3rd edition.
I have never read the book, but based on Taylor's recommendation just posted I am ordering the current version from Amazon, through the link on this site. A little surprised at the price, almost $50, but like lots of other things guess quality doesn't come cheap.
Random Walker
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Re: Asset Allocation by Roger Gibson

Post by Random Walker »

If you don't like the price of the book, read the short summary paper he wrote.

http://www.amcham-shanghai.org/amchampo ... esting.pdf


Dave
novicemoney
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Re: Asset Allocation by Roger Gibson

Post by novicemoney »

There is a great chart in this article "Total Investment Capital Market". It give me a snapshot of where all the money is going. For a novice like me, great stuff. The only problem is the data is from 12/31/2005. I tried to find more current data, but have had no success. Any suggestions?
staythecourse
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Re: Asset Allocation by Roger Gibson

Post by staythecourse »

novicemoney wrote:There is a great chart in this article "Total Investment Capital Market". It give me a snapshot of where all the money is going. For a novice like me, great stuff. The only problem is the data is from 12/31/2005. I tried to find more current data, but have had no success. Any suggestions?
If your talking abut the investable capital markets as a pie chart I believe Mr. Ferri's "AAAA" has the same and his last edition should be more recent.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
Random Walker
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Re: Asset Allocation by Roger Gibson

Post by Random Walker »

I'm curious, of those who are fans of the book and appreciate the improved portfolio efficiency achieved with multi asset class investing, have you all become tilted slice & dice multi asset class investors? For me books like this led me to accept somewhat higher portfolio maintenance costs for the sake of getting closer to the northwest corner of the efficient frontier.

Dave
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SimpleGift
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Re: Asset Allocation by Roger Gibson

Post by SimpleGift »

Random Walker wrote:I'm curious, of those who are fans of the book and appreciate the improved portfolio efficiency achieved with multi asset class investing, have you all become tilted slice & dice multi asset class investors? For me books like this led me to accept somewhat higher portfolio maintenance costs for the sake of getting closer to the northwest corner of the efficient frontier.
Absolutely. Gibson's book left me with the impression that "the more diversification, the better!" As a result, whenever Vanguard came out with a new asset class index (small caps, REITs, emerging markets, etc.), I usually made room for it in my portfolio allocation. Sure, I've probably benefited from increased returns and lower volatility over the years — but as I've gotten older I've questioned whether I really need so many diverse slices (all with embedded capital gains now that make it impractical to sell them for simplification).

I wish now that I'd more fully appreciated the simplicity of the 3 or 4 fund portfolios in the beginning — and realized that they are probably plenty diversified enough.
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Re: Asset Allocation by Roger Gibson

Post by RyeWhiskey »

This looks like a pretty straightforward argument for the Permanent Portfolio, although perhaps a bit more diverse. :beer
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Random Walker
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Re: Asset Allocation by Roger Gibson

Post by Random Walker »

Simple Gift,
I agree that I've always got the lowest cost all VG total markets portfolio in the back of my mind for comparison. I'm sure that there are decreasing marginal benefits for each additional asset class added to a portfolio. But some of the best diversifies aren't available at VG: international small value, international value, maybe even CCFs. Since reading Gibson's book, I've become a bit of an asset class junkie. And I am paying a premium for joining that club :-) so far though, I have no complaints. At list I win all the cocktail party "how diversified is your portfolio" conversations. Of course I've never actually had one of those conversations at a party come to think of it :-)

Dave
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