MUSCULAR PORTFOLIOS

A detailed financial guide for no-nonsense investors.

At the start of investigative journalist Livingston’s (Windows Vista Secrets, 2007, etc.) lavishly produced nonfiction work, he warns readers against trusting their own investing instincts: “When we see a poisonous snake, we instinctively leap out of its way,” he writes. “But faced with the Wall Street gambling den—crawling with financial vipers—our impulse is to jump right in.” As a result, he contends, many people become “gamblers with their life savings,” too often relying on “Lazy Portfolios” that fail to adjust to market fluctuations, and therefore virtually guaranteed to lose significant money during cyclical downturns. Then things can get even worse, Livingston says: “After a crash ravages their nest eggs, investors’ survival instincts make them sell, locking in the loss and ensuring they miss much of the next bull market.” In place of such outmoded models, he proposes a far more responsive approach to building “muscular” portfolios that proactively adapt to market conditions, instead of trying to hide from them. In nearly 400 pages of vivid, accessible prose, followed by appendices, notes, and an index, Livingston lays out his strategy for creating broadly diversified, low-risk portfolios, designed to thrive in prosperous times and carry their owners through bad times with a minimum of loss. The author lightens his book’s ample precise technical detail with extensive illustrations, including many multicolored charts that make large amounts of information understandable at a glance. Still, his assurance that individual investors—his target readership—can master all of this information without devoting much time to the task should be taken with a grain of salt. Despite its open and sometimes-lighthearted approach, this is a serious book for serious investors. For them, however, it offers an invaluable alternative to hiring a professional portfolio manager—taking them through every aspect of the investing process while demystifying details along the way.

A comprehensive, one-stop personal investment volume.