In 2008 David M. Darst, currently the chief investment strategist of Morgan Stanley’s global wealth management group and chairman of its asset allocation committee, wrote The Little Book That Saves Your Assets. Five years later he is back with an update: The Little Book That Still Saves Your Assets: What the Rich Continue to Do to Stay Wealthy in Up and Down Markets (Wiley, 2013).
The recommended keys to protecting your wealth, as you might suspect from Darst’s credentials, are asset allocation and diversification. The author does not, however, offer the reader a model portfolio that would be appropriate for investors of all ages and personalities and for all situations. Portfolios must be personalized. What is right for a 25-year-old who wants to buy a house in two years is different from what is right for the 25-year-old who is saving for his child’s college education. As Darst writes, “The single most important factor in determining how you manage your investments and structure your asset allocation plan is you. … From the start, you need to establish your goals, honestly evaluate your current financial condition, and be aware of your state of mind and feelings about the financial markets.” (pp. 91-92)
Throughout the book Darst assumes the role of a trusted financial advisor, and sometimes a meta-advisor, with the help of words of wisdom from “Uncle Frank.” If you have a small portfolio and a resolute do-it-yourself attitude you can heed his advice and perhaps profit. Otherwise, you can learn what to look for in a money manager.
Admittedly, the DIYer who is new to investing will face a pretty steep learning curve and will need far more than this “little book” to design and implement an appropriate investment plan. Darst introduces him, for instance, to strategic vs. tactical asset allocation—a distinction deceptively simple in principle, tough to carry out effectively. A single sentence highlights the difficulties: “A large part of your success in using Tactical Asset Allocation is the ability to determine what an asset’s true, intrinsic value is at a given point in time; how far out of line the asset’s price is versus its true, intrinsic value; and what conditions will make it return to its value.” (p. 85) Considering that even those who earn their livings as stock analysts usually lack this ability and that so-called true value rarely coincides with price, the amateur investor who wants to pursue this tactic faces an uphill battle.
For those with some experience in the financial markets Darst’s book is an enjoyable, nay wise, read. You’ll have two new uncles to guide you in your effort to save your assets: Frank and David.