Sublime

16

A fantastic story about the father of modern portfolio theory, Harry Markowitz, brings this to life. Markowitz considered the optimal mix of assets for his personal portfolio but found it all too complicated to wrap his prodigious brain around. “I should have computed the historical co-variances of the asset classes and drawn an efficient frontier,

3. “Enough” is not too little.

4.9 percent allocation to bonds, which are intended to protect against unexpected deflation and to provide near-term

His skill is investing, but his secret is time.

This is a big part of why room for error, flexibility, and financial independence—important themes discussed in previous chapters—are indispensable.

Ronald Read was patient; Richard Fuscone was greedy. That’s all it took to eclipse the massive education and experience gap between the two.

For example, one savvy fund manager put together a memo outlining the subprime bubble with the clever and memorable subtitle “A Home without Equity Is Just a Rental with Debt.”