Asset Allocation – Staying Disciplined

Asset Allocation – Staying Disciplined

Asset allocation involves investing your portfolio among several different asset classes. Since each asset class performs differently (i.e. when some asset classes are up, others may be down, etc.), the overall volatility of your portfolio is reduced. Asset allocation also enhances portfolio diversification beyond holding stocks and bonds and therefore the overall risk is reduced.


A properly designed asset allocation strategy will help you both build and protect your wealth.

Designing an asset allocation for a client is both an art and a science. A properly designed asset allocation must be carefully matched to reflect your unique financial objectives and tolerance for risk.

Asset allocation also provides vital investment discipline through the rebalancing process. Properly executed, the rebalancing process helps the investor buy into an asset class when it’s undervalued (buying low) and sell an asset class when its overvalued (selling high). Of course, emotionally it’s not always easy to buy something when the value has fallen or sell something when the value has increased, but it is the right thing to do in the long run. Unfortunately, most investors do the exact opposite. They buy stocks when they notice the market has had a significant run only to realize that they bought at the top of the market. Then they wait to sell until the market has peaked and decreased in value.


Endowment Style Investing.

Asset allocation allows you to play good offense and defense. The world’s best institutional and ultra high net worth investors have been successfully using asset allocation for many years. Endowments such as Harvard, Yale and Stanford use asset allocation for their portfolios. Many of these strategies have been unavailable to most investors until now. Recent market innovations make it possible for all sophisticated investors to gain access to asset classes such as real estate, commodities, and alternative investments to construct an asset allocation that goes well beyond the limits of a stock and bond portfolio.