An Asset Allocation Model for Maximum Gains

Successful investing begins by conceding that – to a degree – uncertainty will always be your companion.

You can guess what the market is going to do and be right or you can guess and be wrong.  Or you can let some self-styled “expert” do the guessing for you. But no one guesses right consistently. So we don’t waste time here.

Instead, we follow a wealth-building investment formula that won Dr. Harold Markowitz the Nobel Prize in finance in 1990. His paper promising “portfolio optimization through means variance analysis” demonstrates how to maximize your profits and minimize your risk by properly asset allocating and rebalancing your portfolio.

Diversity Doesn’t Mean 3 Different Tech Stocks

Sometimes our readers tell us: “Oh, that means diversify. I already do that.”  But that’s not what asset allocation is about. Three years ago you could have diversified into Microsoft, Intel, Yahoo and Amazon.com and gone right off the cliff.

Asset allocation refers to spreading your investments among different asset classes, not just different securities or market sectors. Doing this has allowed us to survive, prosper and build our wealth during the longest bear market since The Great Depression.

We’ve had money invested over the last five years in foreign stocks. While the stock market has gone down, these have gone up. We’ve also had money invested in six other asset classes. And over that 5-year time period we’ve beaten the S&P’s return.

Because different asset classes are imperfectly correlated – some zig while others zag – our model (as shown below) allows you to boost returns while reducing your portfolio’s volatility.

In layman’s terms, proper asset allocation means you can sleep better – knowing that the daily fluctuations of the market will have little impact on your financial security.

The Foundation of Our Philosophy

In short, asset allocation should be the foundation stone of your whole investment program. It’s critical to building your long-term financial health and it forms the foundation of our philosophy. To learn more about it, pick up a copy of William Bernstein’s excellent book The Intelligent Asset Allocator.

To see how our Asset Allocation Model stacks up go here.

To put this philosophy to work, take a look at our Perpetual Income Portfolio.

The Investment U Resources Page

We Respect Your Privacy

---

What is Investment U?

Since 1999, Investment U has provided impartial, no-nonsense investment advice on how to build long-lasting wealth.

---

Recent Articles

Platinum Services

The Oxford Club is an exclusive, global network of investors, who collectively participate in the pursuit of prosperity and wealth. The Club is renowned for its market-beating, tried-and-true investment principles.

The White Cap Report exclusively identifies companies, White Caps, which - by being among the earliest to gain traction - have secured dominant positions within untapped, billion-dollar markets.

With an elite trading team at the helm, the Xcelerated Profits Report shows any investor how to "invest like a pro," using high-level, yet easy-to-execute strategies that "xcelerate" profits while minimizing risk.

---