Posts filed under “Asset Allocation”

AAII Asset Allocation Survey (Equities) – Deviation from mean

Click to enlarge
Chart

Source: AAII, FusionIQ

 

Last week, we noted the US Equity markets have been outperforming the rest of the world by a huge margins (Spot the Outlier).

This may be contributing to circumstances where US investor allocations are overweight US equities, and underweight other asset classes.

In these circumstances, you might consider looking at Europe and Emerging markets, and (dare I say it) review your Bond Weightings.  I keep seeing portfolios that are underweight Corporate Bonds (which may be needed) as well as High Yield (but only if you have the risk tolerance for it).

Thanks to their price appreciation, As a percentage of holdings, Equities are no longer over Under-owned. However, as we saw in the 1990s, they are not excessively over-owned yet. This condition could go on for many years. . .

 

Category: Asset Allocation, Investing, Psychology

Spot the Outlier

Source: Capital Spectator   A few weeks ago, I spoke at an Financial Advisor conference in Denver. There was some concern about asset allocation returns — it seemed that the more diversified you were, the worse your performance numbers were. Josh quoted a financial advisor who lamented: “Why bother diversifying at all? It’s just a drag…Read More

Category: Asset Allocation, Investing, Psychology

Annual Returns by Asset Class

Click for ginormous table
Table
Source: J.P. Morgan

 

I really like the above table — its a terribly instructive reminder as to how little we know about the future. Look how often the sector you least expected to be the winner ended up on top.

Its also instructive to see what ends up near the top of the list on a regular basis.

The breakdown of Fixed Income annual winners is after the jump.

Read More

Category: Asset Allocation

Reducing Energy Weighting

Reducing Energy Weight David R. Kotok Cumberland Advisors, July 29, 2013     Last week we reduced our energy exposure to underweight. It had been overweight for a while, and we successfully participated in the rebound in natural gas prices and the narrowing of the spread between Brent and WTI (West Texas Intermediate) oil. It…Read More

Category: Asset Allocation, Energy, Think Tank

The Purgatory of Low Returns

Click to enlarge GMO 7-Year Asset Class Real Return Forecasts: 2007     Have a look at the charts above and below. They are from James Montier’s GMO Quarterly Letter, July 2013, titled The Purgatory of Low Returns; you can download the full PDF here (registration may be req’d). (Note to Josh: This quarter, Ben…Read More

Category: Asset Allocation, Cycles, Investing

Asset Classes

We have all seen the standard depiction of asset allocations — I thought this version — via UBS — was a more interesting depiction of the usual chart.   Click for ginormous graphic     Source: UBS House View, July 2013 Mike Ryan Monthly Investment Guide CIO Wealth Management Research

Category: Asset Allocation

Missing the big stocks rally: Readers push back Barry Ritholtz, Washington Post June 28 2013     Last time, I talked about what investors should do if they sat out the big market rally in recent years. In brief, I advised making changes of both a behavioral and investing nature. The behavioral issues included admitting…Read More

Category: Apprenticed Investor, Asset Allocation, Investing

Unsexy Finance vs Cat Food Tacos

Yeah, this time it was my fault — in the midst of a long conversation about taking the emotions out of investing and making finance boring, I dropped a line about cat food tacos. So once again I am in the click bait headline machinery.

Actually, the heart of the advice was from the asset allocation articles in the WaPo (here and here) essentially ” Invest Boringly.”

It looks something like this:

Have a plan.
Execute it faithfully.
Be diversified.
Contribute regularly.
Max out tax-deferred accounts.
Be an asset allocator.
Think long-term.

Not exactly radical, but “Cat Food Tacos” will generate a lot more clicks than “invest boringly.”

Here’s the video:

click to start video
cat food tacos

 

Source: Ritholtz: You Can “Eat Cat Food Tacos In Retirement,” Or You Can Do This… (Yahoo Finance)

Category: Asset Allocation, Investing, Media, Video

Pushing Back Against the Big Rally Miss

>   Two weeks ago, I managed to anger quite a few people with a Washington Post column titled: Missed the big market rally? Here’s what to do now. There were a variety of perturbed commenters both here and at WaPo as well as angry emails and assorted bemused tweets. While lots of readers, commenters…Read More

Category: Apprenticed Investor, Asset Allocation, Cognitive Foibles

The Cost of Cash

I am not sure I fully agree with this BlackRock chart — there are times when cash makes sense. However, I cannot disagree with the takeaway that you cannot sit in cash for very long stretches of time (years) and expect any sort of return above inflation.   Click to enlarge Source: BlackRock

Category: Asset Allocation, Investing