The internet is truly an amazing tool! You have the ability to check on the fundamentals of any company just as quickly as I can. And, if looking for a strategic asset allocation, there are plenty of companies that will gladly provide an allocation without cost. But is it a worthwhile allocation?
Not in my opinion!
Let’s take a look at the chart below which shows what each domestic asset class returned over the past decade.
iShares MorningstarLarge Value: -15.42%
iShares MorningstarLarge Core: -16.94%
iShares MorningstarLarge Growth: -64.20%
iShares MorningstarMid Value: 47.38%
iShares MorningstarMid Core: 51.85%
iShares MorningstarMid Growth: -22.82%
iShares Morningstar Small Value: 76.08%
iShares Morningstar Small Core: 91.12%
iShares Morningstar Small Growth: -25.02%
returns for the period: 01/01/200 – 11/01/2009
The flip-side to a strategic allocation is a tactical allocation. At any point in time there are asset classes which are behaving better than others. By taking a tactical approach to the market, our allocation is going to change periodically. We examine six major asset classes, compare them to one another on a relative strength basis and determine which two or three should be emphasized. The asset classes considered are US Equity, International Equity, Commodities, Foreign Currency, Fixed Income & Cash. Two assets classes are typically emphasized, but Cash may be the sole recommendation if specific criteria are not met by any other asset class. Assuming US Equity is favored, we will compare the nine style boxes shown above to determine where the strength lies, similar analysis transpires to determine the international allocation, if any. The point is - that the allocation is changing based upon what the supply and demand forces within the market are telling us. We are using a logical, organized methodology to know where to be and when to be there.
Do not hesitate to email me if you have questions regarding this or any other strategy.
Securities and Investment Advisory services offered through NBC Securities, Inc., Member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations
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