Archive - June 21, 2016

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Bloomberg Article Gets Asset Allocation Exactly Wrong

Bloomberg Article Gets Asset Allocation Exactly Wrong

Bloomberg Article Gets Asset Allocation Exactly Wrong

I was astonished to find a recent Bloomberg article that opened with: “The idea behind asset allocation is simple: when one market struggles, it’s OK because an investor can jump into another that is thriving. Not so in 2015.”

The article was titled, “The Year Nothing Worked: Stocks, Bonds, Cash Go Nowhere” and it betrays a total lack of comprehension about how wise asset allocation works. This theory of investing is common but fundamentally flawed.

The basic error is assuming you know what the market is doing right now. Lu Wang, the article’s author, says that when one …

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