Talk:Asset Allocation/Archive 1

This is an archive. Do not post responses here; rather, use the main talk page.

Goal / Purpose
To provide investors in regard to specific asset catagories if applicable: Default Risk, Average Annual Rate of Return, Standard Deviation, Average Beta of those Returns for a 5, 10, & 20 year time frame (full market cycle) and corresponding  Indices. Over all it is to help simplify an overly complex system.

Target Audience
Investors that wish to diversify thier portfolio using either passive or active investing approach.

Information Benefit
Even though I am getting very specific about the maturity for fix income based on a 5, 10, & 20 year scale. I would like the data set to be based on 20 years or more thus a full market cycle. As a result the need to update this information will not be necessary. In regards to the subjectivity of rates and other variable, it will have minimal inpact due to the longer time scale that is use for historic return based on each asset class.

Factors Impact

 * Factors such as management fees, stock selection and market timing do have an impact upon one's portfolio but more in a negative way than a positive way. Market Timing’s Flaw by Larry Swedroe The Evidence on Timing by Larry Swedroe
 * It has been proven that asset allocation can determine up to 94% of your rate of return. These are the following sources:
 * The Informed Investor Ch6 The Asset Allocation Decision by Frank Armstrong
 * Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower, Determinants of Portfolio Performance II: An Update, Financial Analysts Journal, May/June 1991.
 * Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower, Determinants of Portfolio Performance, Financial Analysts Journal, July/August 1986 (reprinted in January/February 1995).
 * Does Asset Allocation Policy Explain 40%, 90%, or 100% of Performance? by Roger G. Ibbotson

Counter Argument
 * Bad Practices by William Jahnke

Comparative Study
 * The Asset Allocation Debate: Then and Now by The Vanguard Group 06/08/2005

Topics that should not be in the article

 * Different ways to allocate portfolio or techniques use based on some formula i.e. age.
 * Asset allocation rules, however an appropriate link is applicable.
 * Not an article about stress or stomach acid test.

Topics that should be in the article

 * How to determine an appropriate benchmark and type of benchmark, should be brief and concise.
 * Numerical in nature thus a data set that can be used by an informed investor.