Posts Tagged ‘asset allocation’

A diverse investment portfolio. With butter and sprinkles.

Thursday, December 23rd, 2010

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from Let It Dough! by Christoph Niemann (NYTimes)

You can invest in lots of different things – stocks, bonds, mutual funds, currencies, cows. (For real! They’re called commodities and they’re really weird.) And you can invest in this stuff in the U.S. or in almost any country in the world.

But here’s the trick: you want to have a diverse mix of all these things, so you don’t lose all your money if, say, the U.S. economy crashes or all the cows go on strike.

Diversification is a way to reduce that risk by creating a portfolio with a wide mixture of different investments. In basic terms, it means “don’t put all your eggs in one basket.”

Mmm. Sprinkles.

Investment Advice From A Banker’s Deathbed

Wednesday, December 1st, 2010

Some people would shatter under the weight of Gordon Murray’s diagnosis. But he channeled his remaining energy into creating a legacy.

  • In 2008, former Wall Street bond salesman Gordon Murray was diagnosed with brain cancer. Five months ago he decided to end his treatment and write “The Investment Answer.”
  • After 25-years of high-level jobs on Wall Street, Mr. Murray says he suddenly realized that everything he knew about investing was wrong. Actively managing (tinkering with) investment portfolios, he says, is useless at best, and harmful at worst.
  • Even as an experienced financial player, Murray found he didn’t actually know much about asset allocation. He learned the ropes in firms like Goldman Sachs and Lehman Brothers, which valued risk and bravado over safety and simplicity. His book, full of simple investment advice, is aimed at investors who are in the same position he was.

Facts & Figures

The five choices Murray says every investor needs to make:

  • Only work with financial advisors who earn commission from you – not mutual funds or insurance companies
  • Diversify! Keep your money allocated between stocks and bonds, big and small, and value and growth
  • Make sure to include foreign investments to guard against economic disasters in the U.S.
  • Be skeptical of actively-managed funds… even experienced fund managers can’t predict the future of the market
  • Rebalance – sell your winners, buy more losers. It’s painful, but improves your returns in the long run

Best Quote

“It’s American to think that if you’re smart or work hard, then you can beat the markets.” – Gordon Murray