Asset Allocation Essentials: Simple Steps to Winning Portfolios
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More About This Title Asset Allocation Essentials: Simple Steps to Winning Portfolios


"Thomsett brings the all important concept of asset allocation into clear focus and puts it in the context of the contemporary investment world. I believe everyone - professional or individual investor - can learn something by taking the time to read this new guide"—Blaine Maxfield, SVP, SunGard Online Investment Systems

Investors and advisors alike have learned first hand the critical role proper asset allocation plays in every portfolio. Boom and bust cycles of the market, corporate scandals, and the passage of ERISA, continue to reinforce the need to develop intelligent and innovative strategies for the long-term.

Now, best-selling author and respected asset allocation expert Michael Thomsett's compact new work provides some simple yet powerful steps for building consistently winning portfolios. Thomsett's focus is on the essential factors needed for constructing solid, asset-balanced portfolios, including.

Proper management of risk through diversification - the foundation of any successful asset allocation programThe various types of risk involved with asset allocationHow to develop a highly personalized program that can be adapted for any investment scenarioCommon misperceptions surrounding asset allocation - and the core ingredients needed to create a high-performance portfolio

Asset Allocation Essentials provides a fresh approach to a concept begun many years ago. Written in non-intimidating language, it's a great read for both time-crunched advisors - and clients who need a better understanding of the value proper asset allocation plays in building safe, profitable portfolios over time.


Foreword by Blaine Maxfield SVP, Sungard Online Investment Systems 11

Introduction Why Allocate? 15

Chapter 1. The Importance of Diversification 19

Forms of Diversification 19

Pitfalls of Diversification 24

Chapter 2. Asset Allocation Risks 31

When Diversification Is Excessive 31

Market Changes 34

Anticipating Change 35

Using Asset Allocation to Protect Your Position 36

Investment Volatility Risk 38

Fundamental Volatility 43

Asset Allocation in the Post-Enron Age 44

Chapter 3. The Personalized Program 47

Identifying Specific Goals and Needs 50

Allocation of Available Resources 54

Matching Resources with Goals 56

How Personal Situations Evolve Over Time 59

Investment Needs Versus Risk Tolerance 61

Risk Tolerance and How It Changes Over Time 64

Tailoring Your Individual Strategy 66

Chapter 4. Misconceptions About Asset Allocation 69

Looking for the Magic Bullet 69

Personal Financial Planning 71

Allocation as a Key to Effective Planning 72

Creating the Winning Portfolio 73

Chapter 5. Review Your Knowledge 75

Resource Guide 85

Recommended Reading 87

Important Web Sites 89

Publications of Interest 91

About the Author 97