In the November issue, we recommended that investments be managed according to The Four Pillars of Perpetual Portfolio Planning. (Read November article here) Each Pillar is associated with a form of diversification that should be but is often not incorporated into the investors’ portfolios: Asset Classes, Equity Styles, Geographic Regions, and Investment Philosophies.  The stability of each individual Pillar is naturally increased by diversifying within the Pillar.  But different Pillars and their compositions have unique impacts on the final portfolio. Thus, when constructing Pillars, considerations should be made according to the owner’s preferences and the purpose of the portfolio.

The following sections provide more evidence of people investing poorly, and show what you can do to improve the investment performance, financial security, and lifestyles of your clients.

Rigorously Proving The Value Of Diversification Won The Nobel Prize

Summary: If all investments don’t move in the same direction by the same amount the variation in portfolio value can be decreased (stability increased) by spreading investments across the available assets.  Read More