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Asset Allocation Models Are Similar to Recipes


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Individual investments are the ingredients. But its the recipe (allocation) that dictates which ingredients (individual investments) and how much of each will be used.

Asset allocation models. . . just like recipes. . . can dramatically influence the end result.

Even though a poor recipe may get you by. . . you are not likely to win “The Blue Ribbon".

Wouldn't it be smart to compare your asset allocation recipe to that of the Pros?

Institutional Investors manage the Pension Assets of very large Corporations, Public Agencies (such as those for government employees), or Unions. These professional and Institutional Money Managers have experience, knowledge, and huge responsibilities to their members. They have enough money to be able to invest heavily in anything that they choose.

Like great chefs. . . Institutional Investors are the pros. They have refined their recipe over many years and many competitions (market conditions) to the point that they have a definite advantage. They have a winning recipe.

Their asset allocation models have withstood the test of time. And so. . . their allocations may perhaps represent. . . “an ideal balance" so to speak. . .between opportunity and risk. Or, at a minimum. . . their asset allocation models may provide a very good starting point. A solid basic recipe that works.

When you compare the asset allocation models of the Institutional Investors for very large Corporations to the models used for Public (Government) Agencies or Unions you find something very interesting.

They all have one thing in common. . .

They are basically all in agreement as to how their assets should be allocated.

Isn't that interesting?

Three different groups of professional Institutional Investors. . . each with money enough to do whatever they choose. . . and they all end up investing their assets alike.


Is there a lesson here? I think there is without a doubt.

So what about individual investors?

How do they do it? How do they manage their investments?

Do their asset allocation models compare to those used by “The Big Dogs"?

The answer is. . . no.

The average individual investor allocates his/her money quite differently from the Institutional Investors model.

This difference in asset allocation models may both increase risk and decrease opportunity for individual investors.

It is my opinion that we as individuals can benefit greatly by understanding the asset allocation models used by the Professional and Institutional Pension Plan Managers.

Their asset allocation models illustrate broad diversity and balance. They have been tested over long periods of time. And. . . they have weathered all types of market conditions.

We can benefit from their experience.

Their asset allocation models represent a very compelling starting point from which to. . . fine tune, tweak, and personalize into your own allocation. . . according to your own goal and risk tolerance.

Consider your current portfolio. How it is allocated.

How does it compare to the asset allocation models of the Professional Institutional Investors?

"Because It Matters". . . Jim

For a more detailed discussion about asset allocation models and to find out how the pros do it. . . go to

The website is dedicated to helping you better understand what is important and how much your financial choices matter.


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