Managed Asset Allocation – Working Capital Model Part One
Asset Allocation is an investment-planning tool, not an investment strategy — few investment professionals understand the distinction. Fewer still have discovered the power of The Working Capital Model. The problem that most investors have is that they use the wrong number to determine their Asset Allocation in the first place. Neither market value nor the calendar year should be relevant issues.
The only reason for a person to assume the risks associated with investing is the possibility of achieving a higher rate of return than is attainable in risk free savings depositories for their capital (money). Investing is a get rich slowly process, conducted in an uncertain environment — one that must be understood and managed in a way that minimizes the risks involved.
The Working Capital Model accomplishes this by eliminating the need for impersonal comparisons with arbitrary and unrelated numbers and time periods. It works best with portfolios that are diversified among individual securities that are at the same time of high quality and income producing.
The key to successful investment management is Asset Allocation, the process of dividing the available investment dollars into two, and only two, buckets: equity investments and income producing investments.
All investment grade securities fit within one of these two classifications, based solely upon the primary purpose for their ownership. There are several key issues involved in successful Asset Allocation:
For the rest of the article, and links to Parts Two and Three:
http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/6886
Steve Selengut
http://www.kiawahgolfinvestmentseminars.net
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”