Owning multiple asset classes isn’t everything, but assuming you own a broad spread you’ll probably generate middling results if not slightly better over time. That doesn’t sound like much, except when you consider how real-world results stack up–especially after taxes and trading costs are deducted. Can you do better? Maybe, but you’ll have to work at it. Yes, there’s lots of above-average performance records out there. But the opposite is true as well, a point that tends to be overlooked in all the marketing materials pumping the latest gee-whizz product.
The benefits of going broad, meantime, requires mostly discipline as opposed to hope and talent. It helps if you understand the nuances of why this strategy offers so much for so little effort. The details, of course, can get messy, particularly when it comes to deciding on when and how to rebalance and which products to use. That’s one reason why we tackle the challenge of managing asset allocation in some depth via The Beta Investment Report, its proprietary benchmark (the Global Market Index) and the associated model portfolios.
Meantime, the clues in support of the general concept are everywhere, including Paul B. Farrell’s Lazy Portfolios. Yes, investing is still a thousand-mile journey, but the first few steps, at least, are clear. Even better, you don’t need a Ph.D. in finance to figure out the basics. No, it’s not a free lunch. Instead, think of it as a deeply discounted tiffin. The perennial question, of course, is whether there’ll be any dessert.

The momentum effect in securities prices has long been a thorn in the side of modern finance. Why does momentum exist? How can it exist in an equilibrium-based view of economics? It’s still a puzzle, but it becomes less so with time, as the research study du jour on this thorny subject reminds.

Will the inventory cycle help or hurt in the latter half of 2010?
It’s just one question in a sea of inquiries in the quest to get a handle on how the economy fares in the months and quarters ahead. Arguably it’s one of the more topical issues looming. One view is that the burst of economic activity that gave aid and comfort to last year’s third-quarter GDP (the economy grew by 2.2% in Q3, ending a string of GDP declines) was largely inventory related.

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