There’s a furious debate these days over the efficient market hypothesis and whether recent events support or spurn its implications. Among the criticisms: investors are irrational, meaning that they’re prone to chase trends mindlessly. In turn, this leads to speculative manias and crushing selloffs.
Daily Archives: February 22, 2010
GDP VS. MARKET CAP FOR EQUITY MARKET ASSET ALLOCATION
In the hierarchy of investment decisions, asset allocation is at or near the top of the list of variables that are strategically relevant for diversified portfolios. There are a number of studies telling us so, starting with the influential Brinson study from 1986—“Determinants of Portfolio Performance”—and its 1991 update. The basic message: asset allocation matters.