Portfolio allocation from 30K feet - Bradenton Herald 11/15/11

It is no secret, having a well diversified investment portfolio can reduce the market rollercoaster effect. Without it, you are subject to the swings of a few investments.

Investments that react similarly to economic and market conditions can be grouped into class buckets. To have a diversified portfolio you must choose complimentary classes. That is they do not react the same under similar conditions.

The choice of asset classes and relative size of the buckets has been found to be the best predictor of overall portfolio performance. Getting the class and industry choices correct is about getting the strategy right. It is important to choose the right investment in each but, if you don't get the strategy right, it won't matter.