This Week’s Topic: Investment Portfolio as a Machine!
Your investment portfolio should be like a machine, producing money for your use without removing parts of the machinery. To do this, I believe an investor needs to have an investment presence in each of the main asset categories: Cash, Stocks, and Bonds.
Assessing the risk of different securities in each asset class should not be dominated by “shoebox mentality,” which is what I call the psychological urge people have to be able to count and feel each penny! Each asset class offers investments that cover the entire range of “riskiness,” and each investor most likely will be able to find investments to suit his/her risk tolerance level in each asset class.
Asset allocation does not assure a profit and may not protect against loss in a down market.