The AIS Model Portfolios table on page 52 includes revisions to our previous allocations, which have not changed for some time. Here we provide the rationale for those changes so that our readers can consider whether and to what extent they should modify their own portfolios in response.
While we have changed the percentage allocations assigned to our recommended asset classes, these revisions are not based on an assessment of relative future performance among these asset classes. That is, these new allocations should not be construed as an attempt to time the market.
Instead these changes reflect our recognition of varying preferences among investors. This is a challenge because this newsletter is published on behalf of thousands of individual investors, yet each investor should in fact form a portfolio that is custom designed for his or her circumstances. We cannot address the individual concerns of each reader (as we do through our Professional Asset Management service), but we can strive to identify common concerns and tendencies and publish model allocations that can serve as guidelines, from which each reader can depart according to individual objectives and preferences.
Readers should therefore not necessarily change their current portfolios to match these model allocations. As we explain, these changes are driven largely by our estimate of the “average investor’s” preferences, especially regarding their willingness to deviate from the market’s returns. If the changes we describe better suit your tolerance to withstand such deviations, then it may well be reasonable to revise your allocation targets.
Also In This Issue
Quarterly Review Of Capital Markets
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow Jones Industrials Ranked By Yield
Recommended Investment Vehicles
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