The document discusses traditional asset allocation models used by many financial planners that divide investments into categories like stocks, bonds, and cash. It notes that the standard 60/40 portfolio allocation of 60% stocks and 40% bonds and cash may not be optimal as smaller-cap stocks have outperformed large-cap stocks in the past 12 years while fixed income carries more risk now and cash provides no yield. The document suggests most advisors use simple asset allocation models to spread risk rather than actively choosing sectors that are performing well.
2. Asset Allocation Means Pie Charts
The tool of most financial planners
Utilize the traditional 60/40 portfolio
Mullooly Asset Management September 2013
3. Traditional 60/40 Portfolio
20% Large Growth stocks/funds
15% Mid-Cap stocks/funds
15% Small Cap stocks/funds
10% International/Emerging Markets
20% Fixed Income/Bonds
20% Cash/Money Market/Other
Mullooly Asset Management September 2013
4. Problems
Past 12 years, small-caps have been the best performers
Large-cap have lagged for most of last 12 years
Fixed Income now looks to carry more risk
Cash/Money Market yields zero
Mullooly Asset Management September 2013
5. Why Traditional Asset Allocation?
Most advisors do not know which sectors are doing
well
They would rather spread around your dollars and the
risk
Mullooly Asset Management September 2013
6. None of the securities mentioned in this (or any) podcast or
video represent past specific recommendations of Mullooly
Asset Management.
This video is NOT a recommendation to buy or sell any of the
securities mentioned here.
If you’re relying on a podcast for investment advice, you are
likely making a huge mistake.
We strongly urge our listeners to consult with their
investment advisor before they make a decision to buy or sell
any investment.
Mullooly Asset Management September 2013
7. Mullooly Asset Management, LLC
support (at) mullooly (dot) net
732-223-9000
www.mullooly.net
Mullooly Asset Management September 2013