The right allocation to stocks, bonds and cash can help you weather difficult periods in the market.
Many investors thought they had the right asset allocation based on their mathematical needs going into the financial crisis in 2007.
If Mr. Palmisano is soon to leave IBM, as the article indicates as likely, we can surely hope the Board will seek out a replacement who is equally willing to make the right resource allocation decisions.
The passive form of investing is about reaching your goal by selecting the right asset allocation for your needs, participating in the markets cheaply through index funds and ETFs, and rebalancing the portfolio on occasion to return to its target allocation.
Strategy is about the creation and allocation of resources to the right place in the right way at the right time over time.
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It is about the creation and allocation of resources to the right place, in the right way, at the right time, over time that bring to fruition your mission, vision, objectives and goals while maintaining values.
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Economists would generally argue that price is the right way (although with caveats, pure price allocation of drinking water in a drought might raise hackles) to do that rationing.
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You can start with this short risk tolerance questionnaire and asset allocation worksheet to make sure you have the right amounts in stocks, bonds, and cash based on your time frame and your comfort (or discomfort) with the ups and downs of the market.
Rebalancing annually allows you to gradually shift to the appropriate allocation as opposed to trying to guess when the right time to reduce exposure to equities might be.
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