This is a Gateway Post, which simply means that it contains primarily links to other posts on the subject matter for anyone interested in reading more.
Maybe it is time for a paradigm shift by those who give financial advice on asset allocation. I am not a financial advisor and have never been a believer in what I call static asset allocation. My approach to asset allocation is different, an approach that I call dynamic asset allocation.
Long Term Stock Risks and Situational Risk/Managing Lost Opportunity Risk in a Long Term Secular Bull and Bear Markets/ Novartis or Sanofi
Admittedly, I just do not get the static allocation allocation model which provides for adjustments based on age, unique needs, and and other factors unique to the individual (called situational risk in this blog) and hopefully a diversification of assets (some non-correlated with major asset classes), without making any real effort to adjust based on what is happening in the real world, as if prolonged periods of massive failures in major asset classes have never occurred when they occur with regularity (and other non-situational risk factors as if they did not even exist).
Added 5/12/2009:
The Dynamic Asset Allocation model is itself dynamic, as new tools are added to make it more responsive to events happening in the real world. The most recent addition to this model is the VIX Asset Allocation Model. This is a link to the Gateway Post containing links to my posts which discuss using the VIX to time shifts into and out of stocks as part of Dynamic Asset Allocation. USING THE VIX MODEL AS A TIMING INDICATOR FOR LONGER TERM STOCK ALLOCATIONSVolatility is also used to manage risk for each security position and sub-asset class such as equity preferred securities, though without reference to the Vix Model except in one limited case in September 2008 where certain positions were jettisoned based on the formation of what I call a Phase 2 Unstable Vix Pattern.
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