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Balanced Asset Allocation: How to Profit in Any Economic Climate by Bill Lee, Alex Shahidi

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Introduction

Sitting in my seat as an investment consultant to institutional investors, I get to meet the best investment managers in the world and glean from them the best concepts. The purpose of this book is to share with you the concepts I consider to be the most important for investors. Most of the concepts in this book were originally conceived of by Ray Dalio and Bridgewater Associates, with whom I have had an invaluable relationship for the past 10 years.

First and foremost, I want to alert you to the most common and costly mistake investors make: having a poor asset allocation. Portfolios are simply not well balanced. In fact, most portfolios are so inadequately balanced that the risks of underperformance are much greater than investors realize. Even the most sophisticated investors are guilty of this oversight, which means that you are most likely exposed as well.

The good news is that this mistake is easy to fix. Big mistake, easy solution—why do we need an entire book to cover this topic? Portfolios have been imbalanced for so long that such a state has become the convention. Poor balance is normal. Consequently, I first want to convince you that your existing portfolio and strategy need fixing. I also should explain why keeping a balanced mix is especially important in the uncertain economic climate of the present decade. Finally, I wish to provide compelling support for the characteristics of a truly balanced portfolio, and most importantly, introduce you to a unique ...

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