Chapter 4

Which should we do: buy-and-hold or time markets?

Model investment strategies

There is a lively debate among investment advisers about the role of long-term model allocations between stocks, bonds, cash and other asset classes. These are sometimes called “policy portfolios” or “strategic asset allocations” and are based on views of the returns, risks and correlations expected from financial markets. Proponents argue that such models provide an indispensable building block for distinguishing between investment strategies for investors with different tolerance of risk. They can provide the mechanism for ensuring that investment policy is to allocate more to safe-haven investments for a cautious investor than for an aggressive investor. ...

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