Maximizing Returns: A Guide to Asset Allocation in Investment

Asset allocation

Maximizing Returns

Jan 30, 2023

The importance of asset allocation:

Asset allocation is one of the most critical aspects of successful investing. It involves spreading your investment capital across various assets such as stocks, bonds, commodities, and real estate. This approach helps to minimize risk and optimize returns. However, conventional wisdom often falls short when it comes to asset allocation. In this article, we will take a contrarian approach to asset allocation and challenge some conventional wisdom passed down from generation to generation of investors.

Why Bonds Are No Longer a Safe Haven

Let’s start with bonds. The traditional wisdom is that bonds are a safe haven asset that will stabilise a portfolio. However, the current low-interest rate environment makes bonds a poor investment choice. With bond yields at historic lows, the return on investment barely keeps up with inflation. Investing in bonds makes no sense when there are other options that offer better returns with similar levels of risk.

The Benefits of Investing in Blue-Chip Stocks

Instead of bonds, consider investing in blue-chip stocks. Blue-chip stocks are companies with a long track record of stability and growth, and they tend to weather economic downturns better than other types of stocks. Additionally, investing in blue-chip stocks offers the potential for significant capital appreciation over the long term.

Exchange-Traded Funds: A Convenient Way to Diversify

Another option to consider is investing in exchange-traded funds (ETFs). ETFs provide access to a diversified portfolio of stocks, bonds, commodities, or real estate, and they can be a convenient way to gain exposure to a broad range of assets with a single investment.

Low-Risk Options: Covered Calls and Cash-Secured Puts

For those seeking to generate a consistent income stream, consider utilizing low-risk option strategies such as covered calls and cash-secured puts. These strategies offer the potential for significant returns and also serve as a hedge against market downturns, protecting your portfolio. However, it’s crucial only to sell puts on stocks you’re willing to own, not for speculative purposes. Selling a put is similar to getting paid to put in a limit order. If the stock isn’t assigned to you, you’ll receive payment for the wait. This is why cash-secured puts are a preferred choice for many investors.

Oversold Dividend-Paying Stocks: An Overlooked Opportunity

Finally, consider investing in extremely oversold dividend-paying stocks. Investors often overlook these stocks, but they offer the potential for significant returns and a steady stream of income. With low interest rates, investing in dividend-paying stocks can boost your portfolio’s income.

Asset allocation is a crucial aspect of successful investing. However, conventional wisdom often falls short. By considering options such as blue-chip stocks, ETFs, high-risk options, and oversold dividend-paying stocks, you can create a well-diversified portfolio that offers the potential for significant returns and protects against market downturns. So, don’t waste your time with bonds – consider these alternatives and take your asset allocation to the next level.

In other news

Asia Stocks to Rally: A Comprehensive Analysis

The Asian stock market is poised to rally in the coming weeks, driven by a combination of positive economic indicators and the ongoing strength of the tech sector.

Recent data has shown that the Asian economy is performing well, with steady GDP growth and unemployment rates at historic lows. Additionally, consumer spending has been robust, indicating a strong and confident consumer base.

These positive indicators are expected to continue to drive the stock market higher as investors look to capitalize on the solid economic performance.

Navigating the Tech Sector for Investing Succes

The tech sector has been a major driver of the stock market in recent years, and this trend is expected to continue in the Asian market. Companies in the tech sector are expected to see strong earnings growth in the coming months, driven by increasing demand for their products and services.

This is particularly true in e-commerce, cloud computing, and artificial intelligence. As these industries evolve and expand, they will likely continue to drive the Asian stock market higher.

Understanding & Mitigating the Threats to Your Investments

However, it is essential to note that there are also potential risks to the market. The ongoing trade tensions between the US and China, as well as the ongoing political instability in certain Asian countries, could have a negative impact on the market.

Additionally, a sudden shift in global economic conditions, such as a recession, could also have a negative impact on the Asian stock market.

Overall, the Asian stock market is expected to rally in the coming weeks, driven by positive economic indicators and the ongoing strength of the tech sector. However, investors should be aware of potential risks and monitor the market closely.


Other Articles of Interest

Simplifying the Complex: Understanding Psychology for Dummies

by Sol Palha, Lead analyst at Tactical Investor Psychology for Dummies: Understanding the Mind of the Masses Updated  Dec 2022  ...
Read More

Next American Disaster: Student Debt

Calamities are of two kinds: misfortune to ourselves, and good fortune to others. Ambrose Bierce [color-box color="blue"]Student debt is increasing ...
Read More

Kurds seize key rebel-held airbase in northern Syria

The Kurds are one of the best fighters in the Middle-East, even the woman know how to fight, and most ...
Read More

Central bankers embrace Negative interest rate wars

Don't part with your illusions. When they are gone, you may still exist, but you have ceased to live. Mark ...
Read More

Average Student Debt & Student Debt Clock

Average Student Debt The, key ingredient for any crisis are greed, desperation and a fake sense of need, regardless of ...
Read More

One chart illustrates economic recovery 100% fiction

They say a picture is worth a thousand words and this chart is probably worth a lot more.  It illustrates ...
Read More

3 charts illustrating American Economy in trouble

American economy According to the BLS, the unemployment rate is roughly 5%. Shadow statistics, on the other hand, states that ...
Read More

Currency wars intensify: BOJ Stuns markets with negative rates

The BOJ (Bank of Japan) apparently understands that this economic recovery is nothing but rubbish as they lowered rates into ...
Read More

Dealing with stock market losses: A cry for help

I'm not afraid of storms, for I'm learning how to sail my ship…Louisa May Alcott “I am trading poorly. I ...
Read More

Ticking Time Bomb:Student debt increasing 2800 every second

The clock below shows you Ticking Time Bomb:Student debt increasing 2800 every second Student debt is a time bomb waiting ...
Read More

America’s Economy: Is This Recovery Real?

Updated April 2020 America's Economy and the Stock market The Stock market does not care that  America's economic recovery is ...
Read More

Stock Price Manipulation: How To Profit From It

Let us be thankful for the fools. But for them, the rest of us could not succeed. Mark Twain 1835-1910, ...
Read More

Western media: China Won’t be Asia’s Dominant power

[color-box color="blue"] Why China won't be Asia's dominant power? China may be Asia's economic powerhouse but it won't become the ...
Read More

1987 Market Crash:Investors That Focused Market Recovery Made Money

Do not wait for ideal circumstances nor for the best opportunities; they will never come. Anonymous The 1987 Market Crash ...
Read More

Marc Faber Wrong: black Monday crash a buying opportunity

Black Monday crash: All Bark & No Bite Dr Faber aka Marc The Bust Faber continues to provide the best ...
Read More

Brent crude oil price today: Why Did Oil Crash?

Brent crude oil price today: Why is oil crashing The fundamentals in the oil market are simply horrible and based ...
Read More

Raytheon Company setting up bullish pattern

Company Background [color-box color="green"]Raytheon Company, together with its subsidiaries, is a technology Company that specialises in defence and other Government ...
Read More

No U.S Economic recovery:1 in five children on food stamps

 Updated June 2017   There is No U.S Economic recovery; 1 in five children on food stamps  If the economy had improved ...
Read More

AIIB key to a new era in Asian infrastructure building

By Tom McGregor, CNTV Commentator China's remarkable rise has come with greater global responsibilities. Beijing accepts its new role and ...
Read More

Dow Jones Industrial & The Fake Economic Recovery

Updated April 2020 Dow Jones Industrial and the Economy The U.S loves to dictate rules and enjoys pointing a finger ...
Read More

Go west young man; China developing west to encourage migration

By Tom McGregor, CNTV Commentator China has long enjoyed rapid economic growth, but its remarkable success has led to regional ...
Read More