Mike Stathis

Asset Allocation as a Method for Risk Management

Richard, you forgot the most powerful asset that minimizes investment risk - cash. As I'm sure you are aware, market risk is the largest risk investors face - a risk that is non-diversifiable (systemic risk). Thus, those who are able to use market forecasting combined with appropriate liquidation (i.e. market timing) will do quite well.

Diversification is best used for passive investors and investors with short horizons; otherwise, it actually lowers your total returns.