We are all familiar with the traditional idea of basic budgeting: you set up a plan for how much money you will save and spend each month. “Risk budgeting” is much the same idea for investors, but involves setting up a plan for how much risk you plan on taking with your long-term investments.

Risk surveys and investor questionnaires go part of the way. They ask questions and assess an investor’s self-reported tolerance for risk and then match the investor to a certain asset allocation. This is fine as long as that asset allocation maintains a constant risk level over time. The problem here is that the risk levels associated with almost every asset class vary over extended periods of time, resulting in a specific asset allocation’s risk level changing over the years. Risk levels of a specific asset allocation can change materially through time as a result of changes

Since the market turbulence of the late 2000's shot investors' faith in more traditional investing, there's been quite a lot of discussion of Tactical Asset Allocation.

This form of investing focuses on allocating certain portions of your portfolio to different asset classes, and then ramping up or pulling back on any one of those classes depending on certain factors. The most common of those factors is valuation: if stocks, for example, start to look very cheap based on historical metrics (like price to earnings ratios) you might load up on those. World events might drive some sector rotation as well. Uncertainty in the oil producing regions of the world might convince an investor that there could be an economic slowdown brewing and push them to put more into cash.

Doubts About Tactical Asset Allocation

In a way, it's a middle ground between trying to pick individual winning stocks and hands-off

By Nanette Byrnes

Dave Ramsey is a well-known author and media personality famous for his focus on saving and getting your financial house in order. His books have hit The New York Times' bestseller list and 137,000 people follow his radio show's Twitter feed.

Praise seems to be universal when it comes to his advice on how to pay down debt and save. But his ideas about investing are far less popular with some, who argue they are irresponsibly optimistic. Why does he set hopes so high?

Dave Ramsey's Extremely Optimistic Investing Projections

Ramsey's projections on investing are quite optimistic. He says investors can expect a lofty 12% annualized return on their investments. He also says they can plan to withdraw 8% of their savings each year in retirement. That's twice the 4% benchmark that's most commonly cited as the historically sustainable withdrawal rate.

Armed with such a

John Del Vecchio's new Active Bear Exchange Traded Fund, (HDGE), is the opposite of what you'd expect: it's relatively expensive in a category dominated by low-cost funds, it's transparent in a field (shorting) that's all about secrecy, and though it was only launched a month ago, it's already collected $37.7 million in assets under management.

ETFs have grown into a $1 trillion asset class largely because they're a cheaper version of index mutual funds. But HDGE is part of a new breed of ETFs, funds that are not just passive plays on an index, but are instead actively managed, requiring expertise and research, and carrying higher fees.

Like their Index-shadowing brethren, actively-managed ETFs trade throughout the day like any stock does, while mutual funds can only be bought and sold at the end of the day. ETFs also must list their holdings at the close of the day, unlike funds

With events in the Middle East and Africa boosting oil prices, some economic watchers are beginning to talk about the possibility of stagflation: A period in which both inflation and unemployment are high. Like the 1970s in the U.S., a time of "malaise," lines at the gas pump, and strong performance of dividend stocks.

According to John Schloegel, portfolio manager at CORDA Investment Management, during the stagflation of the 1970s, 70% of the total stock market return for the decade came from dividends, only 30% from price appreciation. Even without that bad brew, dividends pack a punch, Schloegel says. Over the longer run, 40-45% of total stock returns can be attributed to dividends.

Unlike bonds, which perform badly in times of inflation, companies stand a chance of beating inflation. If the core business thrives, if the business is able to raise its prices faster than inflation, that dividend may even

Investors looking at energy stocks always have a lot to sort through. At the moment tensions in the Middle East, including over the Suez Canal, are top of mind. Egypt controls the Suez Canal, the route by which much of Europe’s oil is moved from the Middle East. At first there were concerns about the impact of instability following the demonstrations in Tahrir Square, today tensions between Israel and Iran have the canal top of mind. Geopolitical risk is only one factor. Environmental issues loom large for the energy industry as well. The effects of BP’s (BP) Gulf Oil spill, last year’s biggest energy story and environmental disaster, linger and likely will continue to for some time to come.

All that’s before you even start to dig into the details of any particular company’s prospects.

For insight on investing in this complicated sphere, Portfolioist caught up with Phil Weiss, a

By Nanette Byrnes

In recent debate over our piece on the tradeoffs of investing in dividend stocks in place of bonds, there was quite a lively discussion around investing in global dividend stocks. Much of it along the lines of "How come no one ever writes about income investing outside the US?"

The preferred choice for many is to invest in some of the many US-based dividend payers that earn a lot of their revenue overseas -- Philip Morris International (PM) is legally headquartered in New York but gets 100% of its revenue selling Marlboros and other tobacco products outside of the 50 States. Its yield is currently 4.4%. Companies in the Standard & Poor's 500 index on average got just under 30 cents of every dollar of 2009 revenue overseas, according to Bespoke Investment Group. Goldman Sachs predicts the index will yield 2% in 2011.

But

By Nanette Byrnes

A few weeks ago, Mel Lindauer expressed his worry that the super-low yields offered by bonds these days have people considering a questionable move: switching money out of bonds and into dividend-bearing stocks in a search for more income. "People look around and there's nowhere to turn," said Lindauer of the fixed income market. "I’m really concerned. I’m concerned that people are talking about possibly going into equities to get the 2.5% yield and forgetting about the risks in equities."

Larry Swedroe added his voice to the chorus of concern in his MarketWatch column last week. High-dividend stock strategies "are poor substitutes for either a high-quality bond approach or [a] diversified stock approach," Swedroe writes, in introducing analysis done by his colleague Jared Kizer.

Kizer argues that a high-dividend strategy is far riskier than a high-quality fixed income approach. In modeling a high-dividend