ASAP 101 - More on Asset Allocation

Friday's speaker saw another alum. This particular speaker was the President of a small money management firm - a position he's been in since buying the firm along with a partner (who also happens to be an ASAP grad) in 2002. He had been at other firms prior to that, most notably at UBS.

He spoke to us more in depth about asset allocation. In fact, he actually gave us some ideas about how to think about valuing stocks relative to bonds, and how one could form a strategy based on this. The main idea underlying the concepts was mean reversion - that returns tend to come back to their "normal" levels over time.

At a simple level, he looked at recent returns of stocks and bonds, and then created a plan to allocate the portfolio based on those returns - using the idea that if times were great, chances are that the next few years won't be as great, and vice versa.

More food for thought when we're in charge of the portfolio next year!

On a related note, we're off to see the Oracle of Omaha on Saturday, in Omaha, NE. It's going to be a long trip, but I'm sure that it will be a good learning experience!