Failure of a Fail-Safe Strategy Sends Investors Scrambling
Carl Mahler stood before a group of fellow financial advisers recently and voiced frustration and fear that a fundamental tenet of investing had been proved wrong. “Hi. My name is Carl, and I’m a recovering asset-allocationist,” the Raymond James Financial adviser quipped. Asset allocation, a bedrock of investing for decades, appeared to fail miserably in 2008. The conviction shared by most investors — that they should spread their money across myriad asset classes to minimize losses — was shaken as nearly all markets tumbled in unison.
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