August 08, 2004

How not to allocate assets

Harry M. Markowitz..

I should have computed the historical co-variance of the asset classes and drawn an efficient frontier. Instead I visualised my grief if the stock market went up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimize my future regret, so I split my contributions 50-50 between bonds and equities.