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Asset allocation is key from "summary" of A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Twelfth Edition) by Burton G. Malkiel
Asset allocation is key when it comes to successful investing. It involves deciding how to distribute an investor's portfolio among different asset classes, such as stocks, bonds, and cash. The idea behind asset allocation is to balance risk and return based on an investor's goals, risk tolerance, and time horizon. By diversifying across different asset classes, investors can reduce the overall risk of their portfolio while still potentially achieving their desired level of return. Many studies have shown that asset allocation is one of the most important factors in determining investment performance. In fact, some research suggests that asset allocation accounts for as much as 90% of a portfolio's variability in returns over time. This means that the specific investments an investor chooses within each asset class, such as individual stocks or bonds, are less important than the overall allocation of their portfolio. O...
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