Markets Remain Volatile - Protect Yourself With Diversification and Portfolio Balancing

By Aggressive Dividends: One of the most common and over-used expressions in finance or investing is 'diversification.' To some it means spreading out your capital among different asset classes and involves buying gold, bonds, stocks and the money market. For others it involves buying a mix of international stocks while having a variety of sectors, industries and market capitalizations. Another investor might incorporate all of the above in addition to other methods and techniques.

By Doug Short: The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed's method for determining where the market is headed. His analysis was quite compelling. Accordingly I include the Crestmont data to my monthly market valuation updates.

By Doug Short: The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed's method for determining where the market is headed. His analysis was quite compelling. Accordingly I include the Crestmont data to my monthly market valuation updates.

Back in September, I wrote about the importance of diversification even as the market hits new highs as it did during that month when the S&P 500 edged above 1,400.

By Lowell Herr: What is the proper percentage to use as the Threshold Limits or Boundary Targets for rebalancing a portfolio? For example, if we set a target of 15% for an asset class, what upper and lower limits are considered acceptable if the asset class is considered to be in balance? In the ITA Wealth Management portfolios we have gone as high as 35% and as low as 20% for our target limits. Where did those percentages come from?

Carlton Chin, CFA submits: As gold has continued to rally to all-time highs, there has been increased interest in gold, commodities, and managed futures as “diversification plays.” Indeed, these “assets” have been receiving increasing attention as true “asset classes” that offer good risk/returns and diversification benefits – for a traditional portfolio of stocks and bonds. The Rise of the Commodities Index

Ken Hasner submits: The first half of 2010 has been a roller coaster ride so far. We have seen the equity and fixed income markets move in a somewhat volatile fashion, very often in response to the news of the day. While the movement at times has seemed incongruent with the positive reported economic recovery statistics, I believe we are seeing the beginnings of the crack in the dam holding the financial markets together.