Everyone talks about asset allocation, but what does it mean to you? A good comparison would be eating a balanced meal. You don’t just eat meat. You shouldn’t just have bread. You need fruits and vegetables too. Your desired diet results determine how much you have of each food type.
The focus of your portfolio investments are the same way. You wouldn’t be just focused on large capital companies, nor would you probably own only long-term bonds. There is a balance between the different type of investments and what they are expected to do based on past performance. We review and suggest changes that may help reduce volatility in your portfolio.
Diversification and asset allocation may reduce some risks of investing, but do not guarantee a profit or ensure against a loss in a declining market, they are methods used to manage risk.