Asset Allocation DeMystified

chapter 5

Subasset Allocation

Next, let’s look at allocating within your asset classes.

Your Stocks

As was previously noted, the risks and returns you can expect from stocks will depend in part on what type of equities you’re dealing with. The potential gains and losses, for instance, from owning shares of a fledgling company that has yet to turn a profit will likely differ from those holding the stock of a multinational giant that has turned a profit for the past 50 years. Similarly, owning shares of stocks in companies based in developing economies such as Indonesia or the Philippines will offer a different result, in many cases, from owning shares of domestic concerns.

What this means is that the types of stocks you use to implement your ...