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« Weighing the Week Ahead: All Eyes on Earnings | Main | Weighing the Week Ahead: Assessing Risk »

July 12, 2011



It seems one should separate the optimal portfolio from the individual risk. The former is independent of who the investor is. The latter is purely defined by the percentage of cash allocated. The numerous asset allocations for conservative, aggressive etc. investors is a joke perpetrated on retail investors. I thin research establishments should earn their keep by licensing what they think is their optimal portfolio every year and let individual decide how much risk they want to take.


Well, as an individual investor who interacts with many other individual investors, I think this article only has it about half-right.

I think the average individual investor, at any given time, is focused EITHER entirely on the upside, or entirely on the downside. The average individual investor was focused entirely on the upside in 1999, and in 2006/2007. The average individual investor has been focused entirely on the downside since, oh, say around 9/15/2008, and that hasn't changed very much since then.

You get at this when you talk about the "all-in" or "all-out" mentality. But the statement "The average investor thinks only about the downside" should have the words, "these days" appended to the end of it.

Whereas pros, in my conception of ya'll, are ALWAYS focused on BOTH the upside AND the downside.


Very nice article.

In your 'key takeaway' section, your conclusion that: "There is no better time to invest than when there are many well-known and well-documented worries. A bad time to invest is when no one is worried." reminded me of similar quotations from two legendary investors: (1) "The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell" -- John Templeton; and (2) "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful" -- Warren Buffett

In your new book, perhaps you might consider using quotes (such as these) from successful investors to help emphasize your major themes? -- Just a suggestion for you to consider.

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