The I Ching and asset allocation
Asset allocation is a concept that works in perfect harmony with the I CHING because every asset class is bound to eventually go from YANG to YIN and from YIN to YANG.
Because no investor knows for sure which asset class will have a better performance during a particular year, it is crucial the investor prepare his portfolio on a mixture of various asset class such as Cash, Bonds and Stocks in accordance with his profile. As a rough guide, some investors might choose their age to represent the bond equivalent of their portfolios. That is, a 20-year-old investor might have 20% bonds, 75% stocks and 5% cash. While a 70 year old investor would have 70% bonds, 25% stocks and 5% cash. This would be even better if the investor owns his own home, as it would provide him with an additional asset class.
This simple strategy would reduce his risk dramatically and provide for up to 90% of the portfolio’s performance.
