Most people of conscience, especially those who have done well for themselves, want to use their resources to do some good in the world. The problem is, with many of individuals, their charitable giving tends to be somewhat haphazard, often centered on tax considerations; and many times it’s an emotional response that may or may not have the intended impact if at all.
Many investors have heard the term “asset allocation” at one time or another. From the first time we sign up for a 401k plan at the office all the way through the conversations we have with financial planners in retirement we are bombarded with messages about the importance of proper asset allocation. But what is asset allocation, and what does it mean to investors saving for the future?
In the story of Alice in Wonderland, Alice arrives at a fork in the road and wonders aloud which road to take. A smiling Cheshire Cat appears and asks her what her destination is, to which she replies, “I don’t know.” The toothy cat then proffers the only possible response, “Well, then it doesn’t matter.”
When it comes to investing, people can be their own worst enemy. Nearly all of the mistakes made by investors can be attributed to their behavior which is typically dictated by their emotions. Fear and greed have a way of driving even the most rational people to making investing decision which is why most investors typically under perform the markets.
One of the best illustrated instances of indecision occurs in the story of Alice in Wonderland in which Alice comes to a fork in the road and must choose a path to continue her journey. She seeks the advice of the grinning Cheshire cat which appears out of nowhere.