The All-Weather Portfolio The continuum of possibilities within the world of investments has two axes: reward and risk. In virtually all cases, as the potential for reward increases, so does the exposure to risk. For the great majority of portfolios, the key constituents are stocks and bonds. Each of the major asset classes is subdivided into many smaller segments. Stocks can be divided into domestic and international. Within each of those categories, they can be further divided by the size of the companies they represent. Of those that are international, the countries may be labeled developed or emerging. To make things more confusing, there are companies such as Coca-Cola or 3M that are ostensibly domestic, but in fact derive most of their revenues from outside the U.S. The converse would be Royal Dutch Petroleum and Nestle, based abroad, but with a considerable presence in North America. One of the most basic rules of thumb is that over extended periods of time, generally
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.