Asset Allocation and Investment Horizon
DOI:
https://doi.org/10.1016/S1057-0810(97)90014-7Abstract
Quarterly recommendations by national brokeragefirms since the third quarter of 1989 provide an opportunity to compare different approaches to asset allocation. To follow a brokerage firm’s recommendation every quarter is to practice tactical asset alloca- tion. Both the length of the investor’s decision horizon and brokerage commissions that are incurred when portfolio changes are made impact investment performance, and both contribute to the risk experienced by investors. Buy-and-hold and strategic asset allocation would have served investors better than tactical asset allocation during the first half of the 1990s.
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