For today’s screencast we are going to stay on the topic of asset allocation and diversification.  We came across some more posts that are skeptical about the advice investors are receiving on the asset allocation front.  Mark Cuban for one believes asset allocation is being sold to investors who truly don’t understand what they are buying into.  SurlyTrader doesn’t believe that target date mutual funds, often used in retirement accounts, are not really designed to maximize the risk-reward trade-off.  One problem with our current thinking on diversification is that we have put asset classes into the wrong buckets.  An institutional perspective may allow investors to think better about risk.  In today’s screencast we wonder whether we are making the asset allocation decision more complicated than it needs to be.

Items mentioned in the above screencast:

Mark Cuban on the “new lie to Main Street” that is asset allocation.  (Blog Maverick)

There are a number of problems with target date funds.  (SurlyTrader)

Diversification: Often Discussed, but Frequently Misunderstood – Welton Investment Corporation (Pensions & Investments)

Consensus asset allocations, and by extension target date funds, haven’t provided investors much benefit of late.  (AR Screencast)

Performance chart of IEF and SPY.  (StockCharts)