But what I am is a stock and bond investor who analyzes the economy to make better investment decisions, primarily at the sector level, and secondarily at
the asset class level.
At
the asset class level, it means ensuring we assess relative global valuations while constructing portfolios with a defensive posture should volatility rise.
All three of these components are at
an asset class level and are designed to provide value in different types of markets (i.e. rising, falling, or flat, respectively).
When an advisor optimizes at
the asset class level, the result is a mix of asset classes that have shown efficient characteristics over some time frame.
Most optimizers work only at
the asset class level, such as cash, bonds, growth stocks, and international stocks.
After optimizing at
the asset class level is done, the optimal mix of asset classes is chosen, and then the advisor will select actual investments that represent those asset classes.
Optimizing at
the asset class level means the optimizer can only work with broad asset classes, like U.S. growth stocks, international stocks, etc..
The following discussion does not apply to lower - end optimizers that only work at
the asset class level.