Expert: Paul Henneman - 9/25/2005

Question
I've read one book on Modern Portfolio Theory and asset class investing for the average investor.  There is some info on the web, but the idea does not seem to be widely reccommended to small investors.  Is there some problem with the approach that I should be aware of.  At the depth I've found so far the approach looks good.

Answer
Paul,
   Thank you for your question! I tend to agree with you, I don't see any problems with asset class investing. Such an approach can diversify a portfolio, I believe in this. It is true that such a program would require more work and research, as you would need to be familiar with various investment classes. Perhaps the time and commitment this takes is why you have not seen wide support for individual investors to do this. Another reason could simply be that it is professional that provide most of the advice to individual investors, and they offer such asset class analysis. It would go against most professionals self interest if they recommended this type of analysis for folks to do on their own.
   Ultimately I suggest that if you have the time, dedication, and commitment to really do it correctly, such a program is attractive. Read a few more books, start creating some ideas, and track these to see how they perform before investing any real money. If all goes well, start small, work your way up. Most importantly, never be afraid of your own ability to research and control your own finances. No one can look out for your needs better than you.

I hope this helps! Please do not hesitate to follow up with me if I can be of any further service, if you do follow up I would be curious to learn which book you have read.

Sincerely,
Paul Henneman
President
ValuEngine, Inc.
www.ValuEngine.com
www.VEInstitutional.com
(800) 381-5576