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The best estimate of an asset's near term future return is its recent past return. An alternative way of saying this is that bull and bear markets are real. Additionally, there is also clear empirical evidence of this in looking at the annual returns for different rebalance periods. These returns are shown here from an equally weighted portfolio constructed of bonds, domestic stocks, international stocks, commodities, real estate and gold from 12/31/71 through 8/31/16. No

Tactically allocated portfolios adjust the allocation to the assets in a way that seeks to improve upon the risk-adjusted returns of passive allocation investing such as Strategic Asset Allocation by dynamically allocating capital toward outperforming assets and away from underperforming assets. Disclosure: The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article

Periodically rebalancing your portfolio boosts overall return by selling temporarily outperforming assets and reinvesting into underperforming assets. If each asset displays similar long term returns, underperforming assets have higher future expected returns than outperforming assets. As the higher future expected returns are realized, overall portfolio performance is increased. Here is some annual return data for different rebalance periods from an equally weighted portf

Strategic asset allocation refers to allocating the assets in a portfolio into target allocations then rebalancing the portfolio periodically to maintain the original allocations. The allocations can be made in any way, but typically the allocations are made in a way to optimize return with respect to risk or risk with respect to return in such a way that the portfolio is kept on the efficient frontier. Disclosure: The information presented here is the opinion of the author

Modern Portfolio Theory attempts to manage and define portfolio risk. The theory focuses on the relationships of all assets in a portfolio and holds that risks can be lowered through selection of assets whose returns are not correlated. The goal of Modern Portfolio Theory is to construct the most efficient portfolio from a set of assets. The most efficient portfolio gives the most return for a given amount of risk or the least risk for a given amount of return. The set of