Amateur vs Pro: The Importance of Asset Allocation | Erik Averill, Brandon Averill, Justin Dyer Insights #73

In your investment portfolio, you have the choice of making the amateur move – listening to the mainstream financial pundits who want you to feel FOMO over the latest stock picking craze – or the pro move of looking at how the best in the world do what they do, which is also backed by decades of research.We started this series a few weeks ago by focusing on overall financial structure and followed up last week with how to think about portfolio construction, and the result of that is the topic for this week – your asset allocation.Erik, Justin and Brandon define what asset allocation is, the complexity of asset classes, and how to avoid making the amateur investment moves. EPISODE HIGHLIGHTS(00:30) The news you should know: US stock market doubles, Robinhood goes public, paid vaccinations, drop in poverty, how much are Olympic medals worth?(3:57) What is asset allocation? Model portfolios?(6:35) Adding human capital into the mix(9:23) The complexity of assets(11:30) Amateurs vs Pros(12:40) “It's really unfortunate, because you do have the Robinhood's of the world, the big brokerage houses that we all know, and they're so focused on marketing and generating this activity, and playing on emotions, it's really unfortunate. Because the education out there, the buy, the sell, the Jim Cramer's, they're all trying to get you to focus on the tool, and the tool's not what's going to make you successful, the tactic. It's more about stepping back and looking at the whole.” – Brandon Averill(14:56) “That's the whole goal here, is to make sure your assets, your overall net worth, your total net worth, is structured in a way, is built in a way to support your priorities.” – Justin Dyer(16:01) “Am I allowing [mainstream voices] to get my emotions riled up, to use my FOMO against me, to extract dollars out of my pocket as an amateur? Or, do I want to take a step back, and do I want to look at the best in the world at what they do? Because that's who you are as an audience. You're a professional athlete, you're a founder, you're a business owner, you're a wealthy individual, who has gotten that way by being a pro.” – Erik Averill(17:24) How are you measuring investment performance?