Keep valuations firmly in sight

asset allocation

Rather than piling into technology stocks, as in the last bull run, investors should be focusing on valuation, profits, sound management and robust business models

At the height of the bull market, asset allocation became concentrated into very few areas. Those sectors were, of course, almost exclusively technology related. At that stage, we were talking about flawless execution and frictionless growth. Investors continued to pour into stocks such as Yahoo, Ebay and Cisco. During this period, portfolios that were out of these areas were almost guaranteed to underperform. Indeed, those who stuck by their belief that technology stocks were wildly overvalued were harassed by clients and sometimes subsequently sacked by their respective employers. This ...