We will have a stock portfolio 2Q 2001 - we are trading it now but need to negotiate lower transaction costs to become affordable. This theory studied asset allocation. However, history may show that those 10 investments reacted the same way. Our money managers have evolved past the Modern Portfolio Theory . Computers and the Internet have changed the investment world since MPT was created.
Asset allocation is good - but using today's data, rather than yesterday's, works best.
Some of these industries are quite similar and can be lumped together to form a sector. For instance the technology sector consists of 14 industries. There are now international sectors. Sector Rotation attempts to avoid the worst performing sectors-and invest in the better performing sectors. Many times by just avoiding the worst sectors performance can be enhanced.