Skip to content

Portfolio Asset Allocation Strategies

March 7, 2014

Asset allocation refers to the balance between growth- and income-oriented investments in a portfolio. This allows the investor to take advantage of the risk/reward trade off and benefit from both growth and income. Building an appropriate asset mix plays a determinant role in a portfolio’s overall risk and return. A portfolio’s asset mix should reflect goals at any point in time.

Basic steps to asset allocation consist of:

  • Choosing which asset classes (stocks, bonds, money market, real estate, precious metals, etc.)
  • Selecting the ideal percentage (the target) to allocate to each asset class
  • Identifying an acceptable range within that target
  • Diversifying within each asset class

Asset allocation can be an active process to varying degrees or passive in nature. Asset allocation strategies listed should be used only as general guidelines on how investors may use asset allocation as a part of their core strategies.

  • Constant-Weighting Asset Allocation
  • Strategic Asset Allocation
  • Tactical Asset Allocation
  • Dynamic Asset Allocation
  • Insured Asset Allocation
  • Integrated Asset Allocation

Read full article “Portfolio Asset Allocation Strategies”

Fed Announces Open-Ended Bond Purchases – QE3

September 13, 2012

The Federal Reserve on Thursday announced that it is launching a new Quantitative Easing 3 (QE3) program, saying it will buy $40 billion of agency mortgage-backed securities each month as long as the economy needs it, starting Friday.

It’s also keeping in place so-called Operation Twist, which consists of swapping short-dated securities for longer-term securities, as well as reinvesting the proceeds of maturing securities, so the central bank will be adding $85 billion of long-term securities each month through the end of the year.

The Fed is also extending its plan to keep interest rates exceptionally low until at least through mid-2015. Fed funds rates are currently targeted at a rate between 0% and 0.25%.


Hong Kong Regulator Took Ernst & Young To Court

August 29, 2012

Hong Kong’s securities regulator has taken Ernst & Young to court after the audit firm failed to turn over accounting records related to a company based in mainland China.

The auditor now faces the dilemma of complying with the order from the regulator and risking a possible breach of mainland China’s state secrecy laws, or facing sanctions in Hong Kong.

The case is the first of its kind in Hong Kong, and it mirrors one in the United States in which Ernst & Young’s rival, Deloitte Touche Tohmatsu, is fighting a request from U.S. regulators to hand over work papers from its audit of the Chinese computer company Longtop Financial Technologies.

The Securities and Futures Commission wants Ernst & Young Hong Kong to hand over records from its audit work for the water provider Standard Water.

The regulator said Monday that the audit firm had claimed it did not have the relevant records, as they were being held in mainland China by its joint-venture partner, Ernst & Young Hua Ming, and could not be produced due to restrictions under the mainland’s state secrecy laws.

Guide on Cloud Computing

August 9, 2012

In a book “10 Steps to a Digital Practice in the Cloud: New Levels of CPA Firm Workflow Efficiency” published by the American Institute of CPAs, the authors describe the 10 steps for getting a digital practice up and running:

  • Get the right technology infrastructure to leverage the cloud.
  • Provision enough Internet bandwidth, both wired and wireless, to operate effectively.
  • Select the right mix of desktops, laptops, mobile devices and software to function in a productive, effective way.
  • Install the right scanning systems to aid the shift to a paperless office. 
  • Deploy a document management system to maximize efficiency with digital records.
  • Use trial balance working paper software, if the firm performs many of these engagements.
  • Transform the firm’s Web site into a full-fledged client portal.
  • Maximize productivity with workflow software.
  • Offer clients cloud-based accounting systems.
  • Have the right plan and tools in place to ensure data security and speedy disaster recovery.

Read full article “Guide on Cloud Computing” at

U.S. Economic Growth Slows to 1.5% in Q2

July 28, 2012


GDP-Q2-2012The latest U.S. government statistics showed that the economy expanded by a simply 1.5 percent annual rate in the second quarter. The government also provided on Friday a revised figure for first-quarter G.D.P., saying the economy then grew by a 2 percent annual rate. The previous estimate was 1.9 percent.

The economic growth, as measured by the gross domestic product, lagged as consumers curbed new spending and businesses held back. Consumers increased their savings rate, a sign of increased uncertainty about the future. Several bright spots in the first three months of the year, including auto production, computer sales and large purchases like appliances and televisions, dimmed or faded away altogether in the second quarter, and government at all levels continued to cut spending. Growth was not strong enough to drive down the unemployment rate, which has stalled above 8 percent in recent months.

Exports accelerated in the second quarter despite more recent signs of diminishing demand, but the gain was canceled out by a larger increase in imports, which count against the gross domestic product. Economists expect exports to shrink as the dollar rises against other currencies, making American goods less competitive.

The housing sector, which has gone from a drag on the economy to a positive, continued to grow, posting a 9.7 percent gain, though it is less than half its rate of growth in the first quarter.

Inflation, a measure watched closely by the Federal Reserve as it determines whether to take further action, slowed as well, with consumer prices growing only 0.7 percent compared with 2.5 percent in the first quarter.

Why Do Businesses Need An Accounting System?

July 15, 2012

Maintaining a set of accounting records is not optional, it’s a law! The Internal Revenue Service (IRS) requires that businesses prepare and retain a set of records and documents that can be audited. Internal Revenue Code requires that business have the ability to compute taxable income by using some sort of common-sense accounting system that clearly reflects income. In addition, the federal legislation requires public companies to have a detail and accurate books, records, and accounts of transactions and dispositions of the assets.

Beyond complying with the law, a company that fails to keep an accurate record of its business transactions may lose revenue and is more likely to operate inefficiently. You can’t successfully manage your business without the accounting system. Success requires the ability to perform financial analysis, which is to accurately measure business growth, profitability, and cash flow, as well as to reasonably estimate your financial condition.

Read full source article at

LIBOR Rigging

July 5, 2012

LIBOR (the London inter-bank offered rate) scandal that involves Barclays, a 300-year-old British bank, is beginning to assume global significance. Over the past weeks damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years. And worse is likely to emerge. Investigations by regulators in several countries, including Canada, America, Japan, the EU, Switzerland and Britain, are looking into allegations that LIBOR and similar rates were rigged by large numbers of banks.

The LIBOR that the traders were toying with determines the prices that people and corporations around the world pay for loans or receive for their savings. It is used as a benchmark to set payments on about $800 trillion-worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. The number determines the global flow of billions of dollars each year. Yet it turns out to have been flawed.

Bob Diamond resign over LIBOR riggingOn July 3rd, Barclays PLC Chief Executive Robert Diamond caved in to intense pressure to quit after the U.K. bank became embroiled in a bitter political row over its role in the Libor rate-rigging scandal. Robert Diamond resigned amid a deepening dispute about whether the Bank of England pushed the lender to submit artificially low Libor rates during the financial crisis.

Like many of the City’s ways, LIBOR is something of an anachronism, a throwback to a time when many bankers within the Square Mile knew one another and when trust was more important than contract. For LIBOR, a borrowing rate is set daily by a panel of banks for ten currencies and for 15 maturities. The most important of these, three-month dollar LIBOR, is supposed to indicate what a bank would pay to borrow dollars for three months from other banks at 11am on the day it is set. The dollar rate is fixed each day by taking estimates from a panel, currently comprising 18 banks, of what they think they would have to pay to borrow if they needed money. The top four and bottom four estimates are then discarded, and LIBOR is the average of those left. The submissions of all the participants are published, along with each day’s LIBOR fix.

In theory, LIBOR is supposed to be a pretty honest number because it is assumed, for a start, that banks play by the rules and give truthful estimates. The market is also sufficiently small that most banks are presumed to know what the others are doing. In reality, the system is rotten.

First, it is based on banks’ estimates, rather than the actual prices at which banks have lent to or borrowed from one another.

A second problem is that those involved in setting the rates have often had every incentive to lie, since their banks stood to profit or lose money depending on the level at which LIBOR was set each day. Worse still, transparency in the mechanism of setting rates may well have exacerbated the tendency to lie, rather than suppressed it. Banks that were weak would not have wanted to signal that fact widely in markets by submitting honest estimates of the high price they would have to pay to borrow, if they could borrow at all. Read full article “LIBOR Rigging” at