Secrets of the Perfect Stock Portfolio

Investors know what they want. And generally speaking, it’s pretty straightforward. They want their portfolios to outperform in bull markets, and hold steady, decline only slightly, or even increase in value when markets turn bearish.

The objectives are easy to explain. But achieving them… well, that’s the hard part. And like the Quest for the Grail — arguably the most elusive object known to man — so it is with stock returns. Even the most skilled investors concede it’s hard to find what they desire: consistent ways to outsmart the market.

But now, researchers at the nonprofit American Institute for Economic Research (AIER) in Great Barrington, Mass., think they may have cracked the code. They call their result The Perfect Portfolio, and they credit its success to a mathematical model that shows that stocks fare well in good times and fall modestly when markets change. Read more…

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