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Modern or Aged?

​It is doubtful this man's photo is in your house. 

Modern: adjective 1. of or relating to present and recent time; not ancient or remote: 2. characteristic of present and recent time; contemporary; not antiquated or obsolete. This is no longer considered "Modern." 

However, his presence is very likely present in your portfolio. In 1952, Harry Markowitz published his "Modern Portfolio Theory 1." More than sixty years later, it is no longer "Modern," but the financial industry continues touting its arrival. It does not matter if you are working with a financial planner, stock broker or on on-line site. Your portfolio is mostly likely some iteration of this:

Certainly, a six decade old theory is no longer "Modern" or up to date. Brokers and planners present the theory as a means of managing downside risk.

However, Modern Portfolio Theory (MPT) does not provide sufficient downside protection for most investors to reach their goals, and, according to Dr. Markowitz, MPT was never intended to provide that protection. The bursting of the tech and real estate bubbles has dashed Investor expectations for high returns against the rocky shore of a transitioning global economy. Several decades of bull market appreciation led to optimistic assumptions about our future. The future arrived but the assumptions were not realized. The "buy and hold" strategy and diversification created investor disappointment if not significant losses. Instead of a predetermined commitment to asset classes or to countries, flexibility is required to meet the changing global economy. There is no pie chart that accommodates all market environments.

Investor Resources, Inc's Global Opportunity Portfolio may hold up to twenty exchange traded funds. In October 2014, the portfolio was recalculated for changes with prices from 2007 through early 2009. Relative strength is a result of basic math. The portfolio was forced into high cash positions as seen in this chart.

Did your investment process force you to build cash reserves prior to October 2008? The same basic math forced a portfolio back into the market by


How will your current portfolio respond to the catalysts of the next bear market? Want to know more?