October 02, 2021

All investors face capital-market risk. Managing that risk, evaluating opportunities in the context of an investor’s goals, and assessing specific investments efficiently requires broad, objective, close-to-the-capital-market thinking. An asset allocation framework does not need to be a black box that processes many statistical variables and then spits out an investment plan. It should be a logical framework that lays out choices for investors. The LJE Asset Allocation Process strives to accomplish these objectives. The equity allocation between domestic and international stocks is driven by the likelihood of foreign stocks outperforming domestic stocks. Collectively, we estimate the likelihood of international stocks outperforming the U.S. Thus, an increased exposure to domestic equities at the expense of international stocks is warranted this quarter. The performance: During the first three quarters of 2021 the benchmark has appreciated 5.57%, while the LJE Asset Allocation utilizing the ETFs gained 6.27%. So far, for the year, the LJE allocation has outperformed its benchmark by 70 basis points.

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