“Balance is key. Balance is a virtue. Balance is next to godliness, maybe. We should all aspire to better balance. Too much of what is said in this world is one-sided, and we need more balance – in our speech, in our music, in our art, in everything.” That’s a quote from Thomas DeCarlo Callaway but you may know him as Atlanta-based rapper CeeLo Green.
We need more balance in our portfolios as well as in all areas of our lives. Balance, in an investing context, is an admission that we cannot know what the future holds, therefore it is wise not to lean too heavily toward any particular bet. The bets we make with our money – and yes, we must bet – give us exposure. Exposure to the results of the future. Exposure to what happens and what doesn’t. The term “exposure” can have a positive or a negative connotation, depending on whether or not our bets turn out to have profited us. We must make multiple bets and allow them to rub together, smoothing down their opposing edges and offsetting the extremes of their respective outcomes.
Therefore, we want to use a balanced asset allocation to calibrate the right amount of exposure given our current wants and future needs.
Between 1962 and 1973, NASA launched a series of ten Mariner spacecraft missions to explore our solar system. As with a well diversified investment portfolio, each of these probes had a specific role to play in service to the greater goal. The Mariner program’s accomplishments included our earliest visits to Mars, Mercury and Venus as well as sending a craft into the orbit of another planet for the first time. Our Mariner portfolio is meant to balance the need for capital preservation, current income and long-term growth with a 50% target allocation to fixed income and a 50% target allocation to stocks.