While asset allocation may be the single most important determinant ofperformance, most investors still enjoy theaction of picking individual stocks.For more details visit our website.

1. Hunter William Kowald
Hunter Kowald Manage the stock portfolio
While asset allocation may be the single most important determinant of performance, most
investors still enjoy the action of picking individual stocks. Staying consistent with my approach to
asset allocation, I also believe in a somewhat disciplined approach to stock selection and like to
follow a three-point approach.
First, I do not believe in market timing, so whatever allocation you designate for large cap equities,
for example, should be invested solely in that asset class. If your personal investment objectives
change, and you wish to revise your asset mix accordingly, that is perfectly fine; however, I do not
advise clients to try to out-guess or time the direction of the markets. Refer to the chart on best- and
worst-performing asset classes to see the potential perils. At the same time, I believe there is
considerable risk in aggressively overweighting or underweighting particular sectors of the market.
I’ll refer to the following table:
118
S&P Sector Approximate Tolerance
Weighting Limits
Basic industry 3.1% 2-6%
Capital goods 8.4 5-12
Communications 9.8 6-15
Consumer cyclicals 3.0 2-6
Consumer staples 7.6 5-12
Energy 7.6 5-12
Finance 18.4 12-25
Health care 14.6 10-20
Retailing 6.8 4-10
Technology 17.3 12-25
Transportation 0.7 1-3
Utilities 2.7 1-6
Total 100.0% N/A