Hi Larry,

Please allow me to share with you what the sages of the Talmud wrote 2000 years ago in tractate Baba Metzia page 42a

Here is their advice : When it comes to investment : "Man must divide his assets into 3 pockets: 1/3 Liquidity, 1/3 Land, 1/3 Professional assets" …

Does it sounds familiar ?

Let's look at it from a risk allocation point of view.

1 -The personal risk bucket, or safety portfolio, is designed to protect the
investor. This bucket offers the certainty of protection from anxiety. It
offers below market returns. this is 1/3 Liquidity (in Hebrew : תחת ידו )

2 - The second bucket, or market risk portfolio, is the most efficient way of
getting return per unit of market risk. 1/3 market : Yester-year’s Land are today’s financial markets. Indeed, they were the speculative part of a portfolio where consumer staples were produced : cereals, herd…

3 - The third bucket : 1/3 professional assets is the “Aspirational” Risk portfolio. This bucket offers the possibility for wealth mobility, which can arise from human capital, highly concentrated stock position, stock options, business ownbership.

As King Salomon wrote : "nothing new under the sun". The current risk allocation has been present in the mind of people for ages.

As a conclusion, this 2,000 old piece of advice goes even further than today
risk allocation strategy : it caters for the 3 basic and fundamental needs of people : the need for security, the need for growth and the need for hope.

All the Best

David Botobl, CFA