The Plimsoll Principles of Investing and Asset Allocation:

• All families need a “contingency” (a dollar amount of money, not a computer generated percentage of assets in a pie chart) set aside in absolute safe and liquid assets to provide for estimated expenses over a set period of time ranging from 6 months to 6 years depending on their tolerance for extreme market volatility, retirement time horizon, and other available sources of income.
• Superior returns with relatively low risk can potentially be achieved through active investment management that is disciplined and focused.
• Risk is the permanent loss or impairment of invested capital. The enemy of compound investment returns is the significant and permanent degradation of capital.
• Many individuals and some institutions prefer absolute return strategies as opposed to indexed or relative return strategies.
• Achieving sustained compound returns and controlled risk are essential elements of successful investing. Compound annual rates of return do not occur on a straight line basis.
• Excess diversification can contribute to “deworsification” with the unintended result of increasing portfolio risk and lowering returns.
• Investment decisions should be made with a five year planning view and measured on a rolling five year basis.