Intended to balance risk and reward, asset allocation apportions an investor’s assets based on their goals, risk tolerance, and investment horizon, according to expert Douglas Greenberg. A former Morgan Stanley broker specializing in the field, wealth advisor Douglas Greenberg provides a more detailed look at the process and explores a number of relevant strategies.
“Successful asset allocation relies heavily on addressing the characteristics of different asset classes within an overall portfolio,” explains Greenberg. “Once an investor’s goals, risk tolerance, and investment timeframe—or horizon—have been ascertained, it’s time to explore these classes, which can include, for example, stocks, bonds, real estate, and cash,” he adds.
Ultimately, Douglas Greenberg points out, asset allocation is largely about not putting all of one’s eggs into one basket. “Stocks, bonds, and real estate will all perform differently over time,” the expert explains, “dependent upon economic conditions, market forces, and variables such as government policies.”
According to the former Morgan Stanley broker, by diversifying investments across a range of asset classes, investors are significantly reducing their overall risk. “If one class should perform poorly,” says Greenberg, “this can be effectively offset by other, better-performing classes within the same portfolio.”
After identifying and assessing their objectives and willingness to entertain risk, aspiring investors must employ what Greenberg calls a considerable degree of introspection. “Success relies on a considerable degree of introspection and plenty of planning,” he reveals, “and periodically reviewing and rebalancing down the line.”
“It’s also extremely good practice,” the wealth advisor, senior portfolio manager, and former Morgan Stanley broker adds, “to diversify holdings, not just across asset classes, but also within them.”
Greenberg also specializes in alternative investments. “Alternative investments offer broader diversification, further reducing risk, and, often, greatly enhancing potential returns,” he explains.
Investments made in assets beyond stocks, bonds, and cash, alternative investments are, Greenberg, says, beneficial for those wishing to build more diverse portfolios, outside of the realm of traditional funds. Popular alternative investments include commodities, real estate, private equity, and hedge funds.
“Investments made in commodities, such as oil, precious metals, and agricultural products, for example, come with several benefits,” explains Greenberg, “such as protecting against inflation, at least to a degree.”
“Real estate, private equity, and hedge funds are beneficial, meanwhile,” adds the expert, wrapping up, “for the sake of portfolio diversification, capital gains potential, and long-term strategic focus, and should, I believe, represent an integral part of almost any investor’s portfolio.”
Texas-born father of two Douglas Greenberg is a resident of Lake Oswego, located 10 miles south of Portland, Oregon. A graduate of the University of Pennsylvania’s Wharton School of Business Executive Education programs and a former Morgan Stanley executive director, wealth advisor, and senior portfolio manager, Greenberg is known for his problem-solving skills, as well as specializing in alternative investments and asset allocation. A fan of professional soccer and basketball, Greenberg holds a Bachelor of Science degree from the University of Texas at Dallas and, in his spare time, enjoys hiking, sailing, and wine tasting in addition to travel, skiing, and scuba diving.