Strategies
Chapters in this video
- 0:00 Strategic asset allocation: the 60-30-10 blueprint
- 1:46 Rebalancing: pruning the garden to sell high and buy low
- 3:22 Buy and hold: zero rebalancing, zero guarantees
- 4:08 Tactical asset allocation: market timing and sector rotation traps
- 5:21 Strategic vs tactical: the ultimate showdown table
- 6:27 Rapid-fire exam recap
What this video covers
- What strategic asset allocation actually is: a long-term blueprint based on client goals, risk tolerance, and time horizon, not market conditions
- Why rebalancing mathematically forces a buy-low-sell-high discipline and the two methods you can use (calendar-based and threshold-based)
- The critical distinction between rebalancing (returning to target weights after drift) and tactical asset allocation (deliberately deviating from targets to chase opportunities)
- Why buy and hold minimizes transaction costs and capital gains taxes but does NOT guarantee profits, despite passivity
- Why tactical asset allocation generates higher fees, more taxable events, and relies on market timing that research shows is extremely difficult to execute consistently
- How to read a side-by-side comparison of strategic versus tactical asset allocation and pick the right answer when the exam disguises one as the other
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 66 course also includes adaptive practice questions and spaced-repetition flashcards.