Fritz Meyer is calling for a crucial shift in long-term strategic investing. He's breaking with conventional wisdom and explains why in this 15-minute video for advisors. 

To be clear, according to Fritz, financial planning software projections relied upon by professionals, as well as consumers, are seriously mistaken! Fritz's common sense approach to investing is on display. He makes a fact-filled and convincing case for replacing two of the seven asset classes of a classic broadly diversified portfolio: foreign equities and commodities.  A five-asset portfolio will be more efficient in the future, says Fritz, an independent economist whose CE classes for CFP^®, CIMA^® and CPA professionals are educating advisors on economic fundamentals driving financial markets. Fritz has received an average rating of 4.9 stars (out of five stars) over the past 12 months.   

The asset allocation problem has its roots in the 1980s, Fritz says, when the Japanese economic miracle that followed World War II came to a financial climax.  As a ¥1 yen investment in Japanese stocks grew nearly 40,000 times in value, the accepted wisdom understandably became that foreign stocks must be in a diversified portfolio. That's wrong, says Fritz! And he argues that it has led to a widespread misapplication of Modern Portfolio Theory.

Astronomical returns on the Nikkei stock index made for a compelling story. Foreign stocks, by the late 1980s, were accepted by the world's largest institutional investors as a logical addition to a prudent portfolio. However, foreign equities have not worked well for long-term investors for the last 25 years, and that's a very long time.  Nor have commodities, which were catapulted into orbit by their own unique fundamentals, and have fallen off the efficient frontier over 25 years, which is certainly a long enough time to rethink conventional wisdom. 

A simple solution is replacing commodities and foreign with U.S. large- and small-caps. Along with real estate, large-cap and small-cap stocks are the main risk asset in a typical U.S. investor's portfolio. Making that shift would have boosted a diversified portfolio by 40%, according to Fritz.  

Abandoning conventional wisdom, Fritz Meyer's fact-based analysis on long-term strategic investing on Advisors4Advisors is intended for professionals guided by strategic application of enduring and fundamental financial and economic conditions and the knowledge to embrace and appreciate thought leadership. 

Here are two videos on this topic: a 15-minute snippet of my interview with Fritz is a free sample of the continuing education A4A has provided since October 2008. The second is a two-minute video introducing this topic to advisor clients. It's a great piece for RIA lead-generation campaigns.

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