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This work develops the frameworks investors reason with: how to weigh risk against a horizon, and how to tell a sound decision from one that simply happened to pay off.
Allocation decisions go wrong in recognisable ways. Capital follows last year's returns. Risk gets judged by recent volatility instead of by what the holder would actually need to survive. Two options are compared on headline return with no account taken of the horizon or the liquidity each one demands. This work builds and refines the frameworks that make those mistakes harder to make.
It draws on established portfolio construction and risk management, fitted to the constraints a particular client has. Horizon, liquidity needs, tolerance for drawdown, tax position, and the exposures already held all bear on which framework is the relevant one. A framework suited to a long-dated pension liability is the wrong tool for a family selling a business next year.
As with our other research disciplines, the emphasis is on reasoning rather than calls. Views on specific allocations are worked out for an individual client and discussed with them, because the same allocation can be sensible for one holder and reckless for another.
How much risk a holder can carry, given when the money is actually needed.
How exposures interact inside a portfolio, rather than how each one looks on its own.
Telling a sound decision from a result that merely worked out, which matters most after a good year.