This series will address financial planning topics ranging from budgeting to investment management and tax planning, targeting timely updates which I believe could be of interest and value to you.
Newsletter 2 of 10: Asset Allocation in 2025
Our firm Eight Ventures Private Wealth Management takes its name from this passage found in Ecclesiastes 11:1-2:
“Ship your grain across the sea;
after many days you may receive a return.
Invest in seven ventures, yes, in eight;
you do not know what disaster may come upon the land.”
This wisdom literature passage has been interpreted in two ways, with the minority interpretation well represented in translations such as Eugene Peterson’s The Message. Here, we see an ancient version of “pay it forward” in which we are instructed to share widely so that those helped will be well positioned and duly motivated to assist us in our future time of need. This is a commendable idea, but likely misses authorial intent.
The majority interpretation holds that the passage is bringing into view a ship’s cargo, one of the most common investment vehicles of that time and place. Because ancient near eastern boats and seas were in turn primitive and treacherous, the author is encouraging readers to spread their bets among seven or eight ventures.
In summary, Solomon provides a poignant lesson on asset allocation that has stood the test of time. You might beg the question, does this passage truly speak about asset allocation, a concept more normally associated with 21st century financial planning? Yes, it clearly does and this is not so surprising when you consider that the most meaningful concepts over time in any field tend to be aptly expressed in proverbs and pithy quotes. This is true because the wisdom conveyed is foundational, intuitive and lasting.
Solomon’s wisdom applied in 2025 indicates that we should spread our bets. In modern asset allocation, we set out to divide our investment portfolio among different asset classes, with some of the primary ones represented here:
- Stocks represent equity ownership, provide higher growth potential, but with higher volatility.
- United States – can be further subdivided by market cap; growth v. value; under and/or overweight by sector
- International – Developed markets (for example, Japan & UK)
- International – Emerging markets (for example, India & Brazil)
- Bonds represent debt ownership, offer income and stability, helping cushion portfolio swings.
- United States Treasuries
- Nominal Bonds
- Treasury Inflation Protected Securities
- International
- Corporate – Investment Grade
- Corporate – High Yield
- Private placement debt
- United States Treasuries
- Alternatives can add diversification.
- Commodities (for example, crude oil & gold)
- Cryptocurrencies (for example, Bitcoin & Ethereum)
- Real Estate (direct or through REITS)
- Cash can add liquidity and optionality.
The right mix depends on your goals, time horizon and risk profile (risk tolerance, risk need, risk capacity). For instance, a 30-year-old saving for retirement may have an 80/20 stock-bond allocation, while someone approaching retirement might pivot to 60/40.
Because individual markets are volatile, it is important to maintain a disciplined, diversified allocation which can help:
- Reduce volatility without sacrificing returns
- Capture growth across different market cycles
- Provide flexibility for income or liquidity needs
At this moment in the 4th quarter of 2025, we have experienced a large run-up in equity markets. Not only has this rendered stock valuations rich with regard to historical norms (S&P500 forward P/E of 21.7x versus 10-year average of 18x), it has also allowed investor allocations to drift out of balance, with stocks now representing a bigger slice of the pie. For that reason, this is an important time to rebalance your investments in order to bring your positions in line with your long-term strategy. This is often as simple as selling down the winning asset class and moving freed up funds into the asset class that has lagged. Over long timeframes, regular rebalancing amounts to systematic “selling high” and “buying low.”
Asset allocation is not a one-time decision; it’s a living framework that evolves with your changing circumstances, and that is responsive to market pricing and opportunities. Regarding the latter, at Eight Ventures, we maintain a dashboard on every asset class that assigns four grades:
- Overweight
- Equalweight
- Underweight
- Avoid
These grades detail our view on the risk/reward profile for the asset class. This grade can then be applied to an individual investor profile to determine how to shade the client’s standard allocation.
I will state the obvious in saying that we diversify because we do not understand exactly what sits around the bend. Those that don’t follow markets every day may not fully appreciate just how rich you could get in very short order if you knew with exact certainty the price of ANY asset on ANY future date. Tell me the true price of gold one year from now and I can make a king’s ransom. If it is going to be far higher, I can go all in and buy gold futures, levering up tremendously because, if you know where it will land, there is no risk. If gold will drop, I can sell gold futures and utilize massive leverage to create gaudy returns. If the price is going to end exactly where it stands today, even then I can make my fortune selling calls and puts to the rest of the world, executing a “short straddle.” If you had perfect knowledge that any asset was going to appreciate rapidly in the near-term, you could use short-term call options to grow your cash pile 10x, or even 50x. Just two of those 50x moves in a row, you have turned $10,000 into $25,000,000.
Those opportunities are available in the market every day (easily picked out in the rearview mirror) and we don’t pursue them because we don’t know what the price of anything is going to be with certainty. Because uncertainty is permanent, we practice strategic asset allocation to manage that uncertainty intelligently. What you can be certain of is this; those fellow travelers engaging in short-term strategies can be found in three categories:
- Those that have lost money
- Those who are down today, waiting for the turn
- Those who have quick-won gains (smaller group)
Sadly, those in category 3 usually learn the lesson that quick-won gains are quickly lost. Like the guy who has a good run at the tables in Vegas, they will likely hang around the casino until they lose those winnings … and often a little more.
Bottom line, if you are targeting long-term wealth creation, you should diversify among long-term investments. In the words of legendary investor Sir John Templeton: The only investors who shouldn’t diversify are those who are right 100% of the time.”
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