The art of asset allocation

THERE was a popular Japanese video game in the 1990s called Pokemon with the slogan: "Gotta catch 'em all!". In the game, you collect monsters and train them to fight other monsters. Like that game, investors in financial markets also sometimes want to "catch them all".

Consider this scenario: Today, you come across a stock you think is attractive. You put it on your watchlist. You might even buy some for your portfolio.

Months later, you may have forgotten about that first stock, having noticed another which you consider more interesting. The original stock may have appreciated slightly and you think it too expensive to buy more.