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The one-third asset allocation rule is ancient wisdom.
I never checked, but it is reported that the Talmud advices a third portion in Real Estate, in Business, and in Reserve.
It is said that Baron Rothschild kept one-third of his wealth fluid, one-third in Art, and one-third in Real Estate.
Many other one-third rules are offered for simplified asset allocation. In modern times you might think in terms of equal thirds of US mutual funds, International funds, and a Total Bond fund.
A more complex alternate might be to deploy the 1/N rule which means equal parts in each of N major investment categories.
It’s interesting that Scott referenced some recent Rothschild happenings. The Rothschild dynasty has been a major player in high powered European politics and finance for centuries. That dynasty continues today with yet another influential Rothschild.
The Baron Rothschild that I believe contributed the 3-part investment portfolio was the 19th century British nobleman. He is usually credited with the sage investor advice to “buy when there’s blood in the streets.”
He’s also the same Rothschild who made a stock market “killing” when he sent an agent to monitor the Waterloo battle in 1815. When it became clear that Napoleon would be defeated, the agent released homing pigeons with that message to alert Rothschild in London. Front running is a very ancient investor strategy. Some things never change.
By the way, some folks believe that the famous “Blood” quote is truncated. Some suspect that the entire quote is “buy when there’s blood in the streets, even if the blood is your own”. Now that’s a hard man and a committed investor.
This 19th century Rothschild also assembled an array of other pity, colorful investment quotes that demonstrate his wisdom.
He said: “Buy on the sound of cannons, sell on the sound of the trumpets”.
He said: “I don’t know what the seven wonders of the world are, but I know the eighth, compound interest”. If true, he preceded Einstein by more than a century.
Finally, one of my favorites, Nathan Rothschild advised: “It requires a great deal of boldness and a great deal of caution to make a fortune, and when you have it, you require ten times as much wit to keep it”. Even in yesteryear, the wise investor balanced the delicate risk/reward tradeoffs of boldness and caution.
It’s great fun to romp through history, and there are many lessons to be learned.
"It’s interesting that Scott referenced some recent Rothschild happenings. "
RIT Capital Partners was originally part of the Rothschild dynasty as the Rothschild Investment Trust. It then was split off and went public as RIT Capital Partners. See: http://www.ritcap.com/our-heritage
RIT's key issue is sort of Buffett-esque in that you have a Chairman who is now almost 80. While the company is largely run by a number of managers, the question becomes does another family member fill in the spot as Chairman to continue RIT as part of the Rothschild dynasty?
"... more than half (51%) will be investing more assets in their checking/savings accounts ... Forty-four percent plan to invest in money market funds ..."
Sounds like many are choosing to lock-up a portion in ultra-safe investments. Not an incorrect use of the term (investing) - but a somewhat unusual use. Carried to its logical extreme, anyone with a checking account would be considered an "investor."
Brings to mind the cliche, "The rich are different than you and me. They have money."
@MJG It's unlikely that Rothschild ever said "buy when there's blood in the streets" and there never was a Rothschild who became a baron until 1885. Many of the quotes ascribed to the Rothschild family are apocryphal and falsely used by anti-Semitic web sites as evidence of a global conspiracy: grammarphobia.com/blog/2013/04/waxing-rothschild.html
Thanks for the heads-up with regard to my referencing the supposedly Rothschild quotes. I recognize that quote attributions are often hotly debated, especially those dated by century timescales.
I am a little familiar that controversy exists with respect to the Rothschild family quotes. Fame and fortune attracts both enemies and allies.
That’s why I allowed myself some wiggle room when I wrote that: “He is usually credited with the sage investor advice to ….” and in a later paragraph “… some folks believe…”. The Rothschild family history is not without controversy.
Personally, I really don’t care who said it; they’re words of wisdom. I actually lifted them from website sources which I can’t easily reproduce, but I didn’t consider the politics of those checkpoints when so doing. I’ll remember your wise cautionary warning.
With the lapsing of time, these famous sayings get distorted, get a life of their own, and sometimes gain myth status. Although these sayings are wonderfully pity and poignant, they are peripheral to the investment process. I have seen financial columns that match one pity quote against an equally pithy quote taking the opposite investment position.
You might want to consider that subject for one of your upcoming articles.
Your reference seems like an authoritative place to do quote checking. Thank you.
Comments
The one-third asset allocation rule is ancient wisdom.
I never checked, but it is reported that the Talmud advices a third portion in Real Estate, in Business, and in Reserve.
It is said that Baron Rothschild kept one-third of his wealth fluid, one-third in Art, and one-third in Real Estate.
Many other one-third rules are offered for simplified asset allocation. In modern times you might think in terms of equal thirds of US mutual funds, International funds, and a Total Bond fund.
A more complex alternate might be to deploy the 1/N rule which means equal parts in each of N major investment categories.
Best Wishes.
http://www.blackstone.com/the-firm/overview/our-people/jacob-rothschild
RIT Capital Partners mentioned on that page is the Rothschild Investment Trust (RCP in London, a not very liquid pink sheet version is RITPF.)
It’s interesting that Scott referenced some recent Rothschild happenings. The Rothschild dynasty has been a major player in high powered European politics and finance for centuries. That dynasty continues today with yet another influential Rothschild.
The Baron Rothschild that I believe contributed the 3-part investment portfolio was the 19th century British nobleman. He is usually credited with the sage investor advice to “buy when there’s blood in the streets.”
He’s also the same Rothschild who made a stock market “killing” when he sent an agent to monitor the Waterloo battle in 1815. When it became clear that Napoleon would be defeated, the agent released homing pigeons with that message to alert Rothschild in London. Front running is a very ancient investor strategy. Some things never change.
By the way, some folks believe that the famous “Blood” quote is truncated. Some suspect that the entire quote is “buy when there’s blood in the streets, even if the blood is your own”. Now that’s a hard man and a committed investor.
This 19th century Rothschild also assembled an array of other pity, colorful investment quotes that demonstrate his wisdom.
He said: “Buy on the sound of cannons, sell on the sound of the trumpets”.
He said: “I don’t know what the seven wonders of the world are, but I know the eighth, compound interest”. If true, he preceded Einstein by more than a century.
Finally, one of my favorites, Nathan Rothschild advised: “It requires a great deal of boldness and a great deal of caution to make a fortune, and when you have it, you require ten times as much wit to keep it”. Even in yesteryear, the wise investor balanced the delicate risk/reward tradeoffs of boldness and caution.
It’s great fun to romp through history, and there are many lessons to be learned.
Best Wishes.
RIT Capital Partners was originally part of the Rothschild dynasty as the Rothschild Investment Trust. It then was split off and went public as RIT Capital Partners. See: http://www.ritcap.com/our-heritage
RIT bought a stake in the Rockefeller dynasty in 2012 (http://www.ritcap.com/news-item&item=1024407682201991) and entered into a partnership with Edmond de Rothschild in the same year (http://www.edmond-de-rothschild.com/news/financial/news/strategic-partnership-between-rit-capital-partners-and-edmond-de-120316.aspx.)
RIT's key issue is sort of Buffett-esque in that you have a Chairman who is now almost 80. While the company is largely run by a number of managers, the question becomes does another family member fill in the spot as Chairman to continue RIT as part of the Rothschild dynasty?
A much deeper discussion here:
http://www.campdenfb.com/article/banking-family-ties
Sounds like many are choosing to lock-up a portion in ultra-safe investments. Not an incorrect use of the term (investing) - but a somewhat unusual use. Carried to its logical extreme, anyone with a checking account would be considered an "investor."
Brings to mind the cliche, "The rich are different than you and me. They have money."
Thanks for the heads-up with regard to my referencing the supposedly Rothschild quotes. I recognize that quote attributions are often hotly debated, especially those dated by century timescales.
I am a little familiar that controversy exists with respect to the Rothschild family quotes. Fame and fortune attracts both enemies and allies.
That’s why I allowed myself some wiggle room when I wrote that: “He is usually credited with the sage investor advice to ….” and in a later paragraph “… some folks believe…”. The Rothschild family history is not without controversy.
Personally, I really don’t care who said it; they’re words of wisdom. I actually lifted them from website sources which I can’t easily reproduce, but I didn’t consider the politics of those checkpoints when so doing. I’ll remember your wise cautionary warning.
With the lapsing of time, these famous sayings get distorted, get a life of their own, and sometimes gain myth status. Although these sayings are wonderfully pity and poignant, they are peripheral to the investment process. I have seen financial columns that match one pity quote against an equally pithy quote taking the opposite investment position.
You might want to consider that subject for one of your upcoming articles.
Your reference seems like an authoritative place to do quote checking. Thank you.
Best Wishes.