Asset Allocation

Though asset allocation between types of investments doesn't guarantee a profit or protection against loss, a combination of different types of investments may reduce a portfolio's sensitivity to market swings because different assets, like stocks and bonds, react different to adverse events. So asset allocation is basically adhering to the old adage "don't put all your eggs in one basket".

Academic research performed shows the biggest determinant of portfolio return, is not individual stock selection nor is it timing the market, knowing when to get in and out fo markets, but how your money is allocated among various types inf investments.