Our active asset allocation process allows for making asset class moves only when we are highly confident the move will pay off in the long term.Using a baseball analogy, we only want to swing at “fat pitches.”
Most of the time it is difficult to outsmart the market. But when the market offers occasional opportunities for exceptional performance potential, capturing even a portion of the return and locking it in for a full market cycle can result in market-beating performance.
Fat-pitch investing is not market timing—it’s based on valuation instead. We expect our fat-pitch discipline to help us overweight early (before a bottom) and to help us return to our neutral allocation or less before a top. We don’t expect stop-on-a-dime market timing (i.e., getting out at the market peak.) In fact, our discipline is more likely to lead us to reduce our exposure well before that point..
Warren Buffett
