The backbone of good investing is Asset Allocation, and today I am going to load you up with great information.

Terms needed to understand asset allocation:

Domestic Stocks = US Companies Market Capitilization of US Stocks (According to Morningstar): Large Cap = US Companies with a Market Cap greater than $11 Billion (these are the companies that are household names like Wal-mart, GE, Home Depot, Coca-Cola, Pfizer, and so forth) Mid Cap = US Companies with a Market Cap between $2-$11 Billion (these are companies that you might have heard of like HR Block, but are not the size of the previous listed group. Small Cap = US Companies with a Market Cap below $2 Billion. Probably not going to recognize the small company unless you specifically use their product or they are in your town.

 

For more financial terms, visit the show notes at http://www.moneyguy.com/2007/01/the-abcs-of-asset-allocation

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