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The Owl 401k Guide was designed to help measure the risk levels of some Macro Investment Groups. Usually, we are making comparisons between common stocks, bonds, and cash. This could help you to make your Personal Asset Allocation decisions. This website page was last updated on 6/17/03.

The Macro Investment Group Allocation Process
A lower risk rating suggests that your investment returns in this Macro Group could be good when compared to its historical returns, over the next 5 years. A higher risk rating suggests that your returns in this Macro Group could be bad when compared to its historical returns, over the next 5 years. To help complete this allocation process, please print out your Allocation Worksheet.

Macro Value Cycle Risk - For Long Term Allocations to Common Stocks
Lowest	Low	Medium	High	Highest
		Medium

Use the Macro Value Cycle Risk rating to help you make your Long Term common stock asset allocation decisions. As you can see, our Macro Value Cycle Risk rating is currently rated medium. We believe that common stocks are a reasonable Long Term investment.

Current Market Cycle Risk - For Short Term Allocations to Common Stocks
Lowest	Low	Medium	High	Highest
				Highest

This Current Market Cycle Risk Rating is a useful tool in determining a short term entry or exit point, in this current ongoing Short Term Market Cycle. Use this table to your short term advantage. When the Risk Ratings are lower, use it for new common stock allocations. Or use it when you have a lump sum of money to invest. On the other hand, when the ratings are higher, you can use this tool if you need to reduce your common stock allocation level. Or if needed, you can use it to increase your cash position.

At this time we believe you should stop allocating money towards common stocks. Do this allocation when the the risk rating is lower in this Current Short Term Market Cycle Movement. Click here for the Current Market Factors. Or click here for the Current S&P 500 Market Chart.

Bonds - Macro Value Cycle Risk Rating for Long Term Allocations
Lowest	Low	Medium	High	Highest
			High

Long term bonds could become more risky holdings if interest rates begin to trend upwards. As interest rates increase the underlying bond prices will likely decrease in value. In addition, the current dividend coupon payments are lower when compared to historical coupon returns. Short term bonds could be a reasonable position to take, but be careful! The Bond Bull Market that began in the early 1980s could be nearing its end. If this is true, people may begin allocating money from bonds to other Macro Investment Groups.

Cash Risk Rating - For Short Term Allocations
Lowest	Low	Medium	High	Highest
			High

Potential returns on cash positions appear low versus historical returns. Newly issued two year Certificate of Deposit are paying about 2.5% to 3%, with inflation running at 2.5% to 3%. Inflation appears to be trending upwards based on the 12 month CPI rate. Therefore, on an inflation adjusted basis you are losing on your cash positions. Also, the dollar's purchasing power has stabilized against some other key international currencies. Cash in Certificate of Deposits is still a safe and secure place for money. Current returns are close to preserving your assets. But there is little growth potential and inflation probably is increasing.

Long Term Allocation...and Risk Management Rationale
Once you understand these Macro Group's Risk Rating Comparisons, you need to factor in your Personal Risk Management Rationale. Or possibly, you will need to factor in your cash requirements for the near term. For certain, think through the appropriate diversification approach that fits your personal needs. We encourage you to consult with other sources of information you may trust. You may want to review our Risk Management ideas again to help you prepare your plan.

If you have chosen common stocks for one of your Macro Investment Group, then click here to make your Sector and Style Selections. In the end, make your % allocation to each Macro Investment Group, and if needed Sector/Style on your Allocation Worksheet. Read through the choices offered in your individual Tax Deferred Plan. Connect the dots and make the matches to their Mutual Fund offerings. Sleep on your decision, and if it feels good in the morning, implement your plans!

Ready to go to the Eagle Investor or directly to The Invest Window ? Or go to the Sector and Style Selections.