The choice of stocks, bonds, cash in savings accounts or money market funds, gold, commodities, and real estate is, in my mind, really one of personal financial planning much more than one related to trading.

Anything personal, of course, is none of my business.

Moreover, I think it's wrong to presume anything that is "personal". So I don't.

Several years ago, my son said to me that he was thinking of investing money, and he wanted my advice. He then went on to say he was thinking of maybe $20 a month, and I thought, "Hmmm... this kid needs to speak to a financial planner, not a trader." He was, in fact, thinking about saving money, or more accurately, to find a way not to spend it.

Still, it's an asset allocation question.

Your research is bound to turn up personal biases in the advice that is offered. For instance, in the Motley Fool article about Asset Allocation I referred to, how do you deal with a statement like this one: "When even seemingly solid companies like Merck can lose 30% to 50% over a short period of time, it's not really investing -- it's gambling."?

Gambling for whom?

So, if there is a place to start when talking about money, a good one is to have a lifetime personal financial plan. Within that plan will be money to be invested in a portfolio of securities and commodities or invested directly in a business.

If you have no business to invest directly into, then you should treat your portfolio as a business because that's exactly what it is. And just like an operating business is not about the operator, but about the customers, so too is your portfolio not about personal matters or affectation, but about trying to build wealth based on the trading decisions of other traders.

So you see trading is not personal, or more accurately, it should not be a personal matter. It's really all about everybody else, and whether at a point in time, they are more sensitive to economic data, interest-rate data, and/or commodity-price data.

In my business, my portfolio is my "store", and other traders are my "customers". Whether by need or desire, my customers want things from the market, then it's my job to figure out in advance what that is likely to be, then I must accumulate products, and when customers come to my store I need to distribute those products at prices higher than I paid for them.

Like an engineer or architect of buildings, or a clothing designer, I'm always thinking ahead. Like a purchasing agent, I'm always on the prowl for products that I think (based on cycles that repeat or new opinions that are being formed) that customers will soon want to buy at higher prices.

In my business, you see, there is no place for Asset Allocation. That's an academic discussion or, as I say, one related to personal financial planning.

Do I think it makes sense to buy real estate? Yes, if it gives you pleasure as a user or it returns a cash-on-cash return that is greater than you can get with other assets in your portfolio. For persons who are interested in direct investment, real estate makes a lot of sense, and there could be good reason for those people to invest 100-pct of their assets in a number of real estate holdings.

Does it make sense to hold bonds? Yes, if your need is for fixed-income, and you intend to hold these securities until maturity. Traders, too, find times when bonds are relatively more attractive than stocks.

One of those times I recall was in 2Q82 " almost 24 years ago. Speaking at an Investors' Roundtable for Canadian Doctor magazine at a time I was employed by Dominion Securities Investment Management in Toronto, I picked the absolute best time to buy bonds. I said that (to paraphrase): "Bonds are the Buy of a Generation... Those 15 pct long-term Govt of Canada's put into a registered retirement account (i.e., non-taxable until withdrawal) cannot be beat for risk-adjusted returns."

But really, most of the time, I think equities represent the best total risk-adjusted returns in most portfolios, so I focus my time and attention there.

Do I think it makes good sense to hold gold or gold-related securities? Yes, but just like bonds, the best buying opportunities come infrequently " about once a generation. Gold in the 1970's represented such a buying period based on money inflation caused by the Vietnam War. The last few years have been another time when gold (and other precious metals) has out-performed other assets due to massive increases in money supply that are being directed to less than economic returns, such as real estate holdings that are returning 2 and 3 pct annual return on capital, or expenditures on war that in fact destroy wealth, not create it.

Does it make sense to hold cash or money market funds in amounts greater than say 1 to 3 pct of total assets? Yes, and there are many times when I think that holding as much as 80 pct cash is an effective portfolio management strategy.

But this depends on how a trader manages his "business". For instance, there are some pro traders who never leave the trading floor at the end of the day with less than 100 pct cash. Many in fact would never think of going over a weekend with less than 100 pct cash.

For most of us, the times we are largely holding cash are significantly fewer in number. In my case, today happens to be one of those. That's because (i) other things going on in my life have taken precedence to active trading, and (ii) I believe the risk-reward ratio warrants being in cash so that I do not get caught losing capital at a time I cannot watch the market as closely as I usually do.

Right now I feel like a purchasing agent with a long list of desirables and a pocketbook to spend, but I cannot see how I could make a suitable return from buying product today for sale tomorrow. So I happen to be doing some "busy work" around the office, waiting for the time I can get back to real work.

The essence of what I am saying is that Asset Allocation is a concept used by the sell-side to focus your mind on products they have created to sell to you.

If I happen to be managing a specialized portfolio, such as an Energy related fund, then that is where I'm going to be 100-pct allocated. But if I'm a typical trader, I'm allocated to where I think the best risk-adjusted opportunities lie for my portfolio.

Today, that is about 85 pct cash and much of the balance in gold-related securities, but next month or next quarter the market will lead me to change that allocation.