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Abstract (partial) "Investment has always been a subject of fashion. There are always trends within the industry on how to best place money. Today there is a strong tendency to favor index products and to pick on active management styles. Despite fashion, this paper is on active tactical asset allocation. Asset Allocation is the art of combining different asset classes into one single portfolio. For institutional wealth managers as well as for ultra high net worth individuals, the decisions to be taken in asset allocation are more important than picking single stocks or bonds. In section one, different forms of asset allocation are described. There is a strategic version which keeps allocation constant for a very long time. This differs from tactical asset allocation where allocation changes quite often and is driven by an active investment strategy. Finally, there is portfolio management, which relies on stock or bond picking. If successfully applied, tactical asset allocation will determine whether investors will suffer during a prolonged drawdown. Section one also defines three investment principles that will be used in construction models and investment processes. In this paper, risk is rather cut than spread during a drawdown. In the case of an uptrend, diversification is actively applied, therefore the level of complexity in the decision process is reduced. Simple approaches are favored over complex ones. … In section two, I’d like to present four simple tools which might be helpful in tactical asset allocation. Each model contains a quantitative measure which is able to indicate the attractiveness of an asset class and a set of rules on how to use the tool in asset allocation. Measure and a set of rules define the strategy. In order to select a single asset class, one needs to study the relation between different markets. Therefore, the tools presented are typically used within quantitative intermarket analysis. This is a relative young discipline within the field of technical analysis. … Overall I found evidence that tactical asset allocation might be helpful for the average investor and that the tools presented in this paper will help investors to structure their own investment process."

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