Investors changed their investment strategies after the 2007-2009 financial crisis due to lack of diversification and risk control. Asset allocation involves dividing a portfolio into different types of assets like stocks, bonds, and real estate to reduce risk. There are two main types of asset allocation: strategic (long-term goals) and tactical (short-term market timing). Strategic asset allocation aims to create a balanced mix of assets to maximize returns while managing risk. The chosen asset classes should be similar within each class, diverse from each other, and make up a significant portion of the portfolio without affecting liquidity. Traditional asset classes include equities, bonds, real estate, and cash, with a focus on long-term goals.