Originally Posted by novaman
The market has been gyrating like crazy lately. There is much talk of a correction. So what would be the best portfolio mix to be in at these times? I am a very aggressive investor with 95% of my money in equities- 20% of that being in technology, with apple as my single biggest stock holding.
Less than 10 months ago, we were almost 100% equities. At that time, it dawned on me, that I would have really hard time if half of our savings get wiped out. Since then we have been upping our stake of fixed income (currently at about 12%) with a goal of reaching about 20% by the mid/end of 08. I bit of a drag associated with 20% in bonds/cash seems quite a reasonable trade-off to curb the swings.
If the market takes a (huge) dive between now & end of next year, I will abandon the above plan and keep our equity to fixed income ratio constant. Although I see a need to tinker with the equity to fixed income ratio from time to time (as your risk tolerance changes), I really see no reason to change AA within the equity or fixed income portion of your portfolio (assuming you are not doing any performance chasing/market timing in the first place).