best portfolio mix for these times

[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.

I follow Jack Bower's Fidelity monitor for the bulk of my portfolio, splitting it up between his select system and growth models.

But I'm getting antsy.. what about you guys?

 

[LOL!]

I'll start by disagreeing with your conjecture that the market has been gyrating like crazy lately. Do you remember the plus and minus 20% swings in the 1990's?

The standard advice of book authors and other experts (Rick Ferri, Larry Swedroe, William Bernstein, Paul Merriman, et al.) is to have the same equity allocation and just adjust your risk by changing the percentage of fixed income. There is not much difference in the long term average annual return between a portfolio of 80% stocks/20% fixed income and a portfolio of 100% stocks, but the risk level is quite a bit different.

I am not antsy, but we have between 25% and 30% of assets in fixed income. Our TIPS fund is up 8% this year. Guess what the YTD return of the S&P500 is so far this year? We also have a big slug of foreign investments including emerging markets, so we feel we are well diversified, yet within a risk level that makes it very easy to sleep very well at night.

If you want more specific asset allocation advice, I can point you to some web sites. Just ask.

 

[REdreamn]

If you want more specific asset allocation advice, I can point you to some web sites. Just ask.

I'll bite. The idea of keeping AA stable is appealing.

 

[LOL!]

You have to decide if you want market weights or you wish to slice and dice. For starters, take a look at the "must-read" articles in the right-hand panel at FundAdvice.com - Home. You might also wish to read a book like William Bernstein's The Four Pillars of Investing or Rick Ferri's All About Asset Allocation.

 

[lucija]

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).

 

[maddythebeagle]

I follow Jack Bower's Fidelity monitor for the bulk of my portfolio, splitting it up between his select system and growth models.

I prefer Jack Bauer myself....the threat level is at orange which means 70/30 stocks/bonds...