At the current 22 P/E of the "market" the earnings
yield is about 4.5%. Tack on 3% for inflation and
we can expect an average annual return of about
7.5% going forward over the very long term. Who
knows what it will do next year, but with the recovery
getting long in the tooth we might see a little RTM
sooner rather than later. In any case, stick with
your planned asset allocation and rebalance as
My 60/40 "coffeehouse" with a double weight to International (about 28% of stock) has served me
well the past year and I will ride that horse again.
I hope fate does not put a burr under my saddle.
With the yield curve threatening to invert, you might consider reducing the duration of your bond allocation. Personally, I plan to use the "bar bell" approach and split my allocation between Vanguard's TIPS fund and Short Term Investment Grade.
Best wishes to all of us for a prosperous new year!