SVHoper
Recycles dryer sheets
Hi Rocks911,
I am not sure whether you missed that the main concept of asset allocation and in particular the fixed income/bonds/cash to equity ratio is to pick a % with which you can sleep and not sell during a 2008 or worse.
This is a fundamental tenet of asset allocation as it ensures that you do not sell low (and should be buying to maintain equity allocation too). If you take any major index --> and just look at it in morningstar history or google finance they have "fully recovered" from 2008/9 lows... so you don't have to rely on anyone rewriting history.
This asset allocation "system" has inbuilt market response (not timing as not predictive)... if equities drop and you follow the system you exchange bonds for equities so you are buying at lower equity prices. Similarly, if your mid and small have runup 30-40% as they did in 2013 you would be buying some bonds now... again selling high and buying relatively low.
However, if you try and mix your own predictive market timing into the system - it breaks as you have to time twice... getting out and getting back in.
I hope this makes sense.
Edited to add: I took a very big spanking - near 50% but was buying early in 2009 so all is great.
I am not sure whether you missed that the main concept of asset allocation and in particular the fixed income/bonds/cash to equity ratio is to pick a % with which you can sleep and not sell during a 2008 or worse.
This is a fundamental tenet of asset allocation as it ensures that you do not sell low (and should be buying to maintain equity allocation too). If you take any major index --> and just look at it in morningstar history or google finance they have "fully recovered" from 2008/9 lows... so you don't have to rely on anyone rewriting history.
This asset allocation "system" has inbuilt market response (not timing as not predictive)... if equities drop and you follow the system you exchange bonds for equities so you are buying at lower equity prices. Similarly, if your mid and small have runup 30-40% as they did in 2013 you would be buying some bonds now... again selling high and buying relatively low.
However, if you try and mix your own predictive market timing into the system - it breaks as you have to time twice... getting out and getting back in.
I hope this makes sense.
Edited to add: I took a very big spanking - near 50% but was buying early in 2009 so all is great.