Re: Bulletproof Your Financial Future

From: jeff@scrooge.csd.sdl.usu.edu (Jeff Salisbury)
Subject: Re: Bulletproof Your Financial Future
Date: Fri, 10 Jul 1998 14:54:27 -0600

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Jerry,

Let me say that I heartily recommend Lefavi's book.  Over the past year, I have
called into his Saturday radio show half a dozen times with questions.  I have
read his book from cover to cover -- its marked up and dog-eared by now.  His
book has forever changed the way I view asset allocation.  Up until I read his
book, I basically thought asset allocation was for "sissys" -- I prefered to be
fully invested in equities.

However, Lefavi's strategies opened my eyes.  Basically, he says you should
take a small part of your portfolio and use it as "insurance" to protect the
value of your portfolio against the two main economic threats -- an
inflationary crisis, and a deflationary crisis (recession/depression).  To do
this, he recommends investment vehicles that will do more than hold their value
under crisis.  In fact, historically, they have increased under the two
disaster scenerios enough to make up for the drop in value of the other parts
of the portfolio.

Lefavi lives about two hours from my home.  I've had the opportunity to visit
with him in person a couple of times (as recently as last week), and attend one
of his seminars.  The man is a zealous fiduciary and knows his stuff.

One comment about your allocation percentages below.  The percentage of
Treasury bills and Real Estate you cite below were based on the current
interest rates at the time the book was published (93?).  Interest rates are
now lower.  Therefore, the percentage of treasury bills in your portfolio
should now be higher, and the real estate should be lower.  I asked Lefavi this
very question last week and he indicated he is now recommending 7-9% for
T-bills.  He also indicated he now recommends the zero-coupon T-bills (also
called strips) for the medium risk portfolio.

Best Regards,

Jeff Salisbury

On Jul 10,  2:28pm, Jerry Conley wrote:
> Subject: Bulletproof Your Financial Future
>
> I am in the process of preparing for retirement in a couple of years and
> have been interested in ways to diversify my investments so I can still
> receive a reasonable earnings from investments, but also protect myself in
> the event of inflation or depreciation. I picked up a book written by Bruce
> A. Lefavi "Bulletproof Your Financial Future" in which he recommends
> several investment strategies. The one that seems to fit my needs most is
>
>       4% Treasury bills/cash
>       7% U.S. small-company stocks
>       10% Treasury bonds
>       10% Domestic stocks
>       24% International stocks
>       20% International bonds
>       12% Gold
>       13% Real estate
>
>       Right now I am too heavy in U.S. Stocks. I can make adjustments to
> diversify but am concerned about the market conditions that would time the
> switch from one type of investment to another. When is it a good time to
> get out of some of my U.S. Stocks and into Internation Bonds? Gold? etc?
>       Lefavi suggests that the particular strategy for me would average
> about 13% return and be a medium risk. Does anyone have any view on this
> strategy? Are there any words of wisdom anyone may have for me. I'm
> generally a buy and hold kind of guy
>
>       Thanks
>
>-- End of excerpt from Jerry Conley

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