Go to Jeff Salisbury LWGate Home Page.From: "Richard A. Bauer" <owowo@fclass.net>
Subject: RE Asset Allocation v5 #54
Date: Tue, 6 Oct 1998 11:40:03 -0500
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Peter & Karen wrote: Subject: Asset Allocation I am in the process of picking an investment for a new IRA and have been thinking about asset allocations. The premise of a balanced portfolio of various asset classes and investments makes sense in principle. On the other hand I can't exactly see the problem with picking the best performing asset class and sticking with that one. For example, many people would add an international, small cap or bond investment class to a portfolio. This would balance out the returns since those investments would be doing well when your large cap investments are doing poorly. But if those investments will produce an overall lower return based on their historical averages, what is the point? I really don't care how the portfolio performs year to year. When you are talking about retirement savings and IRAs specifically, what I really want is the most money in the account in the end. Since you shouldn't be taping into it, who cares how you got there? I have at least 30 years for the money to grow and putting some of it into an underperforming asset can really hurt in the long run. >>Who am I. Just another private investor with my own biases. I couldn't agree more! That doesn't mean I do what you suggest. I do allocate to money markets, intermediate term bond, and various large indexes such as S&P 500, Total Stock Market, Income/Growth. I still like the warm and fuzzy of minimizing large swings in my portfolio value. My portfolio went down less than 10 % second quarter to third quarter. Also, I have no more than 12% in any one fund. I do not invest in sector funds (gold, oil, utilities, technology, health, financial, etc.). Reason: I haven't a clue as to when these are good and when these are bad markets. If I did, I would be timing the market, and I have tried that - and at least I can't do it. My problem with your picks is that you want to pick the best performing asset class. Best performing over what time period. If over 20+ years, then you might pick something that hasn't performed well over the last five year (buggy whips?). If over 5 years, you might be hitting a whim that won't last. Have fun..... Richard, retired, but still working - -
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