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Percentage Of Stocks In Your Portfolio?

Friday, April 22, 2011 - 6:34 AM
The rule of thumb says the percentage of stocks one should own equals 100 minus your age. This CNNMoney.com article discusses this topic with some reasons why people may want to be more conservative:
in retirement especially you want to be mindful of "black swan" risk. [...] it's the chance that your portfolio might be decimated by a rare but catastrophic market meltdown. We tend to gloss over cataclysmic events in our planning because they're considered extremely low probability events. But recent research suggests they may pop up more frequently than we've believed.

4
Ken TuminKen Tumin5,469 posts since
Nov 29, 2009
Rep Points: 125,074
1. Friday, April 22, 2011 - 8:20 PM
Age in bonds/cash works for us. You can fiddle around the edges (I could elaborate, but your eyes would glaze over), but any other program seems unwise. Accordingly, at close to 64 years of age, my wife and I hold close to 64% in bonds and cash (with the bulk of that in a long-ladder of CDs) and 36% in equities, both foreign and domestic.

I found the article somewhat marginal, if you must know. It was sort of a typical "on the one hand, on the other hand" drivel.

Don't forget to adjust your asset allocation periodically. Stocks can run up (or down), bonds likewise. By keeping to the "age in bonds/cash" formula, and chucking bubblicious bond funds for long-term CDs in your ladder, you can maximize your returns while being able to sleep at night. I'm not real keen on bond funds these days, as you might have guessed.

Just my $.02.

Bozo
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BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
2. Friday, April 22, 2011 - 9:40 PM
The (100 - age) or (110 - age) for equity rule is just full of it.  It is just something that the silly and boring fianance people dream of to keep most people in the market.  I dropped that rule long ago during the 2000/2002 slump. 

My current retirement portfolio is basically adaptive according to my own "sense" of the market direction... currently at 14.3% equity-- which seems to indicate that I do not any warm and fuzzy feeling about this random and averaging down market. 

However, let me add that my adaptive portfolio is mostly independent of the current market state; if you know what I mean:D
3
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
3. Friday, April 22, 2011 - 10:09 PM
With 563 Trillion invested in derivatives manipulating the market the small investor has no chance. 76% of trades are computer generated. I have been completely out since Dec 1999 and have no plans to get back in even if historically the market goes up twice as much when a democrat is president.  Might not be the smart way to go but I can sleep nights.
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Ally6770Ally6770911 posts since
Jan 16, 2010
Rep Points: 2,647
4. Sunday, April 24, 2011 - 6:21 AM
I am always suspicious of the stock market when a lot of the people I encounter during the course of the day, particularly people who have no real knowledge of stock investing, are bragging about how much money they are making from some hot stock or silver investment. It reminds me of a story I read about Joe Kennedy, the father of President Kennedy, who sold all his stock holdings in 1928 the day after having a cabbie driver in NYC tell him about how much money he was making from his stock investments.
1
loulou543 posts since
Aug 3, 2010
Rep Points: 3,393
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