“What to do about asset allocation” is the one question I get every day which I absolutely cannot answer.
The reason is simple: no two investors are alike.
The answer varies whether you are young or old, have $1,000 in the bank or $1 billion, are a sophisticated investor or a basic beginner, are in the top or the bottom tax bracket, and so on.
This is something you should ask your financial advisor if you haven’t fired him already, which you probably should.
Only advisors who read the Diary of a Mad Hedge Fund Trader should merit your attention. At least they’re going the extra mile trying to figure things out.
Having said all that, there is one old hard and fast rule, which you should probably dump.
It used to be prudent to own your age in bonds. So, if you were 70, you should have had 70% of your assets in fixed-income instruments and 30% in equities.
When bond interest rates were plumbing the depths at a 0.32% yield during the pandemic low, bonds were shunned by all advisers. In fact, the (TLT) was one of the best short plays I have ever executed.
But you know what? Time heals all wounds. Maybe it is time to go back to the old rules. With a 4.47% for ten-year US Treasury bonds, 7.5% for junk, 8.8% for senior loan ETFs, and 15% for some REITS, maybe fixed income doesn’t look so bad after all. And they are all about ready to take off with the Fed ready to start cutting interest rates in the coming months.
Just thought you’d like to know.
Allocation: Are You Him?
Or Him?
