Asset Allocation 02 (Aug 13 - Dec 18)

Re: Asset Allocation 02 (Aug 13 - Dec 16)

Postby winston » Thu May 26, 2016 8:30 am

Finding the right asset allocation is what counts

by Ilana Polyak

"If you're young enough, you can ride out [market losses]"

"Over long periods, the market goes up more than it goes down, but when you're older, you have less time available to do that"


Risk tolerance is something people tend to overestimate when markets are booming.


"Asset allocation and diversification feel good when the market is going down, but they feel bad when the market is going up"




Source: CNBC.com

http://www.cnbc.com/2016/05/24/finding- ... yourwealth
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Re: Asset Allocation 02 (Aug 13 - Dec 16)

Postby winston » Thu Jun 02, 2016 7:53 am

Finding the right asset allocation is what counts

by Ilana Polyak

Source: CNBC.com


http://www.cnbc.com/2016/05/24/finding- ... yourwealth
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Re: Asset Allocation 02 (Aug 13 - Dec 16)

Postby winston » Sun Jul 17, 2016 9:35 am

Great Rotation is here ?

Are stocks the new bonds? Why investors are buying now

by MARLEY JAY

"Income investors have opted to invest in equities versus lower-yielding bonds"

The drop in bond yields has been dramatic. At the start of 2014 the yield on the 10-year Treasury note was 3 percent, and a decade ago it was twice that much. Now it's around 1.6 percent.

The dividend yield on S&P 500 stocks, meanwhile, hasn't changed much over the last few years. It's around 2.1 percent, far more than what the 10-year Treasury pays.


The yield on the United Kingdom's 10-year note is about 0.8 percent, France's is 0.2 percent, and in Japan and Germany, those yields are negative,


The stocks that pay the largest dividends are phone companies and utilities, and investors have clamored for them all year.

The prices of S&P 500 phone and utility companies have soared about 20 percent in 2016, far more than the rest of the market.

Even with those gains, phone companies still pay a dividend yield of 4.3 percent and utility companies pay 3.3 percent, still way more than the 10-year Treasury note.


Source: Associated Press

http://finance.yahoo.com/news/stocks-bo ... 01617.html
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Re: Asset Allocation 02 (Aug 13 - Dec 16)

Postby winston » Fri Sep 16, 2016 10:01 pm

How to Break the Shackles of the Financial Industry

By Mark Ford

The investment-advisory industry is a huge, multibillion-dollar business based on hard work, clever thinking, and sophisticated algorithms. But it's also based on one teensy-weensy lie.

The lie is that you can grow wealthy investing in stocks and bonds.

It's not a big, black lie. But the unfortunate truth is that the financial establishment rarely looks beyond stocks and bonds. And if you think about it, why would it want to? It makes its money by ushering you from one "hot" stock or "amazing" fund to the next.

Because they know that you have heard that "diversification of assets" is good, financial advisers give you the illusion of diversification by filling your stock portfolio with businesses that are "diversified" into manufacturing, retail, global trade, natural resources, etc.

But at the end of the day, it's all invested in stocks or stock derivatives. The result? More risk and less potential wealth gain for you…

If you can't reasonably expect to get rich with just stocks and bonds, what can you do?

You can model your investing behavior on the behaviors that have been proven, time and time again, to actually work.

I'm talking about asset allocation.

Asset allocation is the process by which you spread your wealth across different sorts of investments.

You might think that something so dull as asset allocation could not possibly be that important in acquiring wealth, but numerous studies have shown that it may be the most important factor.

Because of an early financial disaster, I became an emotionally compulsive diversifier of practically every dollar I could save, putting some of it in bonds, some in stocks, some in cash, some in real estate, and so on.

Over the years, I have made hundreds of individual financial decisions – buy this, sell that. Some of them were good, a few of them were bad, and most of them were in between. And yet, overall, my net worth has increased considerably and consistently, without any down years, for more than 30 years.

I could see very clearly that it was not particular buy/sell decisions that accounted for this good fortune. It was the general decisions about asset allocation that paid off.

Let me give you a bird's-eye view of what I do:

1. Stocks – I have several stock portfolios. The lion's share (maybe 80% to 90%) of my stock money is in what you might call "legacy" stocks – a handful of big, dividend-giving companies that I'm happy to keep on a "forever" basis. A smaller percentage is in dividend-giving companies with growth potential. And a tiny percentage are speculations – stocks I'm sure I'll lose all my money on, but that I want to own just for fun.

2. Fixed Income – Historically, bonds make up this asset class. At one time, bonds (AAA-rated municipal bonds) represented as much as 40% of my net worth. My strategy was always to hold until maturity and buy them in "ladders," replacing them when they matured. But I haven't bought them since the rates dropped below 4.5%. Today, they represent about 5% of my net investible wealth.

3. Direct Investments in Entrepreneurial Businesses – This investment class has given me by far the best results. If you do this right, you can expect terrific, steady income and the potential for tremendous growth. The trick here is to invest only in companies you understand and have some control over.

4. Rental Real Estate – Next to business ventures, income-producing property investments have been the largest contributor to my success. I invest for the income and see appreciation as a bonus. Most mainstream real estate advice is bad. But if you do it properly – focusing on income – this asset class will do huge work for your portfolio.

5. Chaos Hedges – This asset class is not an investment. It is, as the name implies, protection from times of turbulence – a market crash, bankruptcy, lawsuits, etc. In this class, I include gold, silver, and platinum coins (bullion and one or two "rare" types). I bought all I needed when gold was trading at about $400 an ounce.

6. Collectibles – My preferred collectibles are fine art and first-edition books, but you can invest in anything from baseball cards to vintage cars to surfboards.

7. Options – Although my cardinal rule is not to invest in something I don't understand, I found a way to trade options that I understand and also believe in. Like real estate and insurance products, most options strategies are speculations. I'd advise against them. But the way I do it – selling puts on high-quality stocks – has worked very well for me.

8. Cash – I call this a "Cash Opportunity Fund." You keep a store of money you add to every year. That way, when the crash comes, you can use this fund to swoop in and buy a bunch of great assets at bargain prices.

I don't think my own portfolio is the best possible example of diversification. But it does reflect my belief that one needs to go well beyond some combination of stocks, bonds, and cash to win at the wealth-building game.

Source: The Palm Beach Research Group
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Re: Asset Allocation 02 (Aug 13 - Dec 16)

Postby winston » Wed Jan 11, 2017 8:17 am

How to make your most important wealth decision in minutes

Source: Daily Crux

http://thecrux.com/how-to-make-your-mos ... n-minutes/
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Re: Asset Allocation 02 (Aug 13 - Dec 18)

Postby winston » Tue Apr 11, 2017 3:25 pm

Francis Kinniry
Principal, Vanguard Investment Strategy Group

Rebalance for Risk

Global equity markets rose for the fourth consecutive month in February, and investor cash flows followed suit, favoring riskier asset classes.

This is concerning, given the size of the bull market, as investors are willing to take on more risk as stock prices continue to rise, amplifying their exposure to a potential downturn.

We think now is a good opportunity to check up on your portfolio’s asset allocation to avoid overexposure to risk assets. Using that $10,000 to rebalance your portfolio can help reduce downside risk if your asset allocation in equities is higher than you'd planned now. Specifically, this would mean allocating the vast majority of the proceeds to high-quality, low-cost bond funds.

As of the end of February, U.S. mutual fund and ETF investors’ assets were approximately 61 percent in equities, 23 percent in bonds and 16 percent in cash. (That is a Vanguard calculation using Morningstar data). This asset mix suggests there is plenty of opportunity for rebalancing.

Rebalancing is not about maximizing returns, reversion to the mean or market forecasts. It is about maintaining the risk-and-return characteristics of the portfolios that investors selected based on their unique time horizon, risk tolerance and financial goals. In contrast to market predictions, rebalancing is within our control.

It is critical to make sure you are still within your acceptable range of risk tolerance and to rebalance if needed. Doing so helps you stick to your investment plan and endure market downturns, better positioning you to meet your long-term financial goals.

Ways to play it with ETFs: Kinniry’s wise advice isn't investing advice that requires picking an ETF. The way to play it is simply to sit down and figure out whether you're overweight in equities and need to get back to a more balanced asset allocation.

Source: Bloomberg
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Re: Asset Allocation 02 (Aug 13 - Dec 18)

Postby winston » Wed Apr 12, 2017 11:22 am

Are Corporate Pensions About To Start Dumping Their $1 Trillion In Equity Holdings?

Companies on average have about 82 percent of the funding they expect to require for retirees’ pensions, compared with around 75 percent in the middle of last year, according to strategists at Morgan Stanley.

Once pensions are around 80 percent funded, they tend to increase their bond holdings and cut their stock investments to lock in gains, Morgan Stanley analysts led by Adam Richmond wrote in a report on Friday.

They funnel much of that money toward high-grade corporate debt, especially longer-dated bonds, to help fund their decades-long obligations.

Source: Investing Channel
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Re: Asset Allocation 02 (Aug 13 - Dec 18)

Postby winston » Tue May 16, 2017 1:19 pm

The end-of-the-world portfolio

Source: Daily Cruxx

http://thecrux.com/are-you-ready-for-th ... portfolio/
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Re: Asset Allocation 02 (Aug 13 - Dec 18)

Postby winston » Fri Jan 26, 2018 7:49 am

Bill Miller: A rush out of bonds is about to 'propel stocks significantly higher'

by Thomas Franck

Bill Miller warns that after two decades, great bull market in bonds may be coming to an end, which could send stocks tearing higher.

"I believe that if rates rise in 2018, taking the 10-year treasury above 3 percent, that will propel stocks significantly higher," he wrote in a letter.

Miller, who is an investor in bitcoin, also told investors that the current geopolitical tensions could be a boon for the cryptocurrency.

"Bonds, in my opinion, have entered a bear market, but one that is likely to be benign for the next year or so."


Source: CNBC

https://www.cnbc.com/2018/01/25/bill-mi ... yptr=yahoo
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Re: Asset Allocation 02 (Aug 13 - Dec 18)

Postby winston » Fri Mar 02, 2018 8:30 pm

How to find the right balance of stocks and bonds for your portfolio

By Paul A. Merriman

It’s crucial to know how much risk you can take

Source: Market Watch

https://www.marketwatch.com/story/how-m ... yptr=yahoo
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