"Is Your Allocation a Good Fit For Your Risk Tolerance?"

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Taylor Larimore
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"Is Your Allocation a Good Fit For Your Risk Tolerance?"

Post by Taylor Larimore »

Bogleheads:

The latest edition of Mike Piper's Oblivious Investor has a very timely topic:

Is Your Allocation a Good Fit For Your Risk Tolerance?

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Occupier
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Re: "Is Your Allocation a Good Fit For Your Risk Tolerance?"

Post by Occupier »

Yup. I put it differently. The one sure way to lose money is to sell out at a low and miss a recovery.

If your going to panic and sell stocks you need to hold more bonds. If your going to panic and sell bonds, you need a shorter duration. You do NOT need a duration longer than intermediate under any circumstance BTW. Rates are at historic lows and are in the range where it is mathematically impossible for them to decline further. Dave
Tom_T
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Re: "Is Your Allocation a Good Fit For Your Risk Tolerance?"

Post by Tom_T »

Occupier wrote: Rates are at historic lows and are in the range where it is mathematically impossible for them to decline further.
Incorrect. The 10-year just went UP a point from last year. How can it be mathematically impossible for it to go down?
Best of Both Worlds
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Re: "Is Your Allocation a Good Fit For Your Risk Tolerance?"

Post by Best of Both Worlds »

Occupier wrote:Yup. I put it differently. The one sure way to lose money is to sell out at a low and miss a recovery.

If your going to panic and sell stocks you need to hold more bonds. If your going to panic and sell bonds, you need a shorter duration. You do NOT need a duration longer than intermediate under any circumstance BTW. Rates are at historic lows and are in the range where it is mathematically impossible for them to decline further. Dave
Comments like the above do a dis-service to novice investors. They are made with such conviction and unfortunately are incorrect. Mathematically, yields can decline significantly further and long-term treasuries, when NOT viewed in isolation, offer unsurpassed deflationary protection.
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ObliviousInvestor
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Re: "Is Your Allocation a Good Fit For Your Risk Tolerance?"

Post by ObliviousInvestor »

Thank you for sharing the article, Taylor.

I agree with the posters who noted that rates certainly could go down.

But I really like this:
Occupier wrote:If you're going to panic and sell stocks you need to hold more bonds. If you're going to panic and sell bonds, you need a shorter duration.
Nice and succinct.
Mike Piper | Roth is a name, not an acronym. If you type ROTH, you're just yelling about retirement accounts.
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