Friend, 40/60 rides these bear markets better than 60/40.thenextguy wrote:Bear with me as I flesh out this scenario.
Let's say you decide that your asset allocation is 60/40.
In the long run, this portfolio won't outperform 100% in stocks, but you take the tradeoff for less risk.
After a 20% slide in the market, a 60/40 allocation may be too conservative since the market tends to outperform long-term averages after bear markets.
So lets say that after every 20% slide in the market you move to an 80/20 allocation until the market returns to new highs.
This seems like a good way to protect downside volatility, but be free to ride the upside.
I so love CDs;
Bozo