Roll call Warren Buffet 90/10 portfolio

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rattlenap
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Re: Roll call Warren Buffet 90/10 portfolio

Post by rattlenap » Mon May 30, 2016 11:56 pm

knpstr wrote:
rattlenap wrote:Just curios if any of you are doing the Warren Buffet 90/10 S&P 500 & Short-term Government Bond portfolio or at least something equivalent. For myself, I do the Vanguard 500 for the stock section, but for the other part I just do High Yield Savings Account/iBonds/No Penalty CD's. What about yourselves?


I'm at 100% total stock market (other than my emergency fund in a savings account, but hold no bonds)
How many months of savings do you keep in your EF? Also, will there be a certain age at which point you will start adding bonds into your portfolio and will you also do a glide path becoming more conservative until you retire?

digit8
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Re: Role call Warren Buffet 90/10 portfolio

Post by digit8 » Tue May 31, 2016 5:43 pm

JoMoney wrote:
rattlenap wrote:
JoMoney wrote:What short-term bond fund(s) do you use?

I had been using Vanguard's Short-Term Bond index, but I've mostly transitioned over to using Series I Savings Bonds, I expect to primarily use those along with high-yield bank bank/money market account.


I'd argue that going ibonds makes the 90/10 option more viable for "average" investors then any other bond choice. An aggresive saver starting early could easily put enough in them to set up retirement in at least a pork-n-beans, Wal Mart greeter job kind of a way, with the equity portion giving a boost during up-market years.
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knpstr
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Re: Roll call Warren Buffet 90/10 portfolio

Post by knpstr » Wed Jun 01, 2016 12:39 pm

rattlenap wrote:How many months of savings do you keep in your EF? Also, will there be a certain age at which point you will start adding bonds into your portfolio and will you also do a glide path becoming more conservative until you retire?


I have 3 months of expenses in my emergency fund. This is not counting what is in my HSA (which is also put in VTI, minus the $5,000 in cash to avoid fees)

I am hoping to have a large enough portfolio to never have to hold bonds (to where a 50% drop doesn't make me nervous at all once relying on the money). If it is "close" I will likely start adding bonds ~5 to 10 years from retirement. Something like switching from VTI to a lifestrategy fund or something (or maybe just a bond fund).

I'm still roughly 30 years from retirement. So nothing is written in stone here.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

rattlenap
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Re: Role call Warren Buffet 90/10 portfolio

Post by rattlenap » Tue Jul 05, 2016 12:53 am

Alchemist wrote:You can count me in as well.

Roth IRA: 100% FUSVX (Fidelity S&P 500 Fund)

Roth TSP: 100% C Fund (S&P 500 equivalent)

Taxable: 100% VTSAX (TSM)

Emergency fund: 12 months expenses in a high yield savings account, currently about 12% of my portfolio.


I'm 29 and the only changes I have in mind is to add to the G fund in my TSP as the rest of my portfolio grows to keep 10% "safe". The simplicity of this approach is the key, my 12 month emergency fund is my SWAN factor. A big cash security blanket to snuggle under. Everything else is one account, one fund. No tinkering, no rebalancing. Simplicity at its finest.
What is a G fund?

rattlenap
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Re: Roll call Warren Buffet 90/10 portfolio

Post by rattlenap » Tue Jul 05, 2016 12:56 am

goldendad wrote:I am 60 years old and have about 20% in cash and Vanguard's short term bond ETF (VCSH). The other 80% is in the S&P500 (SPY) and long term positions in individual blue chip stocks. I do hedge a bit by selling Covered Calls on the SPY and the individual stocks.

That is pretty impressive for being 60 years old. The volatility at your age doesn't scare you?

Engineer250
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Re: Role call Warren Buffet 90/10 portfolio

Post by Engineer250 » Tue Jul 05, 2016 12:07 pm

rattlenap wrote:
Alchemist wrote:You can count me in as well.

Roth IRA: 100% FUSVX (Fidelity S&P 500 Fund)

Roth TSP: 100% C Fund (S&P 500 equivalent)

Taxable: 100% VTSAX (TSM)

Emergency fund: 12 months expenses in a high yield savings account, currently about 12% of my portfolio.


I'm 29 and the only changes I have in mind is to add to the G fund in my TSP as the rest of my portfolio grows to keep 10% "safe". The simplicity of this approach is the key, my 12 month emergency fund is my SWAN factor. A big cash security blanket to snuggle under. Everything else is one account, one fund. No tinkering, no rebalancing. Simplicity at its finest.
What is a G fund?


Government Securities Investment Fund - one of the 5 funds (besides target retirement) available in the US Govt TSP (govt employee's 401k though not technically a 401k). It's a unique thing only available to folks in the TSP. Government buys long term/intermediate term treasuries and then sells funds that are equivalent to short term treasuries but with the long term rate.

https://www.tsp.gov/InvestmentFunds/Fun ... nce_G.html
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JoMoney
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Re: Roll call Warren Buffet 90/10 portfolio

Post by JoMoney » Wed Jan 18, 2017 8:51 am

I stumbled upon this paper and thought it was interesting. I'm not sure if reviving an old thread is appropriate, but this seemed like a reasonable place to post a link to it if others are interested
"Buffett’s Asset Allocation Advice: Take It … with a Twist"
http://web.iese.edu/JEstrada/PDF/Resear ... ett-AA.pdf
JAVIER ESTRADA wrote:...Buffett’s asset allocation advice is sound and simple, and yet many retirees may balk at the thought of holding such an aggressive portfolio.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

inbox788
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Re: Roll call Warren Buffet 90/10 portfolio

Post by inbox788 » Wed Jan 18, 2017 2:45 pm

Buffet says 90/10. Bogle says 50/50.

http://www.cnbc.com/2015/10/14/jack-bog ... -rest.html

If I am close to my number, I think Bogle makes sense. If I'm well above the number, then Buffet makes more sense. Hopefully I'll be somewhere in between and pick a ratio like 70/30. I'm starting to see the wisdom of decreasing risk right at retirement and if things go well, increasing the equities percentage in retirement.

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FelixTheCat
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Re: Roll call Warren Buffet 90/10 portfolio

Post by FelixTheCat » Wed Jan 18, 2017 3:09 pm

rattlenap wrote:
goldendad wrote:I am 60 years old and have about 20% in cash and Vanguard's short term bond ETF (VCSH). The other 80% is in the S&P500 (SPY) and long term positions in individual blue chip stocks. I do hedge a bit by selling Covered Calls on the SPY and the individual stocks.

That is pretty impressive for being 60 years old. The volatility at your age doesn't scare you?

I am curious as well. If your portfolio dropped 40% (think half stocks) like in 08/09, you wouldn't be concerned?
Felix is a wonderful, wonderful cat.

Crushtheturtle
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Crushtheturtle » Sun Jul 02, 2017 11:40 am

JoMoney wrote:I stumbled upon this paper and thought it was interesting. I'm not sure if reviving an old thread is appropriate, but this seemed like a reasonable place to post a link to it if others are interested
"Buffett’s Asset Allocation Advice: Take It … with a Twist"
http://web.iese.edu/JEstrada/PDF/Resear ... ett-AA.pdf
JAVIER ESTRADA wrote:...Buffett’s asset allocation advice is sound and simple, and yet many retirees may balk at the thought of holding such an aggressive portfolio.
Fascinating article, thank you.

Joeko
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Joeko » Sun Jul 02, 2017 5:25 pm

I was 90/10 in my 40s...Now in my 50s..My mix is 50-Total US Stock, 30--Total US Bonds, 20-Intl Stock.

BlackHat
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Re: Roll call Warren Buffet 90/10 portfolio

Post by BlackHat » Sun Jul 02, 2017 6:18 pm

I'm currently 90% VFIAX 10% VFISX. I'll be honest, internationals recent performance has me feeling like I'm missing out. I'm going to stay the course though as I am most comfortable investing in United States businesses.
“Life is really simple, but we insist on making it complicated.” -- Confucius

rattlenap
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Re: Role call Warren Buffet 90/10 portfolio

Post by rattlenap » Sun Jul 02, 2017 6:26 pm

digit8 wrote:
JoMoney wrote:
rattlenap wrote:
JoMoney wrote: What short-term bond fund(s) do you use?
I had been using Vanguard's Short-Term Bond index, but I've mostly transitioned over to using Series I Savings Bonds, I expect to primarily use those along with high-yield bank bank/money market account.
I'd argue that going ibonds makes the 90/10 option more viable for "average" investors then any other bond choice. An aggresive saver starting early could easily put enough in them to set up retirement in at least a pork-n-beans, Wal Mart greeter job kind of a way, with the equity portion giving a boost during up-market years.
Yeah, iBonds seem like they'd be a great option simply for the inflation aspect of them.

dbr
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Re: Roll call Warren Buffet 90/10 portfolio

Post by dbr » Mon Jul 03, 2017 8:31 am

If there is evidence concerning the optimum bond holding at 90/10 it is that the bonds should be long term. The neutral hypothesis is that at that allocation it simply doesn't matter what bonds you choose. Proving differently is not easy.

Keepcalm
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Keepcalm » Mon Jul 03, 2017 3:10 pm

BlackHat wrote:I'm currently 90% VFIAX 10% VFISX. I'll be honest, internationals recent performance has me feeling like I'm missing out. I'm going to stay the course though as I am most comfortable investing in United States businesses.
Not to fall into the category of speculating, however I would not beat yourself up too much. Internationals (since 2011) have had this ceiling they hit and then fall back. Actually looks like it just hit the ceiling recently and is now headed back down.

Not excuse me while I go tar and feather myself for saying all of that. :P

snarlyjack
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Re: Roll call Warren Buffet 90/10 portfolio

Post by snarlyjack » Mon Jul 03, 2017 5:02 pm

I 'am approximately 90/10.

92% VHDYX.
8% Local Bank CD's.
+ some cash in checking & savings account.
No debt.
Last edited by snarlyjack on Mon Jul 03, 2017 7:31 pm, edited 1 time in total.

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Nicolas
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Nicolas » Mon Jul 03, 2017 6:48 pm

snarlyjack wrote:I 'am approximately 90/10.

92% VHYDIX.
8% Local Bank CD's.
+ some cash in checking & savings account.
No debt.
No such ticker. Did you mean VHDYX?
This is Vanguard High Dividend Yield Index Fund Investor Shares.

InsideTheBeltway
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Re: Roll call Warren Buffet 90/10 portfolio

Post by InsideTheBeltway » Mon Jul 03, 2017 7:11 pm

Imagine if your $1,000,000 nest egg turned into $100,000 over 3 years. That is what happened to 100% stock investors between 1929 and 1932.

snarlyjack
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Re: Roll call Warren Buffet 90/10 portfolio

Post by snarlyjack » Mon Jul 03, 2017 7:34 pm

Sorry Nicolas,

Typo...I edited my post & fixed the ticker.
VHDYX is Vanguard High Dividend Yield Index Fund.

Dave55
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Dave55 » Mon Jul 03, 2017 7:47 pm

Warren Buffet has made his fortune by buying stocks and companies where he perceived value. He is one of the greatest, if not the greatest investor of all time.

As far as I know, Warren has not made a living out of advising people or institutions on "asset allocation". His directive about leaving his wife in a 90/10 portfolio may be appropriate for her, but that does not mean it is appropriate for me or you. As stated by many here previously, the ability, need and desire to take risk and many other factors constitute building blocks for asset allocation.

From my perch, (and my sincere apologies if I leave any name out) but this forum has had the honor of hearing directly or indirectly from people that are experts on asset allocation. Some of those experts are: Rick Ferri, Larry Swedroe, Paul Merriman, Jonathan Clements, Allan Roth, Jack Bogle, Taylor Larimore, Mel Lindauer, William Berstein, Bill Schultheis, James Dahle, Charles Ellis, Mike Piper, David Swensen and others.

Having received a great education here, reading books of many of the experts noted above and having had 3 advisors in my younger years, I suggest that anyone eager to knock off Warren Buffets 90/10 suggestion for their own portfolio do themselves a favor and do more research.

Dave

Desert
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Desert » Mon Jul 03, 2017 8:45 pm

InsideTheBeltway wrote:Imagine if your $1,000,000 nest egg turned into $100,000 over 3 years. That is what happened to 100% stock investors between 1929 and 1932.
This and Taylor's post above are two of the most important posts in this thread. 2008/9 was brutal, but hardly the worst possible outcome for equities. Furthermore, I fear the quick snap back of equities following 2008 has lulled some investors into a false sense of security.

As Taylor pointed out far more accurately and eloquently than I can, watching your life savings evaporate over multiple years is something most of the 90/10 folks here have not experienced. 90/10 is fine for young investors with small portfolios. Most of the rest of us need to dial it back a bit.

heyyou
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Re: Roll call Warren Buffet 90/10 portfolio

Post by heyyou » Tue Jul 04, 2017 12:53 pm

With a higher bond allocation, you can spend from bonds before you sell any depressed stocks, retired or not. If a severe crash occurs, your job may not last either. Even state and local governments will cut back when tax revenues drop.

I believe Buffett (with two "t"s and a W) said his current wife was getting his cash savings of 10% of the $66B estate, with his Berkshire shares going to the Gates Foundation. At her age and with that wealth, the trustee's allocation hardly matters. I do not understand how others would view her 90/10 allocation as investing advice for their own portfolios. Buffett did not accumulate his assets by investing in mutual funds nor did he mention a spending % for his widow's fortune. He did buy controlling interest in businesses then added his own managers.

DomDangelina
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Re: Roll call Warren Buffet 90/10 portfolio

Post by DomDangelina » Tue Jul 04, 2017 1:08 pm

I strongly considered going the Buffet route, but eventually decided it was too aggressive for me.
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121

inbox788
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Re: Roll call Warren Buffet 90/10 portfolio

Post by inbox788 » Wed Jul 12, 2017 3:14 am

inbox788 wrote:Buffet says 90/10. Bogle says 50/50.

http://www.cnbc.com/2015/10/14/jack-bog ... -rest.html

If I am close to my number, I think Bogle makes sense. If I'm well above the number, then Buffet makes more sense. Hopefully I'll be somewhere in between and pick a ratio like 70/30. I'm starting to see the wisdom of decreasing risk right at retirement and if things go well, increasing the equities percentage in retirement.
Buffet is aggressive. Bogle is conservative. They're both right, and somewhere in the middle is a happy medium.

sixtyforty
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Re: Roll call Warren Buffet 90/10 portfolio

Post by sixtyforty » Wed Jul 12, 2017 8:18 am

I always find it interesting that threads like this always seem to pop up when the market is at new highs. I'll take my hat off to the person that espouses their 90/10 portfolio when we are in the jaws of a bear market plummeting down -50%. The Dow is consistently opening at a -500 and the news is there is no end in sight. :shock:
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci

metacritic
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Re: Roll call Warren Buffet 90/10 portfolio

Post by metacritic » Wed Jul 12, 2017 8:24 am

I'm age 44. I am 90/10 though that 90 is split 60% in VTSMA and 40% VGTSA. I'll also add 5 percent in bonds next year and another 5 percent at 50 and so on until retirement when I imagine I'll move to 50/50.

While I'm 90/10 at present, I had this set up before Buffett laid out his future plans for his estate. I never understood the interpretation that Buffett's advice was for all. Rather I understood him to be detailing his instructions for what he puts into trust for his surviving spouse.

selftalk
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Re: Roll call Warren Buffet 90/10 portfolio

Post by selftalk » Wed Jul 12, 2017 8:22 pm

I do remember Buffett saying on tv quite a while ago that he would rather make a bumpy 13% than a smooth 10%. This is his risk tolerance. He has also said that you should not buy a stock if you cannot stomach a 50% drop. In his 2014 Berkshire annual report pages 18-19 he writes that the protection of your purchasing power of your money is key and that the short term (1 day, 1 month, 1 year) fluctuations of the market mean nothing. Most people are consumed with their net worth on a short term basis and according to Buffett that is simply wrong.

dbr
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Re: Roll call Warren Buffet 90/10 portfolio

Post by dbr » Thu Jul 13, 2017 9:09 am

I think people just have to face up to the fact that Warren Buffett is absolutely adamant that the way to invest is to hold US stocks for the long term with perhaps some reserve in cash. This is for everyone. People that find this confusing or not to their preference will just have to do something that is not what Mr. Buffett does or recommends. But if you try to invest according to the advice of all the (respectable) gurus and every comment you hear from them you won't be able to invest at all because the advice is too conflicted and ambiguous to follow.

deltaneutral83
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Re: Roll call Warren Buffet 90/10 portfolio

Post by deltaneutral83 » Thu Jul 13, 2017 10:12 am

The 1929-1932 scenario with regards to the stock market was about 5th in line on the priority list. If we experience greater than the 53% decline in 08/09 going forward, there will be a much bigger issue than retirement equity accounts getting halved. For one, mass unemployment. I don't know who is mostly to blame and who is mostly due credit but 08/09 could have easily been a 70% reduction instead of 53% and we could easily be sitting at 12k on the DOW today and 1220 on the S&P. Interestingly enough, the only 30 year period of the S&P not returning nominal 8% (divs reinvested) was if you had dumped everything into the market in September 1929. Sept 1929 through Sept 1959 returned just under nominal 8%. It means nothing going forward but if that holds true we are going to see some serious returns the next 13 years for the 2000-2030 return to equal 8%, i.e. 105k on the DOW and 15k on the S&P whichis 13% CAGR for the next 13 years.

ETA- the big banks are still negative from Oct 2007 to now to the tune of 4-6% annually had you dumped money into them at the Oct 2007 high. Ouch.
Last edited by deltaneutral83 on Thu Jul 13, 2017 10:30 am, edited 3 times in total.

chaz
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Re: Roll call Warren Buffet 90/10 portfolio

Post by chaz » Thu Jul 13, 2017 10:19 am

I like 60-40 and the Vanguard Balanced Index Fund.
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TSquare
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Re: Roll call Warren Buffet 90/10 portfolio

Post by TSquare » Thu Jul 13, 2017 10:27 am

selftalk wrote:Most people are consumed with their net worth on a short term basis and according to Buffett that is simply wrong.
Amen. Please reference the post titled "Do you count vehicle equity in net worth?".

-tsquare

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stemikger
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Re: Roll call Warren Buffet 90/10 portfolio

Post by stemikger » Thu Jul 13, 2017 8:02 pm

chaz wrote:I like 60-40 and the Vanguard Balanced Index Fund.
+1

You can't go wrong with this. As Jack has said, this is the ultimate in investing and simplicity. One fund and no stress. I guess that is why he chose to use this fund for the money he gifts to his Grandchildren. He doesn't want to worry about it and he doesn't want them to worry about it.

If you think about it, it's not much different from the 90/10, just a little more of a safety cushion. I'm sure Warren's wife will have more in her 10% bond portion than most of us will every have in our 40% bond portion.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

chaz
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Re: Roll call Warren Buffet 90/10 portfolio

Post by chaz » Fri Jul 14, 2017 10:31 am

it is very good to avoid stress.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

DoctorE
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Re: Roll call Warren Buffet 90/10 portfolio

Post by DoctorE » Sun Jul 16, 2017 4:16 am

The 10% would last Buffet's spouse several dozen lifetimes, no matter what the 90% did.

chaz
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Re: Roll call Warren Buffet 90/10 portfolio

Post by chaz » Sun Jul 16, 2017 10:54 am

The 10% is too low for most people.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

Quickfoot
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Quickfoot » Sun Jul 16, 2017 8:17 pm

rattlenap wrote:Just curios if any of you are doing the Warren Buffet 90/10 S&P 500 & Short-term Government Bond portfolio or at least something equivalent. For myself, I do the Vanguard 500 for the stock section, but for the other part I just do High Yield Savings Account/iBonds/No Penalty CD's. What about yourselves?
I'm 90:10 as follows:

10% fixed income (75% domestic total bond index fun, 25% total international bond fund)
25% of equity international (75% developed markets, 25% emerging markets)
50% of domestic equity in large-cap
50% of domestic equity in mid-cap

I'll probably keep this formula for life but decrease exposure to equity as we get closer to retirement, I'll probably be about 40/60 to 50/50 at 60 at which point we'll retire and buy a SPIA with 30-40% of portfolio and I'll increase exposure to equities to around 66/34 (I really like Wellington's strategy and allocation so probably just buy it) and probably hold for life.

SPIA + even 60-70% of social security will be ~ twice our living expenses.

Quickfoot
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Re: Roll call Warren Buffet 90/10 portfolio

Post by Quickfoot » Sun Jul 16, 2017 8:29 pm

sixtyforty wrote:I always find it interesting that threads like this always seem to pop up when the market is at new highs. I'll take my hat off to the person that espouses their 90/10 portfolio when we are in the jaws of a bear market plummeting down -50%. The Dow is consistently opening at a -500 and the news is there is no end in sight. :shock:
I'm 90/10, Vanguard suggests 100/0 for me and I agree it'd probably be a perfectly fine asset allocation even in downturn years. I don't mind if it drops 45% in the short term (which I consider ~ 10 years), I don't need the money for another 35 years. I also don't really celebrate huge one or two year returns either though because I know they'll (probably) balance out with the losses in the longer term. I check my 401K twice a month just to make sure my employer is properly depositing my contributions (they aren't super competent with things like that) and don't worry about the balance.

I agree that 90/10 is not reasonable for the majority of people that don't take the time to educate themselves not only about the market but investing behavior and behavioral economics but I also don't think it's a super scary or rare asset allocation either.

chaz
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Re: Roll call Warren Buffet 90/10 portfolio

Post by chaz » Mon Jul 17, 2017 10:06 am

no one size fits all.
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best2u
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Re: Roll call Warren Buffet 90/10 portfolio

Post by best2u » Mon Jul 17, 2017 10:27 am

I was 80% exposed when the great recession hit. Watched several years of hard work and savings disappear when I was 53. The decade of 2000 was a disaster for me. Would have made much more money on a plain old 60-40 portfolio. To show I am not as stupid as I look, today I am at 50-50. Hope this 90-10 thing works out for you because that means I will make money on my stock investments too. Negative interest rates may be about the only thing that could push me back to heavy stock exposure now that I am an old man. :beer

chaz
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Re: Roll call Warren Buffet 90/10 portfolio

Post by chaz » Mon Jul 17, 2017 10:48 am

learn by experience.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

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