Poll: Would you EVER recommend 100% equity?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

Would you EVER recommend 100% equity?

Poll ended at Tue Apr 29, 2014 3:38 pm

Yes
192
63%
No.
111
37%
 
Total votes: 303

pkcrafter
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Poll: Would you EVER recommend 100% equity?

Post by pkcrafter » Fri Apr 25, 2014 3:38 pm

Very simple--Would you ever recommend 100% stocks under any circumstance? I'm not looking for reasons when you might, just IF you would. A NO vote means you would NEVER recommend 100% equity.

I'm trying to get an idea of the percentage of forum members who would recommend 100% stocks. So, if you read this, please vote.

thanks,

Paul
Last edited by pkcrafter on Fri Apr 25, 2014 6:37 pm, edited 1 time in total.
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Re: Would you EVER recommend 100% equity?

Post by thx1138 » Fri Apr 25, 2014 4:04 pm

Not only recommend I did it for a fair bit myself when younger and savings was still rather small.

Rodc
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Re: Would you EVER recommend 100% equity?

Post by Rodc » Fri Apr 25, 2014 4:07 pm

"Ever" covers an awful lot of ground, so I voted yes.

I note that while I am not 100% stocks, given my and wife's pensions and SS and nearly paid off home, and if I work to age 65, wife to 61, our portfolio could go to zero and we'd be middle class. So conceivably we could be 100% stocks.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Would you EVER recommend 100% equity?

Post by bhsince87 » Fri Apr 25, 2014 4:15 pm

I might recommend 0% bonds in some cases, but never 100% equity.
BH87

MichDad
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Re: Would you EVER recommend 100% equity?

Post by MichDad » Fri Apr 25, 2014 4:19 pm

With the exception of a REIT fund and a commodities fund, my wife and I are 100 percent invested in US and international equities -- no bonds. I've been doing this since age 30 (when I first started investing for retirement) and am now 58. My caveat: I will have a decent inflation-adjusted government pension and my wife and I will both receive Social Security. We also maintain a 6+ month emergency fund in a bank FDIC-insured money market account.

I am not advocating this for anyone else but feel that those below age 40 should also be able to do this. After all, those below age 40 can have 20+ years to allow the volitility of a global equities portfolio to work its magic.

MichDad

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Will do good
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Re: Would you EVER recommend 100% equity?

Post by Will do good » Fri Apr 25, 2014 4:19 pm

I would go 100% on equity if I have networth of 10 million and need only 2 million to live on. I would go 100% equity and growth that for the future generations.
Last edited by Will do good on Fri Apr 25, 2014 4:23 pm, edited 2 times in total.

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Re: Would you EVER recommend 100% equity?

Post by steve_14 » Fri Apr 25, 2014 4:20 pm

Of course. There's no free lunch in bonds.

The only time I'd insist on bonds is for someone near or in retirement who didn't have the ability to take the risks of a 100% stock portfolio (which admittedly is post people).

100% stocks at age 30? Fine. 100% stocks with $5M in assets? Fine.

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Re: Would you EVER recommend 100% equity?

Post by YttriumNitrate » Fri Apr 25, 2014 4:25 pm

bhsince87 wrote:I might recommend 0% bonds in some cases, but never 100% equity.
Indeed, I hear the utility companies get a bit fussy when you try to pay your bills with shares of VTI.

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Re: Would you EVER recommend 100% equity?

Post by pennstater2005 » Fri Apr 25, 2014 5:03 pm

pkcrafter wrote:I'm not looking for reasons when you might, just IF you would.
Yeah, good luck with that :happy
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manwithnoname
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Re: Would you EVER recommend 100% equity?

Post by manwithnoname » Fri Apr 25, 2014 5:29 pm

100% equities is my recommendation for investors under 40.They don't want to have anything to do with bonds because they are too difficult to understand and dont have much of a return. Equities are easy to understand because they go up and down with the economy. Since the investment is for the long term they are willing to ride out the volatility of equities.

As investors get to mid career they can begin diversifying into fixed income say 90/10.

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Re: Would you EVER recommend 100% equity?

Post by TheTimeLord » Fri Apr 25, 2014 6:06 pm

I believe people with the psychological makeup to handle a 100% equity portfolio above 5 figures properly are few and far between so I personally would never recommend it.
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Re: Would you EVER recommend 100% equity?

Post by dr direction » Fri Apr 25, 2014 6:19 pm

My understanding is that historically having 5%-10 invested in safe assets (like short term treasuries) has not only decreased risk but increased CAGR due to improved portfolio efficiency.

Why take additional risk with your portfolio if you do not expect it to offer you additional returns? (with the usual caveats of past performance and future returns etc...)

DD

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Re: Would you EVER recommend 100% equity?

Post by flyingaway » Fri Apr 25, 2014 6:25 pm

I have 100% equities.

pkcrafter
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Re: Would you EVER recommend 100% equity?

Post by pkcrafter » Fri Apr 25, 2014 6:29 pm

Almost 600 reads and only 60 votes. I was worried that we might get biased voting and that's why I encouraged everyone who read it to vote. Maybe the voting is biased, but I don't know for sure.

I would not believe 2/3rds of members would recommend 100% equity, even under the circumstances described, but maybe it's true.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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CABob
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Re: Would you EVER recommend 100% equity?

Post by CABob » Fri Apr 25, 2014 6:36 pm

Yes for a young, beginning investor with a small portfolio.
How small, how young? I'm not sure, perhaps under 30 with a portfolio of less than $10K. :idea:
Bob

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JoMoney
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Re: Would you EVER recommend 100% equity?

Post by JoMoney » Fri Apr 25, 2014 6:37 pm

http://johncbogle.com/wordpress/wp-cont ... -12-12.pdf
...John M. Templeton, Dartmouth Professor Peter Williamson, and Charles R. Schwab were all true believers in equities. Templeton was unequivocal: “invest 100 percent in common stocks.” (The 6.9 percent annual return on his Templeton Growth Fund for the period, in fact, would barely outpace the bond market return of 6.2 percent, despite assuming twice the risk.) Nor did Williamson accept any need for “an anchor to windward” (in bonds or cash) to modify volatility. Schwab described equities as “the investment of choice,” and—surprising as it may seem for this marketer focused on managed funds with good past performance—favored the use of index funds. ...
http://johncbogle.com/speeches/JCB_AZ_Republic_3-00.pdf
...Typically, the allocation might range from something as crude as, say, 50% in stocks and 50% in bonds for older, moderately risk-averse investors who have accumulated substantial capital, have reached normal retirement age, and need to draw down income. Or up to 100% stocks for young, confident investors who are just beginning to accumulate their first investments in a 401(k) retirement plan, and have scores of years before income will be an issue. In short, intelligent asset allocation is an inevitably imperfect combination of
(1) the years you have remaining to accumulate wealth,
(2) the amount of your assets,
(3) the income you require, and
(4) the courage to stay the course you have set for yourself.
In an uncertain world—and it will be ever thus—getting your allocation almost right is better than getting it precisely wrong...
http://johncbogle.com/speeches/JCB_NE_Pension_4-00.pdf
...I am comforted to share that inadequacy with the likes of Paul Samuelson, who tells us, “there is no way any professor of economics or any minister of the church can tell you what your risk tolerance must be.”
No, nor can any Wall Street seer, nor any money manager, nor any indexing advocate, nor even any grizzled veteran of 50 years in this wonderful business....
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Would you EVER recommend 100% equity?

Post by manwithnoname » Fri Apr 25, 2014 6:37 pm

StarbuxInvestor wrote:I believe people with the psychological makeup to handle a 100% equity portfolio above 5 figures properly are few and far between so I personally would never recommend it.
All the investors under 40 that I know who are 100% equities have 6 figure portfolios. Few investors under 50 want bonds because they are too complicated and have a low investment return.

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Re: Would you EVER recommend 100% equity?

Post by manwithnoname » Fri Apr 25, 2014 6:40 pm

pkcrafter wrote:Almost 600 reads and only 60 votes. I was worried that we might get biased voting and that's why I encouraged everyone who read it to vote. Maybe the voting is biased, but I don't know for sure.

I would not believe 2/3rds of members would recommend 100% equity, even under the circumstances described, but maybe it's true.

Paul
Why not? There is not much to recommend bonds as a long term investment in a low interest rate environment for the foreseeable future.

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Re: Poll: Would you EVER recommend 100% equity?

Post by Trader Joe » Fri Apr 25, 2014 6:42 pm

Yes, I recommend that all young investors maintain 100% equity.

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nedsaid
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Re: Poll: Would you EVER recommend 100% equity?

Post by nedsaid » Fri Apr 25, 2014 6:46 pm

What I would say is that I would never recommend a 100% equity portfolio to anyone. It is okay for an investor in their 20's, but even then I would recommend for them an 80% stock/20% bond portfolio. Everyone has a high risk tolerance in a bull market. When you actually go through a bear market, you can come back to me and tell me that you have a high risk tolerance. Until then, I won't believe you.

When I first started as an investor, I was very risk adverse. I ramped up risk as I went on. At age 39, I was over 90% in equities. Pretty foolhardy now that I look back. After selling about 15% of my stocks in 2000, I worked down to an 80/20 portfolio and later to about 70/30 where I am today.
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Re: Poll: Would you EVER recommend 100% equity?

Post by cfs » Fri Apr 25, 2014 6:47 pm

My simple answer is negative.

Why not? Because I remember the beating we took during the tech bubble when a very large percentage of individual investors were 100 percent in high flying equities because that time was different.

Do Great Things! And thanks for reading this note.
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thx1138
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Re: Would you EVER recommend 100% equity?

Post by thx1138 » Fri Apr 25, 2014 6:48 pm

StarbuxInvestor wrote:I believe people with the psychological makeup to handle a 100% equity portfolio above 5 figures properly are few and far between so I personally would never recommend it.
I can't fathom why 90/10 or 80/20 would be any better if you are so twitchy and undisciplined you might sell at a trough. 90/10 and 80/20 are common recommendations for young investors and most target date fund glide slopes start at 90/10. So if people are suppose to live with 90/10 they can just as easily live with 100/0.

And I'll echo a previous post, I know plenty of people with 100/0 and six figure retirement portfolios.

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Re: Would you EVER recommend 100% equity?

Post by berntson » Fri Apr 25, 2014 6:49 pm

pkcrafter wrote:Almost 600 reads and only 60 votes. I was worried that we might get biased voting and that's why I encouraged everyone who read it to vote. Maybe the voting is biased, but I don't know for sure.

I would not believe 2/3rds of members would recommend 100% equity, even under the circumstances described, but maybe it's true.

Paul
Don't dispair! The vote is likely influenced by the wording of the question. "I would never under any circumstances recommend 100% equities" is more extreme than "I can come up with some sort of hypothetical situation in which 100% equities makes sense, even if I generally think it's a bad idea." People tend to vote for more moderate positions when given the choice. Bogleheads are likely more opposed to 100% equities than the poll suggests.

Compare: I think that 100% bonds is financially insane. One can both decrease risk and increase returns by having at least a smattering of equities. But I can imagine situations in which I would recommend 100% bonds. If an investor obviously has more than enough for the rest of her life and is extremely scared of the stock market, 100% bonds would be alright. Once you have a certain amount of money, you can do whatever floats your boat.

(I am in fact a young investor with 100% equities.)

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LowER
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Re: Poll: Would you EVER recommend 100% equity?

Post by LowER » Fri Apr 25, 2014 6:56 pm

If income is relatively high and cost of living relatively low, and tolerance for huge losses is intact, and a more-than-adequate EF, and the investment horizon is more than a decade (preferably 2+), I think 100% equities is reasonable, but not for everyone.

Whatever helps you sleep best...and minimizing future regrets can be tricky.

"It's tough to make predictions, especially about the future." Yogi Berra

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Re: Poll: Would you EVER recommend 100% equity?

Post by tadamsmar » Fri Apr 25, 2014 7:06 pm

I typically recommend Target Retirement funds. the Vanguard 2060 fund is 90%, not that different from 100%. So. I would not argue against 100%.

Ability to stay the course is more important than +/- 10%.

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Re: Poll: Would you EVER recommend 100% equity?

Post by englishgirl » Fri Apr 25, 2014 7:10 pm

Haha, asking for us not to comment on reasons is just asking for trouble.

I voted no. I would never recommend 100% equity. But if someone came to me for advice on their portfolio and they wanted 100% equities, and believed they could handle the risk, I wouldn't recommend against it.
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Re: Poll: Would you EVER recommend 100% equity?

Post by Fallible » Fri Apr 25, 2014 8:16 pm

pkcrafter wrote:Very simple--Would you ever recommend 100% stocks under any circumstance? I'm not looking for reasons when you might, just IF you would. A NO vote means you would NEVER recommend 100% equity. ...
I can't vote NO because it means NEVER and there's that saying, "Never say never." But then does YES mean ALWAYS?
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Re: Poll: Would you EVER recommend 100% equity?

Post by meowcat » Fri Apr 25, 2014 8:16 pm

I'll be 51 in June, this year. My portfolio remains at 100% equity. It was at 100% during the 2000 tech crash and has remained 100% during the 2008/2009 financial crisis. I never wavered. I slept well at night and never once even considered a sell off. Does that make me a good investor? No. Stupid? Perhaps. All I know is that I'm glad I had the discipline to hold on because it has paid off big time. I'm thinking I might change my allocation when I turn 60.
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Re: Poll: Would you EVER recommend 100% equity?

Post by Elbowman » Fri Apr 25, 2014 8:36 pm

No. With most of the experts I've read recommending no more than 80/20, I'd feel irresponsible recommending 100/0.

Perhaps people are focusing too much on "ever" and not enough on "recommend". I can imagine situations where I'd go 100/0, but I still wouldn't be comfortable suggesting someone else do that.

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Re: Poll: Would you EVER recommend 100% equity?

Post by Random Musings » Fri Apr 25, 2014 8:45 pm

No. Because one can't predict how someone will react to the reality of a big bear market versus how they think they will react.

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Re: Poll: Would you EVER recommend 100% equity?

Post by Peter Foley » Fri Apr 25, 2014 9:07 pm

Yes. To the very young investor just staring out. IMHO there is no need to diversify if your regular annual contributions greatly exceed your equity stake. In my opinion this is a one to two year window.

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Re: Poll: Would you EVER recommend 100% equity?

Post by grabiner » Fri Apr 25, 2014 9:12 pm

I don't recommend 100% equity, despite having had a portfolio of risk equal to 100% equity for ten years myself. If my portfolio (one of the most aggressive on the forum) is right for you, then you know enough to ignore my advice.

I will actively dissuade investors from 100% equity portfolios unless they have already been through a bear market. If you had 80% stock in 2007, and rebalanced to 80% stock in the fall of 2008 (when your portfolio would have become about 65% stock if you didn't rebalance), then you may have the tolerance for a 100% equity portfolio.
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Re: Would you EVER recommend 100% equity?

Post by steve_14 » Fri Apr 25, 2014 9:15 pm

thx1138 wrote:I can't fathom why 90/10 or 80/20 would be any better if you are so twitchy and undisciplined you might sell at a trough. 90/10 and 80/20 are common recommendations for young investors and most target date fund glide slopes start at 90/10. So if people are suppose to live with 90/10 they can just as easily live with 100/0.
Indeed, the thousands of posts here during the Great Recession show that, while everyone was unhappy with the drop in equities, almost everyone stayed the course, with a small, about equal number of people increasing and decreasing their equity allocations.

The idea that most investors sell reflexively at the first sign of trouble is mostly a straw man.

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LH
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Re: Poll: Would you EVER recommend 100% equity?

Post by LH » Fri Apr 25, 2014 9:26 pm

yes.

classic case, just starting out investing when young in 20s, early 30s. go sp500.

1) there is little nominal dollars at risk
2) There is little lifecycle risk, your main asset is your future earnings
3) You can follow sp500, and figure out your ability to take risk, when you have little to lose. If the market drops 50 percent, and your 10K you have saved away goes to 5K, and you cannot sleep.... well much much much better to know early on, than when you have 500K, and it drops to 250 K, and you capitulate, fixing your loss. If you want to make up the 5K loss, if you capitulate when young, well buy a cheaper car/house, eat out less over a couple years, whatever. If you want to make up the 250K at age 50.... well different story.
4)Simple, one fund, no muss, no fuss.

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Re: Poll: Would you EVER recommend 100% equity?

Post by zaboomafoozarg » Fri Apr 25, 2014 9:31 pm

LH wrote:classic case, just starting out investing when young in 20s, early 30s. go sp500.
This is bogleheads.org though, where almost everyone reaches 100k well before 30 :D

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zaboomafoozarg
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Re: Poll: Would you EVER recommend 100% equity?

Post by zaboomafoozarg » Fri Apr 25, 2014 9:33 pm

I also voted no, because diversify.

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LH
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Re: Poll: Would you EVER recommend 100% equity?

Post by LH » Fri Apr 25, 2014 9:59 pm

zaboomafoozarg wrote:
LH wrote:classic case, just starting out investing when young in 20s, early 30s. go sp500.
This is bogleheads.org though, where almost everyone reaches 100k well before 30 :D
well.... speaking as an MD, I surely did not : )
MDs usually just out of residency circa 30 years old.

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Re: Poll: Would you EVER recommend 100% equity?

Post by Clever_Username » Fri Apr 25, 2014 10:15 pm

LH wrote:
zaboomafoozarg wrote:
LH wrote:classic case, just starting out investing when young in 20s, early 30s. go sp500.
This is bogleheads.org though, where almost everyone reaches 100k well before 30 :D
well.... speaking as an MD, I surely did not : )
MDs usually just out of residency circa 30 years old.
Speaking as a different kind of doctor, I also did not. But I did hit 100k shortly after 30.
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Re: Poll: Would you EVER recommend 100% equity?

Post by 6miths » Fri Apr 25, 2014 11:20 pm

The kids are 100% equity. Not huge amounts and 80 year time horizon...
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Re: Poll: Would you EVER recommend 100% equity?

Post by asset_chaos » Sat Apr 26, 2014 1:18 am

If my kids wanted to start their investing lives with 100% equities, I wouldn't necessarily tell them they're wrong. But, if they were to ask for my recommendation, I would suggest to put some bonds into the mix. At some point in life almost everyone will want a significant allocation to bonds. I suggest that it's a good idea to have some bonds, even early in life, to experience their performance over many market conditions in order to emotionally assimilate their use and misuse into one's core investing understanding. This may also aid in finally coming to understand one's own risk tolerance. 10 or 20% at the very least, just to experience the full spectrum of investing.
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Re: Poll: Would you EVER recommend 100% equity?

Post by richard » Sat Apr 26, 2014 5:16 am

Recommending 100% equities tends to reinforce the belief that risk of equities is psychological (panic selling) rather than economic (e.g., recession, market plummets, lose job, must sell to eat). Starting with 100% equities and winning can be as dangerous as starting to go to casinos and winning on your first visit, due to the impressions it fosters (not that investing is the same as casino gambling).

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Re: Poll: Would you EVER recommend 100% equity?

Post by obgyn65 » Sat Apr 26, 2014 5:43 am

No. Never.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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Re: Poll: Would you EVER recommend 100% equity?

Post by Levett » Sat Apr 26, 2014 5:47 am

Put all your eggs in one basket, eh? Not a chance.

The habits (including investing) that you form early need to be durable.

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Re: Poll: Would you EVER recommend 100% equity?

Post by Dandy » Sat Apr 26, 2014 7:57 am

I suppose I could come up with some extreme case where I would. for most people I would say no. It probably is more likely for very young people - that have the ability to take risk but hardly know much about investments, risk and the bumps in the road of life yet.
I think 80% equities is about the tops I could recommend -- I never exceeded 60%.

Young people today are also more burdened by large mortgages and student loans and a much more unsure job market. It seems a couple both have to work to be in the same position as a single earner was 30 years ago. I would urge saving more and spending below their means vs extending to 100% equities.

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Re: Poll: Would you EVER recommend 100% equity?

Post by House Blend » Sat Apr 26, 2014 8:03 am

I generally don't recommend anything, unless asked.

If asked, I would never recommend 100% equity.

But that doesn't mean that I think that no one should ever hold 100% equity. What I do think is that Bogleheads who post threads titled "Why not 100% equity?" should not hold 100% equity.

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telemark
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Re: Poll: Would you EVER recommend 100% equity?

Post by telemark » Sat Apr 26, 2014 8:04 am

pkcrafter wrote:Almost 600 reads and only 60 votes.
I suspect that many, perhaps most of the readers of this forum have never registered to comment. If it's like most forums.

And while I don't have a reference handy, my recollection is that 80/20 has almost the same return as 100% equity but with lower volatility. Seems like a no-brainer to me.

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Re: Poll: Would you EVER recommend 100% equity?

Post by claver » Sat Apr 26, 2014 8:25 am

Of course I would. I'm a Stocks for the Long Run kind of guy. I'm trying to build a 40 year empire.

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Re: Poll: Would you EVER recommend 100% equity?

Post by columbia » Sat Apr 26, 2014 8:46 am

No, but I also don't intend to ever hold below 40% equities in retirement.
I'm more comfortable with a more balanced approach now (25 years from retirement and 20% bonds) and through the end of my investing :P life.

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Re: Poll: Would you EVER recommend 100% equity?

Post by SC Hoosier » Sat Apr 26, 2014 9:23 am

I am 100% equities. I do this because I have no debt, home is paid for, I'm 38, bonds are a raw deal right now, interest rates are low, I have a good emergency fund, and my parents are 99% farm land and residence (I stand to inherit 25% of that). Also, I think my wife's parents are 90% cash and residence.

Somebody's got to own equities in this family! So it's me.

My equity portfolio is just about to surpass the value of my home. Most of my net worth has been house for a while. Doesn't make much. But the stocks are rising quickly!

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Re: Poll: Would you EVER recommend 100% equity?

Post by NoRoboGuy » Sat Apr 26, 2014 9:34 am

I voted no. Young people may be able to handle 100% stocks on paper, but I suspect most are not able to cope emotionally during a severe bear market they have never lived through. I manage my daughter's Roth with a three fund portfolio in equal percentages with US, International, and Long Term Treasuries. I would normally not recommend long term treasuries for most people, but young people with a low portfolio balance and making regular contributions, yes. The idea is to maximize both stock and bond returns over a very long period and to provide decent asset diversification/protection during most bear markets. She is learning how the asset types perform and is new to investing.
There is no free lunch.

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