Absolutely agree - it depends on your AA, which in turn depends on how much risk you're willing to take onLeeraar wrote:That depends on your desired AA. I have Vanguard LifeStrategy Moderate. You can look up its four components for yourself.
Yes, I will grant that an AA that is based on the total global market may have a better risk-adjusted expected return (before expenses) but you can get there with either active or passive strategies. I think a combination of TSM and TBM get you close enough so it does not much matter if you add International or tilt to REITS, etc.
By the way, a "passive" "bond fund" may be a tautology. A friend in our local Bogleheads chapter tells of touring Vanguard in Malvern, PA. The bond department is much larger (in terms of desks) than the stock department. He said that TSM, for all its billions, is managed (monitored) by two guys each with two display monitors, in one cube.
I suppose we've lost track of the discussion this sprang from, which was the criticism that changing an asset allocation based on (let's say) unusually high valuations is somehow attempting to 'beat the market' ... Which we can then claim is anti-BH thing to try and do
I don't really know what 'beat the market' means in this context .. On the one hand, there is a global market, and anyone who's ever used leverage or overweighted stocks against it could be described as trying to 'beat' it .. On the other, if your AA is really about risk management, then as risk indicators in a certain market change, it might be perfectly reasonable to adjust your exposure to that risk ... After all, our present concepts of risk and return, per asset class, are only based on past returns - so it's not like we should demand any greater certainty from valuations