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re: Stock vs Bond allocation in portfolio?
Posted on 2/9/20 at 8:09 pm to ykevin25
Posted on 2/9/20 at 8:09 pm to ykevin25
quote:And until then, you’re losing out on the gains of stocks for the portion that is allocated to bonds. So the longer it takes to get to a crash, the greater the gains you’ll miss out on before the crash, and there is a good chance that you’ll end up missing out on more gains even after a crash.
I guess my thinking was that if I had 20% in bonds during the next market crash I could use those funds to scoop up cheap stocks.
You’re strategy is basically an attempt to time the market, which usually doesn’t work out that well without some luck. And in your case, it doesn’t seem like your strategy has a timeline to it in the first place.
There is nothing wrong with an 80/20 risk preference with the understanding that the long-term gains are likely to be greater the closer it gets to 100/0 based on the long-term TREND and a horizon for that TREND. But trying to adjust the risk allocation based on potential cyclical attributes, if not outright random error, provides its own issues of risk, and potentially greater and more unknowable risks at that.
Posted on 2/10/20 at 8:01 pm to buckeye_vol
quote:Doesn't have to be. Value cost averaging on a strict periodic basis. If you allocate the appropriate amount in bonds (more required depending on volatility of security), you can still do quite well and beat 'buy and hold'. But what do I know?
You’re strategy is basically an attempt to time the market
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