Comments on: 100% Stocks vs. 90/10 Portfolio

By: Andy

Andy — Fri, 17 Dec 2010 14:05:53 +0000

I just thought of something. The only way one can maintain a 90/10 balance with market ups and downs is to rebalance periodically. In doing so, you are automatically buying low and selling high, its impossible not to. So, of course 90/10 would beat 100% stocks.

This is essentially what I do, but I sort of “over-rebalance”. I don’t just maintain a solid 90/10… I go a little softer on stocks when they are high and heavy on stocks when they’re low.

By: Andy

Andy — Thu, 16 Dec 2010 05:41:34 +0000

This is a very interesting post! I didn’t even know this was a common question. I do roughly 90/10 myself, but not for any of the reasons here. I do it because I like to rebalance into stocks when they are low, and out of stocks when they are high. By doing so, I have been beating the S&P 500 by a fairly wide margin. You can only do this of course if you have some stable holdings, so my 10% (which varies quite a bit obviously) is in the stable value fund.

By: Brad

Brad — Tue, 23 Jun 2009 23:25:49 +0000

My Name is Brad I have an MBA and I have worked for a few big corporations in middle and upper Management. I recently got laid off and I am in the last 4 th quarter of my career. So when my 401 K took a dive I took what was allowed out my 401 K and invested it into TTM : TATA MOTORS INC.
Which is the best investment I have made in a very long time,
I strongly suggest looking into TATA (TTM) and investingThey are moving upward and have the banks behind them in India.

Good luck .TTM!!!!

Brad

By: Should Young Investors Be 100% In Stocks? | Amateur Asset Allocator

Should Young Investors Be 100% In Stocks? | Amateur Asset Allocator — Wed, 03 Dec 2008 17:11:29 +0000

[...] was going to run the numbers myself, but as it turns out JLP of All Financial Matters has already done that. His results are interesting. Over the period 1926 – 2006, a 100% stock portfolio would have [...]

By: tinyhands

tinyhands — Mon, 16 Apr 2007 17:44:15 +0000

Andy & Mossy-
I understand what you’re saying, but realize that you’re trying to be market-timers. If your investment horizon is 20 or more years, you’re more likely to do better in stocks EVEN IF the market crashes.

By: eR0CK

eR0CK — Mon, 16 Apr 2007 13:24:10 +0000

Ha! We’re having the same discussion on the diehards forum.

I’m 100% stock. I prescribe to the notion that one should invest in stocks by using the equation 120-AGE=% in Stocks.

Considering I’m 23, the equation says I should be 97/3, but I don’t plan on adding bonds until I’m 30.

By: pf101

pf101 — Mon, 16 Apr 2007 03:56:52 +0000

Great analysis. I’m with you on the 100% stocks thing. I have time on my side and don’t see taking a significant position in bonds for another 10 years or so. That may change as my personal circumstances change, but I’m willing to take the volatility at this point.

Thanks for another great post!
pf101

By: William Wallets

William Wallets — Sat, 14 Apr 2007 23:57:56 +0000

Personally, I am a fan of using leveraged stock funds.

If you invest in a leveraged mutual fund or ETF that gives 200% the return (or loss) of the S&P500 or broader market index with 50% of your dollars and then invest 50% of your dollars in a safer investment such as treasury bonds/notes, then you can get the benefit of diversification of bonds and stocks without actually having to be in 100% stocks.

I think people are too scared of leverage and don’t realize that using leverage on lower risk asset classes can raise the risk (and hence the return) on those asset classes. The benefit of this is that since not all asset classes are highly correlated, you get a benefit from diversification without losing expected return.

By: MossySF

MossySF — Sat, 14 Apr 2007 23:17:22 +0000

I’m a believer in 100% stocks — except when things start to look really really scary like the situation now where we have a housing runup the likes never seen before. Housing driven employment twice as high as historic. People in debt up to their ears using their houses as cash machines to buy consumer goods. Absolutely psychotic loans to buy houses with zero margin for error.

So it’s during times like this when I can see a pileup down the highway, I pull back my speed and move 15% into bonds.

By: Andy

Andy — Sat, 14 Apr 2007 07:23:08 +0000

I don’t think it makes sense to be 100% in stocks. It is conceivable that something very bad could happen and you would lose maybe 90-100% of your stock holdings. At least if you have 10-20% bonds you will have some money left.