Thursday, April 25, 2013

Another Example of Why Fixed Allocations Are a Bad Idea

Just read a good article in the Wall Street Journal about how poorly commodities have been doing:

Wheels Fall Off The Supercycle

This is just another example of why fixed allocations are a bad idea.  Commodities have been in a long bull market and unfortunately investors tend to believe that what has happened most recently will continue.  Now, most traditional asset allocation portfolios have some exposure to commodities.  I have no problem with commodities and no idea whether they will continue to decline or move up.  I just have a problem with fixed allocations to asset classes regardless of how they are doing.  A better idea is to own commodities once they start to trend upwards and don't own them as long as they are in a  downtrend.

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