Wednesday, November 27, 2013

Why traditional diversification is ‘downright dangerous’

Just was an article on and couldn't believe the title:

That is probably going to cost them some advertisers but a lot of the article actually make sense.  They quote Burton Malkiel, who wrote a random walk down Wall Street, which is basically the desk reference guide of the index and buy and hold crowd, as saying that because of what is likely to happen to bonds that the 60/40 portfolio is now dangerous.  

The only thing I take exception to in the article is this quote:

Any norm at all ignores another fundamental investing precept—that your allocation needs to change to suit your personality and stage of life—a more important concept now than 70 years ago, because people live longer and plan their own retirements.
Markets don't care about your personality or stage of life.  Your allocation should change based on the trends in the markets.

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