I read a doomsday article yesterday that got me thinking about the possibility of a correction in the stock market. My thoughts drifted towards what I stood to lose if this were to happen. It's my opinion that the latter stages of the business cycle are are coming, so it's more a question of when than if.
Then I started thinking about redistributing my assets. "I need to prepare for the onslaught," I thought. I thought that maybe I should be contrarian and buy more bonds with the profits I've made from equities.
Then when I was looking at my balances it hit me. My asset allocation has changed drastically since I first started investing 4 years ago (yes, I'm and novice). My allocation to bonds had fallen 50%, from 30 to 15%.
Why? In the longest running bull market in history, it seemed pretty stupid to be putting 30% in bonds. Im sure many here will agree. My equities have been doing so well, naturally I want to keep up that allocation and perhaps buy more (which I have). Pair this with the animosity towards bonds in this projected rising interest rate environment and you have the perfect storm, in my case, for asset allocation creep.
That's my anecdote. I'm sure there are many here who have fallen into a similar pattern. Initially I wrote "fallen victim to," but realized no one has fallen victim yet. The market hasn't peaked. It won't be until the tides change when we realize we have fallen victim to the trend and the times.
Maybe you disagree? Maybe I've got it wrong. All I want is discussion. What do you think? Will the 100% equity portfolios truly be enjoying their ostensible advantage over persons with bonds? Has your assets allocation changed? Am I blowing smoke up my own ass?
Bottom line is I believe this is a concept that is not discussed nearly enough on this forum. Let's change that.
Cheers.
Submitted October 11, 2017 at 08:16AM by tapdance34 http://ift.tt/2yaC06k
