My basic stance is that I should set the percentage of bonds to be equal to my age, which is 42. Current highish market levels, especially in the US, indicate that I should lean slightly more towards bonds, but low bond yields indicate that I should lean towards stocks, and dividend yields also suggest a bias towards stocks. On balance I have decided to set my bond component to 33.5%. This is halfway between Benjamin Graham’s recommended minimum of 25% and the age-based 42%.
So, my new Asset Allocation will be 33.5% bonds and 66.5% stocks. Also, I will not deploy all of my stock funds (the 66.5%) immediately. I will wait until opportunities arise that offer a sufficient margin of safety, such as Power Corp and Teck Resources. Accordingly, I expect to hold a considerable amount of cash where I cannot find value stocks to invest in.