A New Asset Allocation

I have decided to get back to more fundamental value investing.  Accordingly I have reviewed my Investment Policy and have decided upon a new Asset Allocation.

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.


One comment

  1. Pingback: Reducing Bond Exposure | Dataclutter

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s