Monday, May 10, 2010

Building Investment Assets

TAG 401(k) Enrollment Meeting* time has arrived, so I post about ever-popular "asset allocation" models (just the thing as the markets buck up and down, eh?) ...

One of my favorite investment gurus is Dr. William Bernstein of Portland, Oregon. Dr. Bernstein is a full-time neurosurgeon, also a full-time investment advisor. (A neat trick, but the man likes to work eighty-hour weeks. Go figure ...)

One of Dr. Bernstein's model portfolio's is a smart little item called the "Coward's Portfolio," detailed on the Bogleheads "Lazy Portfolios" wiki page as follows:

William Bernstein, the author of several books including "The Intelligent Asset Allocator" and "The Four Pillars of Investing," introduced the Coward's Portfolio in 1996. The "coward" refers not to the investor's risk tolerance but to the strategy of hedging one's bets and having slices of a number of asset classes. This portfolio is similar to the Coffeehouse Portfolio except that short term bonds are used, and the international portion is divided into equal slices of Europe, Pacific and EM.

The Coward's Portfolio

Total Stock Mkt -- 15%

Large Value -- 10%

Small Blend -- 5%

Small Value -- 10%

Europe -- 5%

Pacific -- 5%

Emerging Markets -- 5%

REIT --5%

Short Term Bond -- 40%

There are as many asset allocation models as there are financial wizards, and all will work fairly well, depending on market conditions. Your job is to pick a model that fits snugly into your comfort zone and stick with it for several decades until you become independently wealthy.

* TAG's first 401(k) meeting of the current season happens tomorrow at DreamWorks Animation, 2:00 p.m. in Dining Rooms B & C. Be there, if you can.


Anonymous said...

William Bernstein rocks. I look forwards to reading his Investor's Manifesto book.

hyip said...

I will try these asset allocations. Those are also fairly doing well.

HYIP monitor said...

Risk diversification - it's a wise step, I believe the strategy of William Bernstein is the right way to success.
P.S. It's a pity that I have missed TAG's meeting =(
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