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URL:  http://boards.fool.com/i-would-keep-the-bonds-but-still-underweight-long-29148917.aspx

Subject:  Re: 401(k) allocation to eliminate s/t bond fund Date:  3/4/2011  5:46 PM
Author:  Watty56 Number:  68618 of 75335

I would keep the bonds but still underweight long term bonds.


The reason for this is that when you rebalance regularly between several asset classes you end up automatically "selling high and buying low" so in theory having a percentage of you assets allocation in bonds like it is now will have the same return as a 100% stock portfolio but with less volatility (often called risk).

If you google "efficient frontier" or "modern portfolio theory" you will find lots about this, some of it very technical.

You might check out these books at your local library if you want to learn more;

http://www.amazon.com/All-About-Asset-Allocation-Second/dp/0...

http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-...

Greg
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