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Subject:  Re: Allocation suggested by FinancialEngines Date:  4/22/2002  8:07 PM
Author:  galeno Number:  34308 of 102453

joebedford wrote:
I respectfully disagree. There is no "one size fits all" investing option. You do not know the original poster's age, or goals, or risk tolerance, or desire for "involvement" in their portfolio. To me, that means you do not know enough to make a valid recommendation. If you are invested solely in VTSMX then sure, say so and tell us why. But beware dispensing "investment panaceas". If the original poster was a 60-year-old, with a weak stomach, investing for retirement, then your advice would be horrible IMHO. :-)

I respectfully disagree with your disagreement. In this case, this "one size fits all" fits almost everybody that is invested in the stock market. VTSMX is 2/3'd S&P500 index fund and 1/3'd Russel 3000. The appropriate index is the Wilshire 5000 which has over 9000 stocks.

Over every 5 year rolling period, a VTSMX buy and hold investor will beat 80% of all managed money. Over every 10 year period, he'll beat 95% of all managed money. And over every 20 year rolling period, he'll beat 98% of all managed money. This "one size fits all" type of investment is pretty tough to beat.

The toughest decision of the VTSMX investor is how much cash to keep as a percentage of his portfolio. If the guy is a 60 year-old investor with a weak stomach, maybe he should keep more in cash than the 30 year-old investor who's shooting for an early retirement. The 30 year-old risk taker could use 20 to 30% margin and buy more VTSMX.

Personally, I'm not a VTSMX investor because I'm one of those RARE 2 out of 100 investors that actually has beaten VTSMX over the last 20 year period. My investment expenses are far less than the rockbottom 0.6% of assets that VTSMX would actually cost me. But as an extremely sophisticated long-time equity investor, I have no problem recommending VTSMX to any and all investors.
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