No. of Recommendations: 4
If you trust your numbers, then act on them -- I do...


I'm more risk-adverse than you -- So is 98% (at least) of the planet. Right now, my equities portfolio is at about a 3.5 beta to the markets (S&P / Dow / NASDAQ ) so I can easily make and lose your annual benchmark in a day.

If inflation heats up in this country, as everyone seems to expect it will given current Fed policy, then the buying time for Treasuries will come again. And you know my entry point - mid term 6%, that is when the doc starts allocating into Treasuries.

Sometime, when you get a chance, go to Vanguard's website and look at the performance returns on their index funds. The past ten years haven't been kind to investors in any asset-class. ?????

Your target return is 5%?:

OK From the Vanguard website 10 year returns for a diversified portfolio
50% Equity, 20% Debt, 20% Commodity, 10% Real Estate

Equity:
20% Windsor [large cap value] - 4.09% (Been around since 58' impressive)
10% Mid-Cap Index - 7.83%
10% Small Cap Growth - 9.20%
[RX - diaganolly across the style box]
5% Developed Markets - 4.92%
5% Emerging Markets - 14.66%
[RX - Developed Markets right now w/ Japan??]

Debt:
5% Long Term Investment Grade - 6.73%
5% High Yield Corporate - 6.17%
5% Inflation Protected Securities - 6.50%
5% GNMA - 5.63%
Or Pick your home State for muni's if favorable for 5%??
[RX - Not long Treasuries until mod term is 6% and may go with TBT]

Commodities
10% Energy - 15.79%
10% Metals and Mining - 21.9%
[RX - Bubble in precious metals?? How about going base/industrials?] Although short coffee and long lean hogs is good...

Real Estate
10% REIT - 11.58%
[RX - Technology Space]

with a weighted average return of 9.5% the end result is
Bottom Line = Annual return 11.05%CAGR

With the worst asset class being <u>debt</u> unless you are a trader.

Why should the next ten be even as good, given this country's unwillingness to fix its structural problems, like, not understanding that $2.2 trillion in government revenues doesn't enable $3.8 trillion in government spending?

Totally agree: There are some structural issues that need to be addressed.


The safest bet is that the 'teens will be another "lost decade" in which returns (nearly any asset-class except commodities) will be negative after taxes and inflation.


If I had a nicely diversified portfolio like above, I would take another lost decade that hands me 11.05% annual returns. Individual years may be in the toilet and that is the reason to diversify. Even though under stress correlation seems to be-- correlated! I am quite diversified but not in the exact percentages above and even have the delusion I got a fair shot at getting the 11, but only time will tell.

It's numbers like that make me want to keep "the pedal to the metal" in terms of pursuing returns.

As mentioned before - I am more risk tolerant than most and have some things like 3X ETF's, and hedge funds - out of options right, watching volatility. Also thinking about TBT! So - She is wound tight and either my engine will blow or I cross the line...50/50!!


d(Beta)/dT
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