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Why have 100% in Equities? ... <paraphrase> Because that allocation has done better than one with bonds in 74/100 30 year periods </paraphrase>

I'll note that there is a strong correlation between high stock market valuation and the start of periods in which stocks underperform. We are in a period of very high stock market valuation.

I'll also pipe in to second FMO's caution about real investors' ability to stick with a 100% stock portfolio through multi-year bear markets. People's risk tolerance tends to be lower than they imagined when they've just lost 50% of their stash and there is no sign of the decline stopping. If you're sure, then you're sure, but you never really know until the poo hits the fan.

A 90/10 portfolio with periodic rebalancing gives up almost no performance to a 100% equity portfolio and has lower volatility.

Just a few counterpoints. Personally I currently have substantially more of the stash in fixed income options than I would if the market had a better valuation (or if I had some better options like emerging markets or small cap value in my 401k). I will increase my equity allocation when/if it comes down. If it doesn't come down, then I expect I won't lose out by too much given the horrendously low dividend yield on the S&P 500 these days.

If somehow the market (S&P 500) from here on out were to average the current valuation, then the expected return is the dividend yield plus the real growth in dividends. Dividends: 1.5% Historic real growth: 1-2% Expected real return: 2.5 - 3.5% . The stable value fund in my 401k is paying 4.1% nominal: with inflation at 2% I'm not losing to stocks much and have the potential to buy stocks much lower ...

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