I have a portfolio (401Ks, IRAs, and taxable accounts) that is pretty well diversified into stocks, bonds, convertibles, REITs, money markets, etc. Like everyone else who watched the tech and large cap growth portions of our portfolios swell to enormous amounts, I didn't do much to reallocate during the bubble years. So I took a beating when the bubble popped. However, I was well-diversified prior to the bubble, so I had forced myself to return to that way of thinking again after the bubble, but not before I was mauled pretty good.
Prior to sept/oct, I used to be at about the following allocation (stock percentages used to be higher, but they got hammered, while my bond positions I built up slowly over the last year and a half in my 401K):
* 30% money market funds,
* 20% bond funds,
* 10% REIT funds,
* and 40% normal stock funds (spread out among LG, LV, MV, SV, and International).
Now after the buying and reallocating I've done in sept/oct, I will be at about:
* 5% money market,
* 10% bonds,
* 5% convertibles,
* 5% REITs,
* and 75% stocks.
You can see that I reduced my money market, bonds, and REITs. I think bonds have had their day in the sun and so have REITs. Stocks are the next thing to shine for awhile. In addition, I like the downside protection that convertibles offer, with the upside potential of the underlying stock that they also provide. So I took a position there. In addition, I upped my stock positions to take advantage of these lows we're seeing.
Of course, I could be terribly wrong and then we'll suffer. However, I think if we haven't reached the absolute bottom, then it's close enough for me. Like I said, I have a 10 year horizon, so I have time to wait it out. Plus, I love the absolute pessimism out there. It gives me hope that the herd is wrong. Just as we all were wrong in March of 2000, thinking it would last forever (thus some of us were called perma-bulls), I believe that those who think we've now entered a perma-bear cycle are wrong too. :) |
