You read yesterday about Your Survival Guy’s feelings about recent research suggesting a 100% portfolio in stocks, with some criticisms of the research by author and researcher Larry Swedroe. Recently, Jason Zweig of The Wall Street Journal also commented on the research, warning against the idea that “there is no alternative” (TINA) to stocks, writing:
If you happen to retire into a bull market, you could end up with more money every year even after you withdraw to support your spending. If you have the bad luck to retire into a bear market, you could end up running out of money.
That’s why I still own some bonds (in my case, inflation-protected Treasurys), and I think you should, too. The historical odds, and current government policy, are against them. But stocks also are far from a sure thing.
Tina feels friendly right now as stocks flirt with record highs. But over a lifetime, as I’ve written before, investing as if there is no alternative to stocks will demand that you have the patience of a tortoise and the emotions of a stone.
Here’s the ultimate trouble with Tina. Let’s say the odds that stocks will outperform bonds in the future—if, but only if, the future resembles the past—are something like five out of six.
You can read more from Your Survival Guy on a balanced portfolio here:
- Survival Guy: An All-Weather Balanced Portfolio
- The Balanced Portfolio Rises from the Grave
- Is the 60/40 Balanced Portfolio Model Broken?
- The Importance of a Balanced Portfolio
- Is Your Portfolio Balanced?
Action Line: When you want to talk about a balanced portfolio, email Your Survival Guy at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
