Tuesday, November 29, 2011

The winning portfolio?

Apparently a passive portfolio of 50% bonds and 50% stocks wins out in most markets.  

There are probably a few things going on here:  First bonds and stocks provide great diversification.  Second, because the weights are fixed, there is no market timing going on here.  Market timing, as we know is a fast way to loose wealth.  Third, the stock portfolio is indexed.

In otherwords: diversify, don't market time and index.  Simple.