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Ted , thanks for your numerous links. Students pick of a heavy dose of tips for portfolio goes against pry link that wants a person to sell their older tips & pocket the cash. Have a warm weekend, Derf
There is a claim that traditional 60/40 is on the way out and tactical allocation is the new thing.
The problem with this statement is that tactical asset allocation which is a kind of market timing has always been around with us. In fact, most actively managed balanced funds do this around their neutral asset allocation be it 60/40, 50-50, 40-60 whatever. Maybe they are including more asset classes such as gold or more foreign stocks etc. But this is not something new.
Another thing is that it is sold as if it is a sure thing. History is full of failed tactical asset allocators as well.
Mr. Kim conceded that his team’s projected return for TIPS (5.66 percent) and bonds (5.91 percent) “may be optimistic, given current market conditions.
If that's what Mr. Kim is using as an annual return on TIPS and bonds in his model, I think he's being VERY optimistic seeing as the real fixed interest rate on TIPS is currently negative and an aggregate bond fund is yielding ~2-2.5% (an SEC yield of ~1.5%) with an effective duration of around 5 yrs.
Comments
Have a warm weekend, Derf
The problem with this statement is that tactical asset allocation which is a kind of market timing has always been around with us. In fact, most actively managed balanced funds do this around their neutral asset allocation be it 60/40, 50-50, 40-60 whatever. Maybe they are including more asset classes such as gold or more foreign stocks etc. But this is not something new.
Another thing is that it is sold as if it is a sure thing. History is full of failed tactical asset allocators as well.