Personal Investments • Re: Getting nervous about US equity valuations

But I really had no basis for making those decisions though. I might as well have rolled a dice.

That's okay.

So I made up responses. But I have no confidence in them. Because I don’t know anything.

I understand. That is also what I originally did.

How do I fix my IPS so that it serves a purpose that I can have confidence in and be disciplined to adhere to?

Maybe I can help a bit. I don't have a written IPS, but I do have:

(1) an asset allocation I can hold
(2) a rebalancing rule I can remember, and
(3) specific future points in time when I will be able to change my AA if my ability to take risk has changed

The answer to all of your questions from the viewpoint of a long-term investor is: It doesn't matter, as long you have a diversified portfolio that you can hold and rebalance.

How much to hold in international? Anywhere from 20-50% of equity allocation.
Short term vs Int-term for bonds? Either or both.
Nominals vs TIPS? Either or both.
Should I consider valuations in my AA? You don't have to, if you have a diversified portfolio.
When to change my AA, and by how much? When your risk profile changes, to fit your new risk profile.
Rebalance at bands or once per year? Either.

The key is risk management, which is achieved through adequate diversification. That is what allows you to feel confident in not knowing the "right" answers that nobody else knows either, however strongly they might voice their opinions or personal preferences.

What risks can you afford to take that you are comfortable taking? Take those. Just those.

Statistics: Posted by Beensabu — Tue Oct 15, 2024 1:09 am

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