01/31/07 target
us stocks 38.31% 38.00%
reits 9.68% 10.00%
int'l stocks 29.45% 27.00%
private stock 3.08% 3.00%
bonds 18.73% 20.00%
discretionary 0.56% 1.50%
cash 0.18% 0.50%
Some comments:
For the first time in a long time, I'm very happy with how the
current allocation compares to the strategic target
allocation, mostly because international stocks are finally
exceeding my target of 40% of my stock portfolio. This is
important not only as a hedge against a further decline in the
dollar, but also as a good bet on how the world is developing
economically. Many domestic portfolio managers seem to be
just overcoming their home country biases, but it remains to
be seen whether they are able to close the barn doors before
the horses get out. This is the case with the managers of my
401k money, whom I've had to battle with extremely aggressive
international allocations in my IRA accounts. At last, the
overall picture is balancing out, and I may be able to
purchase some domestic equity funds in my IRAs again soon.
REITs (Real Estate Investment Trusts) - What is going on? I
cannot imagine that their valuations are reasonable and that
their yield represents a decent income play at these prices,
but their lack of correlation with other asset classes has
certainly been a stabilizer.
My "discretionary" allocation" is currently in
the very strange ADVDX, the "Alpine Dynamic Dividend
Fund" which anybody can read about. It uses a novel
"dividend capture" strategy to keep a fairly level
NAV while reaping a phonomenal (mostly) qualified dividend
yield of between 12 and 13 percent. A highly revered
economist tipped me off to this fund, but I'm keeping my
allocation to it cautious in anticipation of the unanticipated
inevitable or the inevitable unanticipated.
My private stock I would just as soon sell, but I'll wait
until I have the energy to finally remodel the fucking
bathroom or quit my job.
My bond allocation doesn't include accrued interest on about a
third of the bond portfolio, but I feel pretty good about its
mix of corporates, treasuries, old-school EE savings bonds
(minimum 4.24% yield) and Series I savings bonds, some of
which are currently yielding more than 7%.
Where possible (outside of my actively managed 401k, that is,
and outside of the tiny allocations to ADVDX and the savings
bonds), everything is invested in low-cost index mutual funds.
I haven't included savings accounts, etc., in the
"cash" category.
The allocation strategy is a hybrid of those championed by
Burton Malkiel and Jeremy Siegel. At this point, I rebalance
only by steering contributions into asset classes where I am
under-invested based on percentage. Emerging Markets stocks
represent roughly 6% of the total portfolio.