Another Egghead Fraud Unmasked

[Covertibility]

Siegel will be on Kudlow and Kronies tonight.

Bonds: Why Bother?

from Ritholtz' blog S&P500 vs CDs (1994-2008)

Other than relatively small bull runs, it really doesn't make sense to blindly buy and hold.

 

[wutangfinancial]

well, the S&P might not be the best proxy these days, either.

Most financial advisers tell aggressive investors to hold 80% equity, 20% fixed income. Within that 80% equity, 70% is domestic with some small cap exposure and 30% is foreign. The portfolio is rebalanced annually. It would be interesting to see a comparison of such a portfolio to T bills. Of course, small caps and emerging markets have tanked, too so modern portfolio theory looks kind of silly as well.

The problem in all of this extrapolating the past into the future. You can't optimize a portfolio by looking at past covariance between asset classes, IMO.