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Sunday, May 23, 2010

"In Defense of the Humble Balanced Portfolio" - Morningstar

I stumbled across this good article from Morningstar "In Defense of the Humble Balanced Portfolio". This relates to a previous discussion on overall investment strategies and several subsequent posts on asset allocations and portfolio construction.

Incidentally, they do note some shortcomings of a simple static 50/50 stock and bond mix, or any static ratio for that matter, which is what prompted me to work on the dynamic asset allocation model over the past year or so. Even the automatic rebalancing target date funds have their problems as they rebalance at linear rates that may not be opportune given market cycles. That's why I prefer the dynamic, interest rate signal approach.

What do you all think?

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