Wednesday, September 26, 2012
Most fundamentally, what this conversation revealed was that Joe neither understood nor believed in diversification.
My philosophy is, 100 percent equity, but very, very diversified, as in Russell 2000 diversified. This is based on the underlying idea that with a less risky portfolio, I'll never be able to retire anyway, assuming I want to, which is unclear. The other assumption is, if the stock market tanks, I'm f*cked anyway, so what's the point of having bonds or whatever. What bonds? Given the risk of inflation, I don't see bonds as any great hedge. Roubini is 100 percent equity for similar reasons and he's as paranoid as I am(though I suspect his idea of retirement is much grander than mine, more yachts than campers). If you are already wealthy, sure, buy some gold or whatever. But if you're just hoping maybe the future won't be as bad as it looks like it will be, buy equity. --TS