Reply to Would you choose bond or "real 3%" investment if you were me?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Another WB colleague here same age. I find this discussion very helpful and wanted to bump up the thread now in the light of the declining inflation. My portfolio is currently 50% sp500, 5% Russell 2k and the rest in real 3%. I have been wanting to increase my SP500 to rebalance the portfolio to at least 70% sp500. Any thoughts on this from those of you with more experience and also is this is a good time to increase allocation in sp500? Also, i see many here hold Russell 2k but it hasn't been doing well for a long time. Any thoughts on that? Thanks a lot. [/quote]

Engaging in market timing is usually a bad idea, and your case qualifies as a bad idea. By the way, the russel 2000 is one of the worst small cap funds. Do you have any other small cap funds available to you? And what about international developed and emerging markets?

But you first need to decide how much risk (bonds) you want to take and stick with the plan unless you have a very good reason to change it.

[/quote]

you're correct that market timing is a terrible idea.  but here is some recent data in terms of performance/returns this year (YTD) -

S&P - 16.9%
EAFE - 12.13%
R2K - 8.1%
all other options (including bonds, emerging markets, etc.) for cash allocations are 5% or below (except for the real 3%, which is based on the US CPI + 3%)

so R2K isn't terrible - it's the only option we have for small cap funds though[/quote]

YTD is irrelevant. Even 10 yr returns are irrelevant. You need to look at historical data when determining asset allocation.

And Russell 2000 sucks compared to other small cap funds like S&P 600 because traders are able to game the Russell 2000 and there also isn't a quality screen to get rid of small cap growth junk.[/quote]

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