Asset Allocation

Ah Asset Allocation it always brings up nice pictures in my mind of pie charts. Yet my version of WordPress has developed a sudden desire to avoid uploading images for me.  So I can’t give you one after all. Sigh.

Yet the general gist of it all was this, as of Dec 31, 2008 my overall allocation was:

22% Bonds or FIxed Income
70% Equity
8% Cash

So overall I’m actually underweight on bonds and fixed income.  Normally I would like to see that at 30%, which is odd with the market drop I figured I would have been needed to add to my equity.  So what happened?  Well a couple of things.  First off my last pension consisted of cash and equity and no bond.  So that messed up things a bit.  Now the new pension is a little more balanced so that should even out in the long haul.  Also I’ve been adding equities to the taxable accounts and building up a bit of a cash cushion for my yearly rebalance.  Normally the rebalance would have occurred on Jan 1, 2009 but I’m moving out my old pension money so I’m waiting for that to clear before doing it.

So how often do you check your overall asset allocation?  Yearly, monthly, or when you think of it?  When do you like to rebalance?

6 thoughts on “Asset Allocation”

  1. I generally like to rebalance twice a year, but I’ll also pay attention to allocation when adding new money. Or sometimes I’ll go nuts with an Excel spreadsheet and keep tabs on it daily, but that’s usually when I’m bored…

  2. During the tech crash I learned that standard asset allocation models with varying percentages depending on one’s risk tolerance and stage in life have one fundamental flaw: they ignore the bigger picture of market cycles. While it’s easier to spot these cycles after the fact, it’s not impossible to establish an objective bull/bear measurement.

    I turned bearish (technically speaking, that is, and looking at the S&P. I don’t have a similar grip on the TSE) in December 2007 and have been investing in GIC’s since then. When the markets turn bullish again, I will reallocate into equities. I have no idea when that will be – could be later this year or in several years.

  3. I usually look at my asset allocation a few times per year. I don’t always adjust after looking at it, but I like pretty graphs… mmm pie:P

    I perform some tactical asset allocation. That is, I don’t stay strictly to a pre-defined asset allocation. For example, with The Fed at 0.25 and BoC at 1 I don’t think that I’d throw any extra $ at fixed income, yields could go down further.

    Of course that is no longer a truly ‘passive’ approach.

  4. I should clarify my GIC strategy: I have been buying a series of GICs dated between 1 and 5 years, with an average yield of just under 4.4%. In spite of the lower interest rate environment, I’m quite impressed that these GICs have held up so well.

  5. I kind of like pictures so I wouldn’t mind seeing you graph.

    You’re probably having the same problem that I’m having with the WP’s flash uploader. The newest version of flash doesn’t like it so I think they disabled it. You’ll have to switch over the the browser uploader to get it to work.

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