The recent market activity and what we saw in September 08 and March 09 is why people should not listen to any ‘investment professional’ who tells you to invest based on how old you are. It’s ridiculous to apply the “average” growth rate of the market without considering where in the market cycle you are in. If you invested during any peak, you are almost guaranteed NEVER to see growth if your portfolio without a significant amount of dollar cost averaging just to get you back to even.
Here’s VanGuard’s model portfolio mix and my portfolio mix for my 401K. If my portfolio looked anything like their ‘model’ portfolio, I’d be, to put it meekly, royally screwed.
I’ve been in cash since the the 4Q of 2009 after being purely in individual stocks for most of the year (I was also completely in cash during 08-09 crash). Don’t get my wrong, I’m not advocating staying out of the market, but timing is important and my portfolio mix will look a bit more like the model mix when stocks become cheap, and hopefully irrationally cheap, again. Dow 8500 looks like a good place to start thinking about it. What do you think? Dow 8500 or Dow 11500 first?