Friday, January 16, 2009
The subject of Money Magazine's advice to their retail investor readership regarding the critical question of asset allocation has come up on a number of occasions recently, so this may be overdoing it a bit, but, then again, why stop talking about it now?
Shown below is the first entry in the Help Desk section of the February issue of the nation's most popular personal finance magazine.
Hmm... what might happen if some pragmatism is applied to the matter?
Here's an alternate answer that might be provided by a rogue Help Desk editor at Money Magazine who, perhaps, had some great revelation one day about how the world really works and isn't afraid to share it with readers, up until the time he or she is asked to pack up their belongings and head for the front door:
Short-term, long-term - it really doesn't matter what type of investor you consider yourself to be these days.
You see, the asset allocations that our magazine have provided won't help you much for at least a few more years, maybe as much as another five or ten years. That is, until we get through this long-term bear market in stocks that, to be honest, we really should have caught on to by now.
But no, we keep telling people that they need to have a healthy allocation of stocks even when they're well into retirement because, even though things changed dramatically in equity markets back around the turn of the century, readers still believe us when we show those historical return charts with average annual gains in the double-digits.
People actually think that they'll get the returns of a stock bull market during a bear market, so we keep tellin' em do load up on stocks.
Truth be told, you'd have been much better off with an all-cash investment portfolio for almost the last ten years and if my employers weren't so obsessed with pleasing their advertisers who are peddling their stock funds for 401k plans (the bulk of our readership) maybe some of us would have told you that years ago.
Geez, you could have tripled your money in gold since the stock bull market turned into a bear - some of us here have been invested in gold for years now, but telling readers to do that would never pass muster with the boss.
Anyway, this might be my last bit of writing for MoneyMag. I hope it helps.
- Rational Roger, Staff Writer