Could you just cut down the cash part of the PP to give a slightly better return and somewhat bumpier ride?rocketdog wrote:Well, I consider the PP to be a somewhat conservative allocation portfolio. I have a long investing time horizon, so I'm willing to take higher risks with some of my portfolio (the VP portion). Since the longer the time horizon you have the more risk you can afford to take, it stands to reason that when I'm young my VP should be larger than my PP, and as I approach retirement I should shift funds from my VP to my PP.Thomas Hoog wrote:Your strategy on ratio VP and PP seems to me a bit weird. VP is some strange invention to satisfy your emotional behaviour. If your behaviour is related to your age, it make sense. But I doubt that.
For me, I don't use a VP. I really have no idea what the future brings.
I'm not recommending that everyone do that, mind you. It's just the approach I've come up with that fits my investing style. If my PP repeatedly outperforms my VP over the next 5-10 years, I may reconsider this tactic and start shifting my VP funds into my PP at a faster rate.
A Japanese person in 1989 even with a long time horizon would be regretting having gone in stock heavy by now.
CraigR once posted something very compelling about a long time horizon actually being no help against risk. If you intend to sell stock in 50 years time and one day before you sell, the market falls by 30%, then that is just as bad as if you only bought the stock the day before. Perhaps if you never intend to sell and have an infinite time horizon as when managing a foundation's endowment fund or whatever, then return and not price volatility is all that matters.