No. of Recommendations: 2
I'm glad to see someone discussing this. Asset allocation is the biggest decision we make, bigger than individual security selection, and yet we get widely differing advice from skilled advisors. Bogle recommended a bond allocation equal to one's age. Target funds from Schwab, Vanguard and others give similar bond allocations. However Buffett recommends a 10% allocation to bonds. Is anyone aware of an academic study of optimal asset allocation?I found this study useful in helping me make some sense of the Buffett allocation for his wife, and the various options/risk factors to be considered when implementing a SWR. I’m basically holding an 80/20 given the overvaluation of the market. I’m keeping a lil’dry powder available. Eventually, I’ll move more towards 90/10, as opportunities hopefully emerge on the next, near term downdraft. However, as gross as it may be to some, and to be clear, I’m actually 80% BRK, so my asset allocation assumption of using BRK as a proxy for the index may be a faulty one and definitely inconsistent with this study.
blog.iese.edu - Buffett AA
