Steve joined Gregg Greenberg at TheStreet.com once again for a discussion on the overvaluation of the market after last year’s rally and how to optimize a portfolio allocation to accommodate for the ever-changing market conditions.
He said it before and he’ll say it again – Steve believes a better way to allocate assets is 33% in stocks, 33% bonds and the final 34% in a tactical trading portfolio. Due to the overvaluation of the equity market, Steve might even up the tactical portion to a 40% allocation – resulting in a 30% allocation to equities and 30% to fixed income for now. This “three bucket” concept – one we have termed Enhanced Modern Portfolio Theory, represents a balanced portfolio allocation that is better built to withstand market cycles.
Forward projected returns for equities are smaller than what we’ve experienced so expecting what happened last year is unrealistic…and you’ve got fixed income at near-historic lows. Look at expanding portfolios to include what endowments and foundations have done for years – add to the tactical space.
To see the interview on TheStreet.com, click here.