Economic Forecast for 2010 and 2011
I normally don’t make outright predictions on this blog, but Sam from Financial Samurai challenged me in his latest blog post. I’m always up for a challenge, so I’ll take a stab at it. Please come and revisit this blog post at the end of 2011. The purpose of the Investor Junkie blog has always been about making good investment decisions. The goal is to help you and I become better investors. Topics discussed in this blog I’ve thought should contain mostly timeless information, and apply regardless of market conditions. I recommend at least 80% of your equities portfolio should be low cost, tax efficient and indexed based investments. If you feel you can outperform the market, do so with no more than 20% of your assets. When the market zigs one way, you zag the other way. That way if you are wrong, you didn’t bet the farm. Adjustments in your asset allocation strategy also make sense when investing this way. This doesn’t mean 100 equities and 0% bond allocation. This means making adjustments within say your equities and increasing your exposure to emerging markets.
By making smaller calculated bets, that can be somewhat speculative, you might be able to come out ahead. A proper asset allocation in my opinion is the most important thing to ensure investment success. As I have mentioned in the past, any predictions about the future are like football color commentary. While the assessments might be correct, it’s sometimes easier to make predictions when you have no skin in the game.
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