With political risk rising in the US following the SEC's civil suit against Goldman, as well as continuing upward trend in bullishness and the markets, I am starting to reallocate to non-equity assets:
|US Equity - Large||USLC||5%|
|International - Large||INTL||5%|
|US Equity - Small||USSC||16%|
|International - Small||INTS||10%|
This portfolio allocation is high on beta with overweights in small stocks, both US and international, as well as emerging markets and REITs overweighted. The beta, which I hope will lead to alpha, is partly offset by the use of a 10% value averaging reserve. This is touched on in my earlier post but basically it allows one to buy on the dips and sell on the highs above a gradually upward trending value allocation to each segment. The division between the VA reserve and cash is artificial in that both contain cash; the division serves to ensure that there are sufficient reserves to backstop the segments where I am applying value averaging.
Please note that I have recalculated the value path for REITs to start at a lower level. REIT's had started to take on too large a position in my portfolio, and there was also some element of "selling the good news" in my action given how much REITs have rallied in recent months. I split the REIT allocation between VNQ (Vanguard US REIT) and RWX (Intl REIT) to maximize diversifcation.
I have re-added commodities to my allocation with the Permanent Portfolio (MUTF:PRPFX) which contains a mix of assets designed to cope with inflation.
On emerging markets, to mitigate the risk of a bubble, I am splitting between VWO, the Vanguard index, and DGS, which is a smallcap, higher dividend EM index.
Disclosure: Long all stocks mentioned