Is This 80/20 Portfolio The Best Plan For Your Money?

POITOU, France – It is wet, but not cold, in this area of France this morning. Rain splashes on the copper flashing. The windowpanes fog over. We have made some tea and settled in to our library for a long day’s study.

One of the pleasures of life is having a good place to work. The library is an old octagonal building, with a cement floor and brick walls, that had been used for laundry. We replaced the windows, put in a gas fireplace, and lined the walls with bookshelves.

You never know how these projects are going to turn out. We have been building and remodeling all our lives; this is one of the successes.

It is warm, cozy, richly decorated with books and old guitars… and a delight to be in. We look forward to opening the door in the morning. We regret having to close it at night…

Onward!

Time to Be in Stocks?

Yesterday, we learned from Wall Street Journal reporter Brett Arends that this is the best time to invest in the stock market:

The best estimates argue that over the long term, stocks have beaten bonds, cash and deposits by an average of about 4 to 5 percentage points a year. Compounded over time, that has amounted to an enormous difference. After 30 years, someone who invested in stocks has often ended up with three times as much money as someone who kept it all in cash and bonds.

Meanwhile, those gains have typically all come during the winter months. Peculiar, but apparently true. The most recent academic study, which has looked at stock markets around the world and went back in some cases more than 100 years, has found that winter has beaten summer pretty consistently in almost every country and almost every period.

Point?

If you want to do well with your investments, you will buy stocks… and buy them now.

Arends goes further. He tells us how much of our money we should have in stocks. Citing the work of valuation expert Andrew Smithers, he concludes that…

…a long-term investor who wants an easy life should keep 80% of their money in stocks and 20% in short-term bonds or cash.