Monday, September 17, 2007

I am reducing equity exposure to reduce risk

When volatility goes up, the “reward” for an investment should go up. In the current market, volatility is definitely up; however, I feel the expected return over the next 12 months is not high.

Since I felt my expected return from my Vanguard Total Market EFT did not justify the price, I sold all the shares and parked it in cash until things have a chance to shake out.

New Allocation: (rough estimate of IRA money)
30% - Fidelity Spartan International
20% - Vanguard Energy EFT
50% Cash

401k Contributions – 100% of new money is going into a diversified portfolio of equity funds. If the market stagnates (or drops) as I expect, it gives me a chance to dollar cost average into the market at better prices.

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