I’ve posted Entry #303 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s a Mistake to Avoid the Risk of Stocks But It’s Also a Mistake to Fail to Mitigate that Risk by Exercising Price Discipline.
Juicy Excerpt: Please note how the change from a 20-percent stock allocation to a 50-percent stock allocation brought on gains of about $100,000 and the change from a 50-percent stock allocation to an 80-percent stock allocation brought on gains of about $100,000 while the change from a fixed 80-percent stock allocation to a valuation-adjusted allocation brought on gains of almost $150,000. Increasing one’s stock allocation is a big plus in the long run. But switching from a Buy-and-Hold approach to a valuation-informed approach is an even bigger plus. The same general pattern applied in the first run but in that case the relative benefit that resulted from increasing one’s stock allocation was greater and the benefit from going to a varying allocation was less.