Wednesday, July 1, 2015

Bucking convention


DEAR HARRY: I am going to question one of the most widespread of "conventional wisdoms." When my father died in 1985, he left my sister and me equal portfolios of stocks worth about $60,000 apiece. There were a few stocks he advised us to sell only in the direst of emergencies. At the end of the first year, our financial adviser wanted us to sell some of our stocks and buy bonds in order to maintain an allocation of 70 percent stocks and 30 percent bonds. I balked. This was contrary to everything I "knew" about stocks. Selling winners to buy losers made no sense. We did not do it. Instead we let the investments stand with occasional replacements within each group. Since I was a math teacher, it was easy for me to create a theoretical 70/30 portfolio and compare it with mine in performance. I am now way ahead with a portfolio that is 91 percent in stocks. The 70/30 portfolio improved slightly. This held true when I tested up and down markets. Am I the only maverick?

WHAT HARRY SAYS: In a word: Hellno! Many people reject the portfolio rebalancing that your adviser recommended. More than one guru has been challenged on the wisdom of this. It does have a potential advantage if all hell breaks loose. However, I have never seen the better numbers in the real world except when using selected past history. The very selection lends the opportunity for known or unknown bias. My advice to you is to hold on but keep careful tabs on the performance of your individual stocks.


Email Harry Gross at, or write to him at Daily News, 801 Market St., Philadelphia, PA 19107. Harry urges all his readers to give blood. Contact the American Red Cross at 800-Red Cross.

Daily News Personal Finance Columnist
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