Key insights
- Robert Pozen suggests a 90/10 equity/money market strategy may outperform a traditional 60/40 stock/bond allocation for investors with a high risk tolerance and long-term investment horizon. This implies a potentially bullish outlook for equities, as it encourages increased allocation to the S&P 500. However, its impact is limited to high-net-worth individuals and depends on their risk appetite.
I read this opinion piece in the WSJ recently where Robert Pozen, formerly the president of Fidelity asserted that for investors with at least one million to invest, an investment strategy of 90% in a low-fee S&P index fund + 10% in a money market can in the long run often beat the traditional 60% stocks-40% bonds recommendation, without a lot of risk. He specifies that the money invested should not be money needed for immediate use, and that his suggestion is only for investors that can withstand and wait out some drops in the S&P. What are your thoughts?
https://mitsloan.mit.edu/centers-initiatives/mit-gcfp/youre-probably-overinvested-bonds