Friday, August 18, 2006

Equity Premium: Entre'acte

by Ken Houghton

I still plan to extend this post eventually, but I see that knzn has done the heavy lifting.

At a 2.55% premium (his or her midpoint, which I consider optimistic), an appropriate asset mix for a prudent investor not near retirement would something closer to 40-60 (at most 50-50) than the more common 80-20 recommendation. (Stocks to bonds in both cases.)
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