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Scott,

 I have read with great interest your arguments in your book, your articles, and on this web site regarding the wisdom of using commodities as an inflation hedge and diversification agent. I am wondering if a new Couch Potato portfolio might not be in order: add an allocation of Commodities ETF to the 10 speed. This "Storm Shelter" portfolio would add commodities to TIPs and REIT hedges for the generational storm you and Larry Koltikof so clearly outline in your book. A 10% allocation to commodities in the Couch Potato portfolio would be similar to the allocation in the more aggressive AB portfolios.

Eric

Eric,

Actually, a proxy for commodities is already in the larger Couch Potato Portfolios in the form of an Energy fund or ETF. That's one of the reasons the portfolios suggested in 'Storm have done so well. It's also one of the reasons the larger Couch Potato portfolios have done so well.

Once the core positions have been filled--- domestic equities, international equities, TIPS, international bonds, and REITs--- the next block is energy. So the Six Ways from Sunday portfolio, with six pieces, is 1/6th energy or about 17 percent. Even as you build the portfolios out to 10 blocks, the commodity proxy piece is at least 10 percent. Similarly, our portfolios at AssetBuilder have a commodities position that ranges from 4 percent to 11 percent.

Here's a link to an earlier column on proxies for commodities:

http://assetbuilder.com/blogs/scott_burns/archive/2008/01/11/making-commodities-part-of-your-portfolio.aspx

Scott