AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

I have a portfolio mix of Vanguard total stock market/Total international, Vanguard TIPS, international bonds, and T. Rowe Price New Era (commodities). My portfolio mix is about 60% stock, 40% bond (with 30% of bonds in international bond) and about 2% commodity. I have about $5000 more to invest in my taxable portion of my $300,000 portfolio. Is it more sensible to invest in the areas that are way down (the stock portion) as opposed to trying to reach an asset allocation target with more commodity or bonds? Then, in the future, when the bond or commodity funds go down, I will put money in them. With the stock portion down 15%, the bonds/commodities up 5-8%, it seems more sensible to put money into the current losers than to follow the asset allocation theory of trying to bring my portfolio into a 20% balance for each even if that is my goal.

There is a lot to be said for dollar-cost averaging--- which is what you are talking about doing by putting more money in the depressed sectors--- but in this case can delay thinking about that until you get close to the asset allocation you want to have. If you want 20 percent in commodity related investments but have only 2 percent, you really don't have the portfolio you intend to have.

As I have pointed out a number of times, people were saying energy was "over" several years ago and it hasn't quit yet. Will commodities continue to rise from here? I don't know. What I do know is that those who read a crystal ball and saw that commodity prices were at a peak have been wrong month after month. Someday they will be right. I just don't know when. Neither do you. Neither do they.

That argues for getting to your chosen allocation first, then rebalancing when the proportions are changed.

Scott