Because the stock market is significantly overvalued at this time, now is an excellent time to consider rebalancing your portfolio. By rebalancing instead of selling what has gone down or buying what has gone up, investors remain diversified but go back to their original allocation. So while diversification is about the eggs, asset allocation is about the basket. What percentage of your basket is going to be in stocks and bonds?
Speaking in late July to Bloomberg News, Greenspan warned, “Equity bears hunting for excess in the stock market might be better off worrying about bond prices… That is where the actual bubble is, and when it pops, it’ll be bad for everyone.”
The political process portends a point at which the gains in income stop going to a small percentage of people. When that happens, it will signal the end of the 35-year bull market in bonds. Why not start preparing your portfolio for that today?