John Bogle Sticks to an Age Based Allocation

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Robert Powell at Marketwatch recently reported from Boston where 1,600 investment professionals gathered. 81 year old John Bogle, one of the speakers, revealed his asset allocation; currently 81% bonds and 19% stocks.

Chris Davis, head of the Davis funds, claimed that bonds were the biggest bubble around as assets have been pouring into bond funds at a record pace.

“That is a terrifying idea,” Davis said. “I think the only real bubble in the world is bonds.”

Now, Davis said bonds might be OK for another year or two. “But when you look over a 10-year period, people are going to get killed,” he said, noting that the U.S. has a net present value of unfunded liabilities in excess of $42 trillion.

“The idea of financing that enterprise at 3% seems crazy to me when I can get a 7% or 8% earnings yield on Coca-Cola,” he said.

Source: Marketwatch
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