By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Did you read my recent column, “Doomsday poll: 87% risk of stock crash by year-end?” Surprise, our Lazy Portfolio gurus totally disagree, aren’t buying into the fear. In fact, they’ve been riding the bull rally since 2008. Plus they’re predicting a bullish stock market for the next decade.
So forget the end of the bond bull, look past the Fed’s cheap money, past China’s credit problems, America’s dysfunctional politicians. Our totally surprising gurus have enormous trust in the stock market’s future, in their Lazy Portfolio strategies and their performance in bulls and bears, rallies, meltdowns and recoveries.
So listen closely to the surprising feedback we got from the brain trust behind four of our Lazy Portfolios: Ted Aronson, lead partner of the $22 billion AJO Partners; wealth manager Bill Schultheis, author of “The Coffeehouse Investor”; financial planner Allan Roth, author of “How A Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn”; and Scott Burns, chief investment strategist with AssetBuilder.com and co-author of “The Clash of Generations” and “Spend ‘Til the End.”
They’re upbeat, positive and optimistic about a winning decade ahead. Listen:
Ted Aronson: the Aronson Family Portfolio 11 funds
Ted Aronson is head of AJO Partners, managers of $22 billion. No retail funds for the public, just institutional retirement money. I first ran across Aronson in a Barron’s interview. During the 2002 scandals, Aronson headed the nation’s leading professional association for 70,000 portfolio managers. TheStreet.com even called him America’s “most honest” manager.
He’s also a rare manager who’s honest enough to tell you where his own money is invested. “All of my family’s retirement money is in AJO funds,” says Aronson. “But because the fund trades a lot, it’s not suitable for taxable investments. So all our family’s taxable money is in Vanguard’s no-load index funds,” with 40% in domestic, 30% in international and 30% in fixed income.
What about cashing out today if you worry about the end of the 30-year bull market in bonds? Or the Fed stopping QE’s cheap money? Or you’re convinced another meltdown’s coming? Aronson calls himself a “broken record:” If you have a well-diversified portfolio, cashing out may be costly in the long run. He confirmed his earlier reasons for staying the course:
“For good reasons and bad, I’d hold tight. The good include my faith in capitalism and its ability to weather a storm, even one of biblical proportions. The bad reason is, I have no faith in my ability to time this sort of thing. Even if I got out in time, I probably wouldn’t be able to correctly time getting back in!”
Here’s his Weather-The-Storm portfolio for tough times:
( 5%) Wilshire 5000 /zigman2/quotes/202876707/realtime VTSMX +0.69%
(15%) S&P 500 Index /zigman2/quotes/209016161/realtime VFINX +0.74%
(10%) Wilshire 4500 Mid-/Small-Cap /zigman2/quotes/204335102/realtime VEXMX +0.47%
( 5%) MSCI US Small-Cap Growth /zigman2/quotes/208808156/realtime VISGX +0.78%
( 5%) MSCI US Small-Cap Value /zigman2/quotes/208571375/realtime VISVX +0.07%
(15%) Emerging Markets MSCI-EMGFree /zigman2/quotes/205715973/realtime VEIEX +0.86%
(10%) Pacific Stock Index MSCI-PAC /zigman2/quotes/208231406/realtime VPACX +0.97%
( 5%) European Stock Index MSCI-EUR /zigman2/quotes/202352012/realtime VEURX +0.58%
(10%) TIPS: Inflation-Protected Securities /zigman2/quotes/207983017/realtime VIPSX -0.27%
(10%) High-Yield Corporate /zigman2/quotes/201549316/realtime VWEHX +0.17%