Few Rekenthaler Reports have praised bonds. That owes partially to timing--fixed-income yields have been consistently low during this column's tenure--and partially to personal preferences. My portfolio has always consisted almost solely of equities. (Currently, it's at its lowest-ever level of 90%, as I trimmed my Morningstar (MORN) position last summer and have not yet reinvested the proceeds.)
It also reflects my view that stocks offer a free lunch, because investors overreact to equities' volatility, thereby improving their long-term returns. (Paradoxically, over time asset classes that are disliked outperform their more-popular rivals.) That argument, which comes from behavioral economists, does not lend itself to proof, but I think it is largely correct.
To view this article, become a Morningstar Basic member.
John Rekenthaler has a position in the following securities mentioned above: MORN. Find out about Morningstar’s editorial policies.