Business is Personal (Finance)

Back in late 2007, I re-evaluated my asset allocation and came to the conclusion that European countries were in just as bad shape as the United States in terms of debt and delusions. The only diversification would have been due to currency factors. Since then, I have been reducing my EAFE holdings -- it has gone down from the traditional 30% of portfolio to 13% as of my post on 01/25/2010.

So this past Monday, I sold another EAFE chunk (and moved it into bonds) bringing my holdings down to 11.5%. Market gains had brought it up to about 14% since January and I was feeling uneasy about the debt news from Europe. It seemed strange that Greece is in financial disaster (can't pay back debts, cooking books) but yet the market just shrugged it's shoulders and continued to climb. Perhaps everybody was too pre-occupied with health care reform?

Well the next shoe dropped today. Portugal was downgraded by Fitch and investors finally blinked. Markets overseas are down 2% in Europe, 1.5% in Japan and 1% in Emerging Markets compared to 0.5% in the U.S. While it is only 2%, it always feels good to make a lucky change before the market moves.

With my latest transactions, my asset allocation now looks like:

Equities                       63.1%
  Domestic             27.4%
  EAFE                 11.5%
  Emerging Markets     11.6%
  REIT                 12.0%
Bonds                          27.7%
  Nominal              19.3%
  Inflation-Protected   8.4%
Commodities                     9.3%
  Commodity Futures     5.3%
  Gold                  4.0%

My 401K is set to auto-rebalance tomorrow and I suspect I will be right at my 60/30/10 benchmark afterwards.

(Filed in investing)