DwmAssetAllocation, you're right, although I talk about things like diversification and capital preservation, it's all relative. I'm essentially 90% equity (~75% of which are U.S. large caps). To some this represents neither diversification nor conservative asset allocation; however, as a young man with decades (God willing) left in the markets, I'm investing as such. It doesn't make any sense, IMO, for someone like me to hold bonds. The risk simply isn't worth the reward relative to equities with rates so low. I'd love to have exposure to some fixed income, but only if rates were 7% or above. I don't see that happening anytime soon with U.S. gov't paper. And while I own 90% equities, they're spread out amongst ~75 or so different holdings, across every major sector (and many industries/sub-industries within), except for energy and utilities (which I'm bearish on at the moment and only have exposure to via BIP). And within these 75 holdings, only a handful do I consider to be overly speculative (~15% of my portfolio is dedicated towards high growth tech such as AMZN, NVDA, BABA, TCEHY, etc). So yes, I have a lot of equity exposure but the vast majority of my holdings pay a dividend and have strong dividend growth histories/forward looking prospects, and it's this passive income stream that I've based my financial freedom upon. This is another thing that I like about DGI companies; sure, many pay a similiar amount of yield as the U.S. 10 year ATM; however, the bonds don't give annual income increases. Ever since I began managing my portfolio 6 years or so ago, I've produced double digit gains with regard to my income stream (organically); this means that I'm getting income that is similiar to bonds, but growing it at rates ~5x the FED's target inflation rate. This is how I plan on becoming wealthy (with time).
Curious: you write about capital preservation, that as it's dangerous out there, so you think it is prudent to take a cautious stance, and then end by saying, in apparent contradiction to your earlier comments, that you are 90% in equities. That seems a high risk asset allocation, but maybe it's our very different risk tolerances: I'm 60, am 72% in equities and planning on reducing that to 16%(!) over the next 8-16 mo's. I lost everything in 2008-9 due to margin calls (kudos for your anti-leverage notes), and have saved 40% of income & outperformed the market (w 16-24 blue chips) every year since for a $2M+ net worth today. Triggers for my sales: the SP500 hitting 3,200 by Sep '18 or 3,700 by Jun '19, or FRED's US High Yield Bond Spread's 3 mo. avg going over 4.25%. For a 100+ yr perspective on why we may be headed for 25%-30% correction with no bounce, followed by first by 7 yrs of 0%, then 4%-6% returns, see Jeremy Grantham's letters @ gmo.com. I'm already getting 3.75% on my Canadian CD's, so can afford to wait once I've sold, and will have the cash to buy equities if there's a 25%+ correction. Do preserve your capital!