My August post 'Asset Class Rotation' described a simple rotation scheme that buys the top 3 of 5 asset classes each month. At that time the method was just coming off of a new equity peak. As you can see in the plot above, the various market panics of the last several weeks has taken a toll on the equity curve. The asset classes used were US Stocks, foreign stocks, US REITS, US Bonds, and commodities.
Should a big picture asset allocation account respond to market changes more quickly? Should a long term account have provisions to move to a more defensive posture?
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