Benjamin Graham advises you never to have more than 75% of your total assets in stocks.
But is putting all your money into the stock market inadvisable for everyone?
For a tiny minority of investors, a 100%-stock portfolio may make sense.
You are one of them if you:
- have set aside enough cash to support your family for at least one year
- will be investing steadily for at least 20 years to come
- survived the bear market that began in 2000
- did not sell stocks during the bear market that began in 2000
- bought more stocks during the bear market that began in 2000
- have read Chapter 8 of The Intelligent Investor and implemented a formal plan to control your own investing behaviour.
Unless you can honestly pass all these tests, you have no business putting all your money in stocks.
Anyone who panicked in the last bear market is going to panic in the next one - and will regret having no cushion of cash and bonds.
Ref: cc Intelligent Investor by Benjamin Graham