RETIREE PORTFOLIO DRAFT #2

After some consideration, Draft #1 was seen as "a bit too aggressive" for a portfolio aimed to generate and maintain income, quell volatility, reduce risk, and introduce value stabilization by *some* S&D and diversification (yet not be aggressively eager about this), while simultaneously being SIMPLE and ELEGANT.

In fact, I'm shifting the focus of the porfolio composition from a multi-asset S&D (slice and dice) makeup into a portfolio that consists of 3 core holdings, with some smaller side dishes. The 3 core holdings are VTSMX, VGTSX, and... um, fixed-income positions of some form.

The 60/40 equity/fixed-income makeup is still maintained.

I still plan to divide the equity allocation into 50/50 domestic/international. Here's where I disagree with critics of my portfolio, who believe that I'm internationally over-weighted. My rationale is I want my portfolio to reflect the WAP (world allocation portfolio) and the global economic integration that's steadily increased over the past many years.

To address all these points, I might eliminate the following assets:

- REITs
- Int'l small-cap stocks
- Emerging market stocks

I'm also reducing positions in the following:
- Domestic value stocks
- Possibly the high-yield corporate bonds

When taking into account all of these factors, here's Draft #2, showing the direction the retiree's portfolio is heading:


VTSMX - 25%
VISVX - 5%
VGTSX - 25% (Total International Fund)
REIT - 5% (Again, I *might* eliminate. Need further analysis.)

VBMFX - 13.3%
VFSTX - 13.3%
VBISX - 13.3%

Morningstar's X-Ray provided the following asset breakdown for the Draft #2 portfolio:

Asset Allocation

Portfolio
Cash 3.04
U.S. Stocks 34.70
Foreign Stocks 24.35
Bonds 37.20
Other 0.71
Not Classified 0.00


Stock Style Diversification



25 26 19
10 7 4
5 3 1

Not Classified 0.00%



65 35 0
0 0 0
0 0 0

Not Classified 0.00%