Trimming Back

From the MONEYLETTER Hotline for October 12th, 2011:

We are recommending changes to our asset allocations. Specifically, we are trimming back our equity allocations for Venturesome and Conservative investors. There is no change for Moderate investors.

For Venturesome investors, we are reducing the allocation to domestic stock funds from 55% to 45%; for international stock funds the reduction is from 35% to 25%. The funds raised are to go to money funds, with a new 20% allocation. For Conservative investors, the domestic stock fund allocation is being reduced from 35% to 25%. Again, the proceeds go to money funds.

We are lowering our stock allocations because, as we look forward over the next six months, we see strong headwinds facing the American economy. We see the probability rising that the remarkably strong profit growth we have seen may slow more than expected. The risks of disappointment have risen, and we are cutting back accordingly.

Trade details and fund recommendations can be found in this week’s Hotline, which is in the Member Area of our website. A paid subscription to MONEYLETTER is required. For more information, call 800-890-9670.