How Do Your Investments Stack Up Against Schiller

If any of you remember Robert Schiller, of Irrational Exuberance fame, he thought tech stocks were overvalued and now he thinks real estate is over valued too.

According to an interview, he stated that between 1890 and 1990 the after-inflation return for real estate was ZERO!

This is not really surprising because real estate has to be affordable in the long run otherwise people are priced out. Since 70% of the population owns a home as opposed to being homeless, in the long run, homes have to have stayed affordable! Right now places like California seem unaffordable and they will correct until they are. (They’ll probably over-correct until they’re insanely cheap too).

So what is Schiller investing in right now?

I’m probably a little over 60 percent in stocks, almost all of it outside the U.S. I have a lot of cash. And I’ve been reducing my exposure to real estate. It may be at the end of a cycle.

Most of my stocks are outside the US too. My 401k has 60% of it invested in foreign stocks. The rest is divided over mid-cap & large growth and value funds.

In my brokerage account, the mix is a little different. According to TDAmeritrade’s Instant XRay tool (which shows you what your portfolio would look like if it were a mutual fund), my asset allocation is

High Yield – 7.33%
Hard Assets – 61.11%
Slow Growth – 12.83%
Classic Growth – 17.63%
Aggressive Growth – 0.58
Speculative Growth – 0.51

Of course I have a smaller more speculative account at Interactive brokers too which comprises mainly of a Japanese REIT (which I bought on the Tokyo Stock Exchange), an Argentinian REIT, and a bunch of speculative long calls and short puts.

Foreign Stocks – 70%
Speculative Growth – 30%

How does your portfolio stack up?

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