Investors must understand that a superior portfolio will underperform from time to time, no matter what mental yardstick they are using. If they are prepared for this disconcerting reality, they are less likely to find themselves abandoning their superior portfolio in favor of Wall Street's deal of the day. Adjusting the Portfolio As good as this portfolio is, it won't be right for every investor. Some will want more return, some will want less risk. But it's pretty easy to modify the portfolio to meet most objectives.
Investors wanting higher risk and reward can just reduce the proportion of bonds.
Once they get to zero bonds they have two potential courses to follow if they still want higher returns. First, they could shift the asset allocation to more value and small-company stocks. While this example didn't include emerging markets, we can assume that they might opt for a healthy portion of them in their portfolio as well. As an alternative, they might consider purchasing the portfolio on margin. My view is that, properly practiced, investing should be reasonably boring.