My tolerance for volatility and loss is higher than the traditional investor. Beyond Burton Malkiel's random walk there's Modern Portfolio Theory. There are t

My tolerance for volatility and loss is higher than the traditional investor. Beyond Burton Malkiel's random walk there's Modern Portfolio Theory. There are three pools of asset-classes that I consider: Bonds - Historic low rates, soon to increase and drive down the price of existing bonds on the market. Bonds should cheapen 3-4 times this year thanks to Yellen. Equity Market - Market PE and PEG values are above the level that historically precedes a correction. Two dynamics may be contributing: The first, domestic corporate equity investment is up due to the low T-Bill rates (a risky return in equity looks a lot better when government bond rates are effectively nothing). The second, foreign investors (specifically Chinese/Russian) trying to diversify away from government corruption. This phenomenon is well-documented in desirable housing markets (Toronto, SF Bay Area, NY, London, etc.) but harder/impossible to identify in the stock markets. The second phenomenon does make the argument for a regime change, but only so long as the US Dollar remains strong relative to the rest to their home countries. Guess what the White House policy is going to do? Cash/Cash Equivalents - A near zero interest rate with low volatility. Cash, from what I can tell, is the only thing priced normally from a discount perspective. I can afford to accumulate more cash at a -3% effective rate while letting the rest of my holdings appreciate. When everyone else is bleeding I'll be there with my liquidity.