Q: Should I Add Energy and Commodity Sectors?



Q: Thank you for your article on the Ultimate Buy and Hold Strategy. I am in my 20’s and trying to develop a solid retirement portfolio. Your thoughts in this article make a lot of sense to me. I am considering investing in the recommended Vanguard ETFs using your “aggressive” approach but am wondering if this portfolio covers energy and commodity sectors. What are your thoughts on adding an energy ETF such as XLE, and possibly a gold ETF such as GTU  to the portfolio?

 A:  My recommended portfolio has lots of energy companies in both the U.S. and international asset classes. The ownership of energy companies is one of the reasons for the profitable long-term return. Gold, on the other hand, has not had a good long-term return. If we take money out of other very productive asset classes to put into gold, the portfolio return would likely decline. If you want to add more of something that is likely to add to long term returns, I suggest adding more small cap value.