Peter Lynch once said that the most important decision that someone makes when constructing a portfolio is deciding what percentage of the portfolio should be put in stocks, and what percentage of the portfolio should be in bonds.
For those of you who have spent some time studying Peter Lynch’s life, it’s no surprise that he is much more of a stock guy than a bond guy. As he writes on page 49 of his book “Beating The Street”:
“The reason that stocks do better than bonds is not hard to fathom. As companies grow larger and more profitable, their stockholders share in the increased profits. The dividends are raised. The dividend is such an important factor in the success of many stocks that you could hardly go wrong by making an entire portfolio of companies that have raised their dividends for 10 or 20 years in a row.”