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I tend to follow Benjamin Graham's advice from The Intelligent Investor. Summarized by investopedia: - Graham recommended distributing one's portfolio evenly b

I tend to follow Benjamin Graham's advice from The Intelligent Investor. Summarized by investopedia: - Graham recommended distributing one's portfolio evenly between stocks and bonds as a way to preserve capital in market downturns while still achieving growth of capital through bond income. Remember, Graham's philosophy was first and foremost, to preserve capital, and then to try to make it grow. He suggested having 25% to 75% of your investments in bonds and varying this based on market conditions. This strategy had the added advantage of keeping investors from boredom, which leads to the temptation to participate in unprofitable trading (i.e. speculating). I've been shifting over to bonds for a while now (currently sitting something like 70/30). Running the numbers on where I would have been if I hadn't started swinging towards bonds, I haven't missed out on much at all. The S&P is pretty flat since the January 2018 peak, and I'm in a safer position if a crash happens. https://www.investopedia.com/articles/basics/07/grahamprinciples.asp https://www.investopedia.com/articles/basics/07/grahamprinci...

ng12 7y ago
It's still just timing the market with more steps. You may have done well the past two years but there are many other periods of uncertainty in which a large bond allocation would significantly underperform.
pfarnsworth 7y ago
Bonds or bond funds? Those are two different beast with two different behaviors when crises hit.
- fred_is_fred 7y ago
  A lot of people buy bond funds and think they own bonds. Bond funds can lose principal quite easily, bonds generally cannot, but are a pain to buy.
BenoitEssiambre 7y ago
Anecdotally, you're the third person I hear talking about their savings recently and all of you have mentioned you think we are near a top and have been swinging your allocation from stocks to bond. Now if this is a general trend, it would mean stock prices have been held back by people doing this transition and we might be due for a rebound.
sporkland 7y ago
I want to do these things but the 15% deduction for tax constantly scares me away. I guess I should assume that my equities are gonna drop 40+% so the 15% is easier to swallow?

ng12 7y ago

It's still just timing the market with more steps. You may have done well the past two years but there are many other periods of uncertainty in which a large bond allocation would significantly underperform.

pfarnsworth 7y ago

Bonds or bond funds? Those are two different beast with two different behaviors when crises hit.

fred_is_fred 7y ago
A lot of people buy bond funds and think they own bonds. Bond funds can lose principal quite easily, bonds generally cannot, but are a pain to buy.

BenoitEssiambre 7y ago

Anecdotally, you're the third person I hear talking about their savings recently and all of you have mentioned you think we are near a top and have been swinging your allocation from stocks to bond. Now if this is a general trend, it would mean stock prices have been held back by people doing this transition and we might be due for a rebound.

sporkland 7y ago

I want to do these things but the 15% deduction for tax constantly scares me away. I guess I should assume that my equities are gonna drop 40+% so the 15% is easier to swallow?