Comments on: Even Very Young Investors Should Own Bonds

By: Kyle

Kyle — Thu, 21 Apr 2011 01:46:26 +0000

That sounds like a good way to lose a lot of money.

By: mike

mike — Wed, 20 Apr 2011 23:20:57 +0000

What about gold and silver? Precious metals and commodities is where you want your money. Bonds are dead. As far as stocks go, I wouldn’t buy any dollar dominated stocks unless those companies do most of their business with consumers of surplus nations. In my opinion precious metals and commodities are a good inflation hedge along with certain foreign currencies. I would only own foreign and U.S. stocks that do business with consumers of surplus nations.

By: Forex Coach

Forex Coach — Thu, 11 Mar 2010 01:21:55 +0000

@ Terry: The rebalancing by percentage seems to be a more practical approach.

By: WellHeeledBlog

WellHeeledBlog — Mon, 22 Feb 2010 02:27:40 +0000

I’m in my mid-20s and I own bonds (~10%) because I don’t think a well-balanced portfolio can be completely devoid of one entire asset class. I’ll gradually increase my bond holdings to 20% in the next 10 years.

By: misanthropope

misanthropope — Fri, 29 Jan 2010 05:41:31 +0000

a) correlations were lower in the distant past than in the recent past, so there is substantial reason to believe that the effects on volatility (which is not risk) will be lower than you anticipate

b) if you have a 15% position in bonds, the transfusion during a bear market rebalance of the portfolio is trivial, even a very serious decline like we recently experienced.

bonds are savings vehicles, not investments. most people have easily anticipated specific expenses which cannot be met with casual cash-on-hand. bonds are a fair way to meet those. but plenty of people have no need to own bonds.

By: Terry

Terry — Fri, 22 Jan 2010 18:54:19 +0000

@Hank & Alper –

Another approach to asset allocation and rebalancing uses percentage differences rather than a set interval by the calendar. I use a 5%; if my allocation drifts more than 5% from the target, I rebalance.

For example; my target mix is roughly 85% equity/15% fixed income. When stocks reach either 80% or 90% of my portfolio, I will rebalance back to 85/15. No market timing necessary.

By: Alper

Alper — Tue, 29 Dec 2009 06:32:04 +0000

Hank,
He does not try to time the market.
The idea is to rebalance your portfolio periodically, say once every 1 year or 6 months.
Alper

By: Hank

Hank — Mon, 28 Dec 2009 16:47:35 +0000

While I don’t agree with you, I can definitely appreciate your arguments. You raised one interesting idea about rebalancing your portfolio with your bond position. The problem with that is that you have to pick and choose (try and time the market) when to buy back into your bond position though. Great post!