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High stock AA
Old 03-06-2018, 10:11 AM   #1
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High stock AA

I've been reading a lot of articles about the lack of diversification available now, where bonds and equities move in lock-step. Gold and commodities are no longer a hedge. I believe some of this is due to ETFS and target date funds with a set AA that fund managers cannot move money around very easily. What do you think? If you agree, what hedges are available for the next rotation? I can only think of real estate or private equity (non-listed investments).
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Old 03-06-2018, 10:13 AM   #2
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Originally Posted by bj345 View Post
I've been reading a lot of articles about the lack of diversification available now, where bonds and equities move in lock-step. Gold and commodities are no longer a hedge. I believe some of this is due to ETFS and target date funds with a set AA that fund managers cannot move money around very easily. What do you think? If you agree, what hedges are available for the next rotation? I can only think of real estate or private equity (non-listed investments).
And if atocks and bonds are so corrolated, why not just settle for an AA with high % of equities?
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Old 03-06-2018, 12:20 PM   #3
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I've been reading a lot of articles about the lack of diversification available now, where bonds and equities move in lock-step. ...
Yup. Looks like they are moving in perfect lockstep to me.

Blue line is Total Stock, orange is Total Bond. Pick any period of time that you want.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

Don't believe everything that you read.
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Old 03-06-2018, 02:18 PM   #4
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Yup. Looks like they are moving in perfect lockstep to me.

Blue line is Total Stock, orange is Total Bond. Pick any period of time that you want.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

Don't believe everything that you read.
Thanks for keeping me focused on the long term. I guess people are concerned with the rate increases being the end of the bond bull mkt.
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Old 03-06-2018, 02:56 PM   #5
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Yup. Looks like they are moving in perfect lockstep to me.

Blue line is Total Stock, orange is Total Bond. Pick any period of time that you want.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

Don't believe everything that you read.
I dunno. That chart shows that ever since the Great Recession in 2008, both stocks and bonds have been going up.

Maybe it's time for both of them to go down together.
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Old 03-06-2018, 03:06 PM   #6
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I dunno. That chart shows that ever since the Great Recession in 2008, both stocks and bonds have been going up.

Maybe it's time for both of them to go down together.
Maybe. There is a risk here in terms of long term rates and equity prices. That's why I am keeping duration low on the fixed side.
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Old 03-06-2018, 03:23 PM   #7
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Maybe. There is a risk here in terms of long term rates and equity prices. That's why I am keeping duration low on the fixed side.
Depends on how soon you need to take money from your bonds. Mine is not needed for 7 years, so any duration less than 7 years works for me.
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Old 03-06-2018, 08:16 PM   #8
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I've been reading a lot of articles about ....
Quote:
Originally Posted by pb4uski View Post
Yup. Looks like they are moving in perfect lockstep to me.

Blue line is Total Stock, orange is Total Bond. Pick any period of time that you want.

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares Fund VTSAX chart

Don't believe everything that you read.
Hah! This reminds me of a more technical forum I visit. The 'mentors' or others with some certification will often say to a poster that "I've been reading and..." doesn't pass muster here. Give a source, and summarize what you think they are saying.

OK, this forum isn't that formal, but the concept applies. When someone says to me something like "well, they say...", I usually respond "they" say lots of things, and most of it is wrong!

-ERD50
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