tightasadrum
Full time employment: Posting here.
Hamlet said:I am 100% equities.
What do you expect inflation to be over the next ten years? It is currently running at 3.5%. The 10-year Treasury is currently yielding 2%. So if nothing changes, each year you hold that Treasury you will lose about 1.5% of your purchasing power.
If you expect inflation to be zero over the next ten years, you will make a real return of 2% a year. The only way you can expect your rate of return to be better than that is if you expect there to be long term deflation. Long term deflation is a tough thing to have when the government can print money to correct it.
If inflation picks up, the people holding long-term bonds are going to have losses that are similiar to the losses people holding stocks had in the recent decline, ie 30-40% losses. Taking that risk for an upside of 2%/year seems foolish.
At least when you gamble by buying stocks today, there is a reasonable chance that you won't lose purchasing power by buying them. I don't see much chance of that with bonds at current prices.
If I was 25 years younger, I would be 100% equities too. Or, if I had enough cash to carry me through to my end, then put the rest in long-term growth for DD. Every situation is different. You might look back and see this as the greatest bargain in investing you ever saw and marvel at your investment wisdom. I hope so.