Anybody else 100% stocks, no bonds?

[clifp]

Bonds are indeed more overvalued than stocks. I'm not sure I'd agree with real estate though. I can still get 7% cap rates here with 30%+ returns levered on real estate. But with the money supply up nearly 40% in the last 20 months and inflation just getting going, I'm still long equities, although I've added more RE exposure in the last 12 months than stocks.

I agree not all RE is overpriced. I too am able to get properties that rent at 1%/month around Kansas City and my Vegas properties are in the 6-7% cap rate.

But the house in Santa Clara, CA I bought for 150K in 1984, sold for 450K in 1999, is now 2.15 million, and payments are twice the rent. Honolulu is a bit cheaper, but San Francisco, parts of LA and NYC are worse

 

[winyaz]

I agree that valuation is notoriously difficult to use for timing in the short term. After all the studies showing it's (argued) effectiveness generally use a 10 year period. I read some time ago about a market timing strategy that assigned the market into quartiles based on valuation and price relative to the 10 month moving average. The idea being to sell equities only when they are over valued and drop below the 10 month moving average. In all other quartiles equities should be held. I can't find a link to the value/momentum timing strategy now, but here is a link to the paper on the 10 month moving average:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461
and here is a brief discussion of it on the Bogleheads, which was surprisingly not as critical as I expected: https://www.bogleheads.org/forum/viewtopic.php?t=309461

The goal of the strategy is to produce equity like returns with bond like risks. On this measure it could be said to have failed as returns have underperformed equities, though it still handily outperformed the market on a risk adjusted basis. Performance has been more comparable to a 40/60 portfolio, such as VWINX. It is certainly not optimal and I'm sure many will question it's usefulness, just as I question whether the market will quickly recover from the next significant set back.