Balanced Portfolio and frustration of this market...

[target2019]

Expecting bond funds to offset equity losses in a 50/50 portfolio?

When I examined data from the Backtest-Portfolio workbook, using TSM and TBM synthesized data, that did not happen in 11 out of 60 years.

If you use shorter term bond funds, I think there would be more failures.

What you are experiencing is the end of a long bond cycle coupled with high inflation.

 

[Montecfo]

True bonds do not usually "offset" equity losses. However they usually provide ballast.

Last year's bond debacle was well telegraphed as the end of cheap money. So most of the carnage was avoidable.

But for the buy/hold set and forget crowd it was the perfect storm.

 

[target2019]

For bond index funds I see there was a perfect storm in 2008 also. As you point out an individual bond would have provided more ballast than the buy & hold index fund last year.

So, with a bond you're improving ballast, but on a real return basis, what does it mean?

For the bond index I see improvement. With any index fund you're gonna get what the market gives. There are swings that are difficult for some investors, but those seem to be down-played until a sizeable decline gets your attention.

One thing's for sure, a paid advisor has advice for you that may just be what other advisers are saying.

 

[Markola]

Expecting bond funds to offset equity losses in a 50/50 portfolio?



When I examined data from the Backtest-Portfolio workbook, using TSM and TBM synthesized data, that did not happen in 11 out of 60 years.



If you use shorter term bond funds, I think there would be more failures.



What you are experiencing is the end of a long bond cycle coupled with high inflation.

The way I read this, bond funds provide excellent ballast, as intended. A 2008 50/50 portfolio was down around 15% vs, what, at least 30% for a 100% stock portfolio?

I hear you about the end of the bond cycle. I’m being patient and am reserving judgment, because:

a) My 50/50 portfolio is hanging in there this YTD, and
b) I respect the Bogleheads and they, nor my Vanguard advisor are counseling any changes.

 

[target2019]

The way I read this, bond funds provide excellent ballast, as intended. A 2008 50/50 portfolio was down around 15% vs, what, at least 30% for a 100% stock portfolio?

I hear you about the end of the bond cycle. I’m being patient and am reserving judgment, because:

a) My 50/50 portfolio is hanging in there this YTD, and
b) I respect the Bogleheads and they, nor my Vanguard advisor are counseling any changes.

I was trying to address the OP's observations. The data was to make the point that bond index being able to offset equity losses is not 100% fact. As you say, it's ballast, which is probablly now better understood by OP.

I'm not endorsing the group, just using a spreadsheet with data I found on the site. There's really no advice in that, just another way to backtest and compare asset allocations.