Originally Posted by mathjak107
since the 1980's every year the fed raised short term rates more than 1% in a year intermediate term bonds went up in value , except 1994 .
but today we are seeing something different . short term rates are moving very little and it is the expectation of higher inflation driving longer term rates .
the end result is bond values are falling far more than just short term interest rate movements would reflect .
we rolled back up a bit off the lows but we can resume the downward trend at any point in time again .
if trumps growth expectations do not pan out bonds ,especially long term treasury's can do very well . but if inflation expectations remain high than bonds are not going to be adding a whole lot to the growth of a portfolio and will likely be taking away . cash and equity's may be the better choice as the cash acts as stock options for stocks at lower prices with no expiration while benefiting from rising rates .
I would disagree....especially those of us with large investment portfolios. So if I have an investment portfolio of $5million and I desire a 50/50 AA equities / fixed income , you are suggesting $2.5M equities/ 2.5M cash? And if stocks do not correct in the near future, how long should we be sitting on all that cash earning a whopping 1% or less?
I would much rather have an AA of 50/40/10 equities/bonds/cash
keeping the bonds at the short duration level (less than 5 years) and at least gain some dividends in the 2-3% range. This also allows for tax loss harvesting in a taxable account if one desires to sell equities that have gained and offsetting these gains with moderate bond losses.