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Old 02-17-2017, 03:50 PM   #41
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Originally Posted by Backdraft57 View Post
https://personal.vanguard.com/us/ins...io-allocations

OP ck these graphs for historical returns on various asset allocations. I'm pretty conservative as well but have settled on 20-35% equities.

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That's good stuff! I look forward to adding another 10% - 15% to equities if and when valuations return to historical norms...
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Old 02-17-2017, 03:53 PM   #42
Recycles dryer sheets
 
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Originally Posted by pb4uski View Post
OP, since you're a Hussman fan you might be interested in this thread: http://www.early-retirement.org/foru...cks-85416.html

Personally, I think he is a flake and has a poor record, but to each his own.

okay thanks!
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Old 02-17-2017, 04:05 PM   #43
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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.
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Old 02-18-2017, 08:37 PM   #44
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Old 02-18-2017, 08:41 PM   #45
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Old 02-19-2017, 06:43 AM   #46
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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.
That would only be true until bond rates continue their rise. Losing 5% in a total bond fund for every point rates rise vs gaining in cash may not be the best strategy
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Old 02-19-2017, 07:17 AM   #47
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That would only be true until bond rates continue their rise. Losing 5% in a total bond fund for every point rates rise vs gaining in cash may not be the best strategy
I too would disagree..Dividends will only go up as interest rates rise..I have nothing I plan to sell at any time period less than the longest term bond held in my bond funds..Again it's my desire that interest rates rise...
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Old 02-19-2017, 08:58 AM   #48
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That would only be true until bond rates continue their rise. Losing 5% in a total bond fund for every point rates rise vs gaining in cash may not be the best strategy
I agree with you that interest rate risk is real but IMO 50% in cash is crazy... there are other ways to mitigate interest rate risk. For example, long CDs have no interest rate risk and pay a lot more than cash.... or while short (5 year or less) individual bonds or target maturity bond funds have interest rate risk you will get your par value back within 5 years or less so they are similar to a CD but with some extent of temporary interest rate risk... or even low duration bond funds.
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