Please pardon the obviously greenhorn question.
Sorry to deviate the main theme of this thread. But reading through this the question is haunting me a bit. Maybe someone can point me to a relevant thread that deals with my question.
When you speak of re-balancing you'all are speaking a stock/bond ratio. Although I feel I have a pretty good grasp on stock investment options (individual, mutual funds, ETFs and all flavors of each), bonds, on the other hand mystify me.
So, generally speaking, are the 'bonds' you refer to bond funds? Individual bonds? Bond ETFs? For example in my recent selling panic (I am clearly not as level headed as most of you - but so far through this huge downturn it has worked in my favor. I'm 9% down total portfolio) I bought Fidelity US Bond Index Fund instead of going to cash for some of my investment choice FXNAX. It has only contributed to my losses (it's down over 2% in a few days). Clearly that choice was bad timing.
Is FXNAX a poor choice bond fund? If so any recommendations for the bond illiterates?
First, I'd stop trying to time the market. Nobody knows where this is headed. Make a plan and stick to it.
FXNAX is a perfectly good total bond market index fund.
"Bonds" can be ETFs or Mutual funds or even holding individual bonds.
Some like to hold the "total market". For them, a total bond fund fits the bill as it holds both government issued bonds and corporate bonds.
Others, like myself, prefer Treasury Bond funds. The bonds inside the fund are backed by the full faith and credit of the US govt, so default risk is as close to zero as you're going to get.
Still others hold individual bonds, often in a bond ladder. If each bond is held to maturity, then you know exactly what the income stream will be with the only question being what inflation might do, unless you choose TIPs bonds.
With index bond funds (either ETFs or mutual funds), just remember how they work. The fund itself is always buying and selling underlying bonds to target a range of maturities. This means that it's possible that they lose money during a sale. If they're holding an older bond and interest rates are rising, then the value of the older bonds will drop because the purchaser of the older bond will demand a lower price-otherwise they'd just buy new bonds at the higher rate. This is also true if you're holding individual bonds yourself and sell them before maturity. So, bond funds can lose money. Vice versa can happen in times of economic stress when there is a flight to safety for some bond types, such as what happened in 2008. No guarantees, though.
A couple of good articles on bonds vs funds
https://www.fidelity.com/learning-center/investment-products/mutual-funds/bond-vs-bond-funds
https://www.thebalance.com/how-bond-funds-work-2466568