80% at full risk and 20% at less risk vs 70% at full risk and 30% at no risk are apparently equal. I don't understand why you're not looking at this holistically. It's a sliding scale and bonds are about a 2 on the risk scale. Stocks are a 4 or 5. Cash is 0 or 1. Different mixes can yield the same weighted average.Superiority is in the eye of the beholder. I see it as a portion of my fixed income NOT fluctuating in NAV, serving its purpose of "being there", "a store of value", "ballast to the portfolio", etc. Those virtues that the bond funds were previously falsely claimed to possess, in the past.You said you don't want your fixed income to fluctuate at all.
Yet, in order to do that, you have to hold less fixed income, putting more of your money at the higher equity risk.
Not all risk is created equal. You've shown that the two alternatives have behaved basically identically. One is not superior to the other.
I have never claimed that "cash" is equivalent to "bonds" in the fixed income space, even though both belong in that space. I do concede that bonds did and quite possibly in the future will also provide higher returns than cash. But at what cost? At the cost of putting the ENTIRE portfolio at risk (one risk or the other; equity risk or interest rate risk). I am saying if you have set yourself a certain risk appetite, take ALL that risk on equity side, not on fixed income side.
And, for them to be equal, you had to use the endpoint of perhaps the worst drawdown of bond funds in history.
Statistics: Posted by Triple digit golfer — Sun Apr 21, 2024 5:25 pm — Replies 29 — Views 2380
