PE and Shiller CAPE can be off by years. Why would you rely on them to make investment decisions? In 2012, Professor Shiller argued that a CAPE above 20 supported investing in emerging markets for the next decade. By 2022, the S&P 500 made 5+ time more than EEM. A few years later, Bogle also projected anemic returns for US stocks. Those forecasts didn't turn out as expected. “Set an asset allocation target.” BND, the total US bond market ETF, delivered relatively low returns over certain 10- and 15-year periods, with inflation eroding purchasing power. How could investors confidently rely on the index as a buy-and-hold investment without considering interest-rate risk, inflation, and their actual retirement needs? “Track your income, expenses, assets, and liabilities.” Tracking everything doesn't guarantee better investment decisions. After more than 35 years working in IT, I never needed to track everything manually. My banks and brokerages already provide most of the information I need.
My approach is simpler: use 3–5 funds, follow 2–3 key indexes, and rely on a combination of managed investments, market awareness, and common sense. You don't need dozens of metrics, but you do need to understand what's happening in the markets rather than blindly following experts.
Buy and hold can also be detriment. During 01/2000 to 01/2010, the SP500 lost money for 10 years. I invested mostly in Value, small cap, and international. In retirement, risk-adjusted returns matter much more than performance alone. Consider early 2022: inflation was surging, supply chains were under severe pressure, war had broken out in Europe, and the Fed repeatedly signaled aggressive rate hikes.
The risks were right in front of us. Why stay fully invested without reconsidering the situation? I sold everything.
I'm not saying anyone can predict every market move. My point is that understanding current market conditions can be more useful than relying on valuation metrics or long-term forecasts that may take years to play out.
2 easy questions
1) What is your portfolio size?
2) Do you have a pension? If you have a big portfolio...or...your pension+ SS cover all your needs, you can be in 100% stocks or bonds.
Adam,
You took a hypothetical situation and made it much more extreme by using assumptions that make your case look stronger.
Is 100% bonds better than 100% stocks? Of course not.
I’ve read and researched hundreds of articles and papers on retirement, and I haven’t found one that recommends a 100% stock allocation.
Here are several ideas I find particularly compelling:
The first 10 years, roughly ages 65–75, are the most crucial.
Use a Rising Equity Glide Path. For example, start with 50% equities at age 65 and increase the equity allocation by 1% each year. I think this is a good approach for managing the first 10 years of retirement.
Make withdrawals flexible based on portfolio performance. If the portfolio performs poorly, reduce withdrawals; if it performs well, you can increase them.
The more interesting question is whether 50% equities is better than 60–75%. 60-75% have a better chance to survive inflation and depletion. 50% could be a good choice for people who have pensions and prefer lower stress.
Was owning a bond index a great idea over the last 5, 10, or 15 years?Definitely not.
BND's annualized returns over those periods were only about -0.60%, 1.20%, and 1.76%, respectively. When the Fed announced in early 2022 that it would raise rates rapidly to fight inflation, why didn't you sell?If you knew rates were about to rise rapidly, why blindly hold a bond fund whose price is highly sensitive to rising rates? Is long-term-care insurance (LTC) a good deal?
For most, it's too expensive, and policies can come with numerous restrictions, exclusions, and loopholes. As usual, the answer depends :-)
Bonds are where I've made all my money since retirement. Most people think of bonds as their safety net. But over the last 5, 10, and 15 years, BND (the Vanguard total bond index) returned -0.5%, 1.3%, and 1.8% annually. You could have done a lot better.
Actually, BND didn't beat inflation. See https://schrts.co/ytfajysu My thinking changed in 2010, when I bought my first unconventional fund, PIMIX, and I never looked back. I realized there are funds and managers who can make good money with much lower volatility, which is just another way of saying a better Sharpe ratio. Add a basic understanding of how markets behave, and my system was born. It's no secret that rising rates demolish bond funds. So when inflation was running hot in early 2022 and Fed officials were openly saying they would raise rates, why were you still holding bond funds? It was the easiest time in years to be out of everything — and that's exactly what I did. The same logic applies elsewhere. Oil runs through the whole economy, from manufacturing to shipping, so when oil prices rise, inflation follows. When the Iran conflict began, wasn't it obvious oil would go up? Oil up, inflation up, rates up, bond funds down. Bogle and Buffett both preached owning just two or three funds. Buffett called diversification "protection against ignorance." I've followed that approach but have used unique bond funds. How it played out:
2010: PIMIX's risk/reward was unbelievable. Within two years it was 50% of my portfolio, and stayed there for years. It beat SPY in 2010, 2011, and 2012. https://schrts.co/TcufUNjd
2010–2018: Shifted steadily out of stocks and into bonds, until I was almost entirely in bond funds.
Jan–Nov 2022: Sat in money market, per the reasoning above.
2023–24: Bought CLOs for the first time in my life (CLOZ, HOSIX). The risk-adjusted returns made 10%+ annually an easy call. chart
April 2025: First time I've ever invested heavily in emerging market bonds, based on how they'd performed. I waited several weeks after Trump's sweeping tariff announcement. chart
The point isn't the specific funds. It's that flexibility and looking at the big picture beat holding a bond index and calling it safety.
There are really only two meaningful measures of investment success: TR(total return) and risk-adjusted return. TR includes everything (distributions too), income doesn't.
Yet there is a group of investors who are obsessed with income. Historically, income was a reasonable measure of a successful blue-chip company, particularly before the 1970s. A company that could consistently pay and grow its dividend demonstrated that it was profitable and generating real cash.
Then came the tech revolution.
Many of these companies chose to reinvest their cash in R&D, acquisitions, and buybacks rather than pay large dividends. Some paid very little or no dividend at all.
And what happened? The performance of the technology sector left many of the traditional high-income companies in the dust. Yet some investors are still drinking the income Kool-Aid, focusing on how much a company pays out rather than how much wealth it actually creates.
To me, the logical approach is simple: first look for the best total return or risk-adjusted return. Then, and only then, consider income. If a high-income investment also delivers great performance, that's a bonus. But income by itself is not a measure of investment success.
Or...
Just invest in the S&P 500 and forget about the rest.
The S&P 500 is one of the best momentum-driven indexes ever created. Ultimately, it is driven by market capitalization, which is based on stock prices. And price is the market's ultimate measure of success, regardless of what anyone says.
The higher a company's stock price goes, the larger its market capitalization becomes—and therefore, the larger its representation in the index.
You don't have to predict which companies will win. The index automatically gives more weight to the winners and less weight to the losers.
So why even try to outsmart it?
Comparison has made my life—and later, my wife’s life—much better.
I grew up in a below-average household. Whenever I thought I was poor, all I had to do was ride my bike to a poorer neighborhood. That quickly put things into perspective.
Decades later, when our portfolio had grown substantially, we still never paid much attention to keeping up with the Joneses. We always lived below our means and focused on what actually mattered to us rather than comparing ourselves with others.
Over the last several years, though, we’ve started spending a lot more. We’ve reached a point where there’s little reason to be conservative. We can’t take it with us, and our kids will still inherit plenty.
For us, comparison helped put life in perspective early on—and eventually, it also taught us when it was okay to enjoy what we had built.
My portfolio has been invested in bond OEFs since I retired in 2018.
So how did I make 11.7% annually using only bonds?
I ignored traditional bond investing and focused instead on great bond funds based on market conditions.
I have never owned individual Treasuries, CDs, or high-rated, traditional bond funds. Think BND, DODIX, etc.
I also own only 2–3 funds. I don’t diversify for the sake of diversification. As Buffett said, “Diversification is protection against ignorance.”
Another key is timing and switching several times per year. I'm a slow trader.
I look for unique market conditions and act (sell everything) when the opportunity is obvious. 2020: COVID crash. 2022: The Fed explicitly promised to raise rates rapidly. Yes, it can be done.
You don’t need to trade constantly. You need to recognize exceptional opportunities when they appear—and have the conviction to act.
Examples:
2023-4: For the first time in my life I noticed that CLO are doing great with very low SD=volatility. I loaded. See a chart https://schrts.co/wkqVVmup
2023-6: EGRIX. See the chart https://schrts.co/ZKDQzGCb
Sure, if you can stay invested in 100% stocks, you will likely earn excellent long-term returns. But most people can’t and shouldn’t do it.
I know an MD who kept 90% of his portfolio in stocks throughout his entire life. At one point during retirement, he had $10 million and lost $3 million in a market downturn. He didn’t care. He had more than enough money and was comfortable with the risk.
That’s the key point: the right level of risk depends on how much money you have and how much you need—not just on expected returns. Most workers don't have a pension, a large inheritance, a stable high-paying job for decades, or millions already saved. They simply can't afford the risk of a major market decline when they approach retirement.
When I retired, my portfolio was more than 25 times our annual expenses. Based on our spending and assets, we should have no problem funding our lifestyle through age 100. So why in the world would I risk that security by going 100% stocks? For me, the goal isn't to maximize returns. It's to have more than enough money while taking as little risk as necessary. BTW, I still manage to make 11.7% annually since 2018 using 95% in bond OEFs and hardly losing from any last top.
Fortunately, I know several successful investors personally.
We’re a group of slow traders who invest in what is currently working and select funds—not individual stocks—with strong risk-adjusted performance. We’ve been doing this for more than 20 years. We don’t use leverage, and we’re slow traders.
Sure, buy and hold is a perfectly reasonable strategy. But here’s the question: What funds—no annuities or other insurance products—would you use for a retiree who wants to earn an average of 9-10% annually while never losing more than 10% from any last top? You can’t do it with buy-and-hold. There is no fund or conventional portfolio that can reliably deliver that combination of return and downside protection. If you want both, you need to be willing to adapt.
Comments
PE and Shiller CAPE can be off by years. Why would you rely on them to make investment decisions? In 2012, Professor Shiller argued that a CAPE above 20 supported investing in emerging markets for the next decade. By 2022, the S&P 500 made 5+ time more than EEM. A few years later, Bogle also projected anemic returns for US stocks. Those forecasts didn't turn out as expected. “Set an asset allocation target.” BND, the total US bond market ETF, delivered relatively low returns over certain 10- and 15-year periods, with inflation eroding purchasing power. How could investors confidently rely on the index as a buy-and-hold investment without considering interest-rate risk, inflation, and their actual retirement needs? “Track your income, expenses, assets, and liabilities.” Tracking everything doesn't guarantee better investment decisions. After more than 35 years working in IT, I never needed to track everything manually. My banks and brokerages already provide most of the information I need. My approach is simpler: use 3–5 funds, follow 2–3 key indexes, and rely on a combination of managed investments, market awareness, and common sense. You don't need dozens of metrics, but you do need to understand what's happening in the markets rather than blindly following experts. Buy and hold can also be detriment. During 01/2000 to 01/2010, the SP500 lost money for 10 years. I invested mostly in Value, small cap, and international. In retirement, risk-adjusted returns matter much more than performance alone. Consider early 2022: inflation was surging, supply chains were under severe pressure, war had broken out in Europe, and the Fed repeatedly signaled aggressive rate hikes. The risks were right in front of us. Why stay fully invested without reconsidering the situation? I sold everything. I'm not saying anyone can predict every market move. My point is that understanding current market conditions can be more useful than relying on valuation metrics or long-term forecasts that may take years to play out.
Post: Market Risks
Link to comment from October 10, 2026
2 easy questions 1) What is your portfolio size? 2) Do you have a pension? If you have a big portfolio...or...your pension+ SS cover all your needs, you can be in 100% stocks or bonds.
Post: Why Bonds Matter
Link to comment from October 3, 2026
Adam, You took a hypothetical situation and made it much more extreme by using assumptions that make your case look stronger. Is 100% bonds better than 100% stocks? Of course not. I’ve read and researched hundreds of articles and papers on retirement, and I haven’t found one that recommends a 100% stock allocation. Here are several ideas I find particularly compelling:
- The first 10 years, roughly ages 65–75, are the most crucial.
- Use a Rising Equity Glide Path. For example, start with 50% equities at age 65 and increase the equity allocation by 1% each year. I think this is a good approach for managing the first 10 years of retirement.
- Make withdrawals flexible based on portfolio performance. If the portfolio performs poorly, reduce withdrawals; if it performs well, you can increase them.
- The more interesting question is whether 50% equities is better than 60–75%. 60-75% have a better chance to survive inflation and depletion. 50% could be a good choice for people who have pensions and prefer lower stress.
Flexibility is always recommended.Post: Why Bonds Matter
Link to comment from October 3, 2026
Was owning a bond index a great idea over the last 5, 10, or 15 years?Definitely not. BND's annualized returns over those periods were only about -0.60%, 1.20%, and 1.76%, respectively. When the Fed announced in early 2022 that it would raise rates rapidly to fight inflation, why didn't you sell?If you knew rates were about to rise rapidly, why blindly hold a bond fund whose price is highly sensitive to rising rates? Is long-term-care insurance (LTC) a good deal? For most, it's too expensive, and policies can come with numerous restrictions, exclusions, and loopholes. As usual, the answer depends :-)
Post: Financial Lessons
Link to comment from September 28, 2026
Bonds are where I've made all my money since retirement. Most people think of bonds as their safety net. But over the last 5, 10, and 15 years, BND (the Vanguard total bond index) returned -0.5%, 1.3%, and 1.8% annually. You could have done a lot better. Actually, BND didn't beat inflation. See https://schrts.co/ytfajysu My thinking changed in 2010, when I bought my first unconventional fund, PIMIX, and I never looked back. I realized there are funds and managers who can make good money with much lower volatility, which is just another way of saying a better Sharpe ratio. Add a basic understanding of how markets behave, and my system was born. It's no secret that rising rates demolish bond funds. So when inflation was running hot in early 2022 and Fed officials were openly saying they would raise rates, why were you still holding bond funds? It was the easiest time in years to be out of everything — and that's exactly what I did. The same logic applies elsewhere. Oil runs through the whole economy, from manufacturing to shipping, so when oil prices rise, inflation follows. When the Iran conflict began, wasn't it obvious oil would go up? Oil up, inflation up, rates up, bond funds down. Bogle and Buffett both preached owning just two or three funds. Buffett called diversification "protection against ignorance." I've followed that approach but have used unique bond funds. How it played out:
- 2010: PIMIX's risk/reward was unbelievable. Within two years it was 50% of my portfolio, and stayed there for years. It beat SPY in 2010, 2011, and 2012. https://schrts.co/TcufUNjd
- 2010–2018: Shifted steadily out of stocks and into bonds, until I was almost entirely in bond funds.
- Jan–Nov 2022: Sat in money market, per the reasoning above.
- 2023–24: Bought CLOs for the first time in my life (CLOZ, HOSIX). The risk-adjusted returns made 10%+ annually an easy call. chart
- April 2025: First time I've ever invested heavily in emerging market bonds, based on how they'd performed. I waited several weeks after Trump's sweeping tariff announcement. chart
The point isn't the specific funds. It's that flexibility and looking at the big picture beat holding a bond index and calling it safety.Post: Structuring Bonds
Link to comment from September 19, 2026
There are really only two meaningful measures of investment success: TR(total return) and risk-adjusted return. TR includes everything (distributions too), income doesn't. Yet there is a group of investors who are obsessed with income. Historically, income was a reasonable measure of a successful blue-chip company, particularly before the 1970s. A company that could consistently pay and grow its dividend demonstrated that it was profitable and generating real cash. Then came the tech revolution. Many of these companies chose to reinvest their cash in R&D, acquisitions, and buybacks rather than pay large dividends. Some paid very little or no dividend at all. And what happened? The performance of the technology sector left many of the traditional high-income companies in the dust. Yet some investors are still drinking the income Kool-Aid, focusing on how much a company pays out rather than how much wealth it actually creates. To me, the logical approach is simple: first look for the best total return or risk-adjusted return. Then, and only then, consider income. If a high-income investment also delivers great performance, that's a bonus. But income by itself is not a measure of investment success. Or... Just invest in the S&P 500 and forget about the rest. The S&P 500 is one of the best momentum-driven indexes ever created. Ultimately, it is driven by market capitalization, which is based on stock prices. And price is the market's ultimate measure of success, regardless of what anyone says. The higher a company's stock price goes, the larger its market capitalization becomes—and therefore, the larger its representation in the index. You don't have to predict which companies will win. The index automatically gives more weight to the winners and less weight to the losers. So why even try to outsmart it?
Post: I will still take the dividends
Link to comment from September 13, 2026
Comparison has made my life—and later, my wife’s life—much better. I grew up in a below-average household. Whenever I thought I was poor, all I had to do was ride my bike to a poorer neighborhood. That quickly put things into perspective. Decades later, when our portfolio had grown substantially, we still never paid much attention to keeping up with the Joneses. We always lived below our means and focused on what actually mattered to us rather than comparing ourselves with others. Over the last several years, though, we’ve started spending a lot more. We’ve reached a point where there’s little reason to be conservative. We can’t take it with us, and our kids will still inherit plenty. For us, comparison helped put life in perspective early on—and eventually, it also taught us when it was okay to enjoy what we had built.
Post: The Economy of Expectations
Link to comment from September 7, 2026
My portfolio has been invested in bond OEFs since I retired in 2018. So how did I make 11.7% annually using only bonds?
- I ignored traditional bond investing and focused instead on great bond funds based on market conditions.
- I have never owned individual Treasuries, CDs, or high-rated, traditional bond funds. Think BND, DODIX, etc.
- I also own only 2–3 funds. I don’t diversify for the sake of diversification. As Buffett said, “Diversification is protection against ignorance.”
- Another key is timing and switching several times per year. I'm a slow trader.
- I look for unique market conditions and act (sell everything) when the opportunity is obvious. 2020: COVID crash. 2022: The Fed explicitly promised to raise rates rapidly. Yes, it can be done.
- You don’t need to trade constantly. You need to recognize exceptional opportunities when they appear—and have the conviction to act.
Examples: 2023-4: For the first time in my life I noticed that CLO are doing great with very low SD=volatility. I loaded. See a chart https://schrts.co/wkqVVmup 2023-6: EGRIX. See the chart https://schrts.co/ZKDQzGCbPost: Inflation Hedge
Link to comment from August 29, 2026
Sure, if you can stay invested in 100% stocks, you will likely earn excellent long-term returns. But most people can’t and shouldn’t do it. I know an MD who kept 90% of his portfolio in stocks throughout his entire life. At one point during retirement, he had $10 million and lost $3 million in a market downturn. He didn’t care. He had more than enough money and was comfortable with the risk. That’s the key point: the right level of risk depends on how much money you have and how much you need—not just on expected returns. Most workers don't have a pension, a large inheritance, a stable high-paying job for decades, or millions already saved. They simply can't afford the risk of a major market decline when they approach retirement. When I retired, my portfolio was more than 25 times our annual expenses. Based on our spending and assets, we should have no problem funding our lifestyle through age 100. So why in the world would I risk that security by going 100% stocks? For me, the goal isn't to maximize returns. It's to have more than enough money while taking as little risk as necessary. BTW, I still manage to make 11.7% annually since 2018 using 95% in bond OEFs and hardly losing from any last top.
Post: Risk Management
Link to comment from August 17, 2026
Fortunately, I know several successful investors personally. We’re a group of slow traders who invest in what is currently working and select funds—not individual stocks—with strong risk-adjusted performance. We’ve been doing this for more than 20 years. We don’t use leverage, and we’re slow traders. Sure, buy and hold is a perfectly reasonable strategy. But here’s the question: What funds—no annuities or other insurance products—would you use for a retiree who wants to earn an average of 9-10% annually while never losing more than 10% from any last top? You can’t do it with buy-and-hold. There is no fund or conventional portfolio that can reliably deliver that combination of return and downside protection. If you want both, you need to be willing to adapt.
Post: Risk Management
Link to comment from August 16, 2026