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I’m gifting a Wall Street Journal article on the share of AI company debt in the bond market. Just as AI is becoming an ever-growing share of the S&P500, it is becoming a bigger share of the bond market. I have already shifted money from the S&P500 to the rest of the market, and to an international fund, now I’m wondering whether I should do the same for bonds.
Since my asset allocation is 50% stocks, I own a fair amount of bonds. Most of the money is in short and intermediate TIPs (VTAPX and VAIPX), and short and intermediate Treasuries (VFIRX and VSIGX), but some is in high-grade corporates (VFSUX and VFICX). Would you only hold Treasuries?
Kathy,
I really enjoyed this article and the discussion by everyone. Can you comment on your decision(s) for your mix of active and passive bond funds mentioned in the opening and in later comments? Thank you!
Buffett recommends 90% S&P and 10% in short term US Gov Bonds, when he dies for his wife. I modified slightly to 85% S&P and 15% cash at internet bank rates about 3.65% interest today, have had this goal for last 10 years or so. In my 60 years of investing I am 80 years old, the market was negative for me only 9 times. One time was close to a disaster as for three years in a row the market was down 45%, years 2000, 2001 and 2002. The savings grace, was I SOLD nothing. 3 to 4 years later I was back even and been increasing most years since. My 15% cash allows me to sell nothing until the market recovers. That is my comfort, and seems to work for me. $1 saved in 1966 has earned me $166! and that includes all the ups and downs over the years. Just do not like Bonds, as they never served me well.
Bill,
Can you describe your approach (time, source of funds strategy) to replenish /maintain your 15% cash allocation?
I agree, Kathy, the inflation info online does support 900% as you stated.
Is that adjusted for inflation? The internet tells me the cumulative inflation rate since 1966 is over 900%.