[Barrera]

The trick is the to get those inflation-adjusted returns you need 100% time exposure. No selling because circumstances force you to. No selling because you get spooked at a 50% drawdown. Not many people can tolerate even a 20% hit, which explains a lot about the situation the world economy finds itself in.

[smt88]

> No selling because you get spooked at a 50% drawdown.

This is common-sense trading advice anyway. If short-term losses spook you into selling, you're probably doing too much stock-picking and are not long enough.

In fact, this is the often-cited reason that active investors can't beat index funds consistently.

[TheFreim]

This is why I don't follow how my portfolio is doing, knowing doesn't give me much actual information and can often encourage bad behavior (admittedly I don't have many investments compared to many).

[s1artibartfast]

My philosophy is essentially buy low, hold forever.

I don't put money that I might realistically need in the market

[deathanatos]

I mean… that defeats the point, no? Surely you must plan to use the money at some point, even if that is just enjoying the end of your days. That's still a time horizon.

> I don't put money that I might realistically need in the market

While it's great that you might have a time horizon far, far into the future, not everyone has that luxury. In theory, I'm supposed to purchase a home & start a family around this point in my life, so that's a rather quick time horizon for at least some portion of my wealth.

[s1artibartfast]

I think you have a point. I should have been more clear. What I'm saying is I don't account for anticipated withdraw when investing. That's not to say I don't or won't do it, just that it's not a consideration when putting the money in.

I treat the question of if I can afford to take money out or if it is a good time to take money out as an entirely separate topic.

I found that trying to optimize investing and weigh risks for a short-term Horizon will drive you crazy.

[xeromal]

My strategy is to ignore it until about my late 40s early 50s and then start slowly cycling it over into more reasonable investments and bonds.

[SV_BubbleTime]

I'm with you.

I consider this an area where the burden of knowledge will hit you pretty hard. Time suck along with stress, and performing at best case a few percent over an automated "MODERATE RISK" button.

I don't have any more time in my life to track anything with the degree that it would take to "be good" at it.

[compumike]

You're right, and the conventional advice has been to have a mix of stocks and bonds, with bonds to reduce volatility and preserve some of the wealth that you might need to access in the shorter term. However, what's unusual about the past few months is that bonds have been getting whacked too!

Here's a comparison of four Vanguard funds, with stock:bond ratios of 80:20, 60:40, 40:60, 20:80 respectively: https://totalrealreturns.com/s/VASGX,VSMGX,VSCGX,VASIX What I find interesting is that they are all experiencing significant and comparable drawdowns right now.

Here are treasury bonds with a comparison between duration: https://totalrealreturns.com/s/VFISX,VFITX,VUSTX

And here are corporate bonds with a comparison between duration: https://totalrealreturns.com/s/VFSTX,VFICX,VWESX

Even inflation-protected bonds (TIPS) are in trouble: https://totalrealreturns.com/s/VIPSX

So right now, bonds are not doing much to provide the short-term real wealth preservation that lets people take the 100% time exposure risk.

[wing-_-nuts]

I'm of the old school bogleheads mentality. I've typically been ageInBonds since I started investing after the great recession. While I expect poor stock performance, I am pretty shook by the poor returns on bonds. I accepted years of poor performance with the expectation that they would cushion the blow during the next recession, and they have done nothing.

I don't know how long, or how bad this recession will be, but I will likely be much less willing to hold bonds going forward.

[icu]

Sorry for your investment woes.

I think part of the problem is established dogma (and regulatory regime) that believes bonds offer diversification from stocks. However this seems to have broken down post 2008, as they have become increasingly correlated.

Imho it's healthy to expect that market regimes change, especially since we do not operate in free market, but a semi-intervined market (where the Fed sets the price of money which is an incredibly important input to the global economy).

I also think it's important to not think of diversification in terms of asset classes anymore, but in terms of alpha source.

I know this is much harder to do because, as far as I know, only by actively trading can you isolate and quantify alpha sources like this.

[tunesmith]

Bond funds are different than bonds. With bonds, you can hold them to maturity and not get whacked.

[jlawson]

You can hold bond funds to the maturity date of the underlying bonds and get the same result (minus fees).

But in either case, you still get whacked with inflation, which would show up on this chart as a drop.

[sicp-enjoyer]

At an individual bonds maturity I get the full principal back. How do I do that principal back from a bond fund if the value has dropped due to the macro environment?

[jlawson]

The value will have dropped, but the distributions/dividends you got in the meantime will have made up the difference. The fund and its underlying holdings must end up even in the end (minus fees).

[paulmd]

Bonds have been the only thing backstopping my 401k from taking the bigger hit that equities have taken, the Vanguard 500 portion itself is down 21% or something and total I'm still down 16% or something like that YTD.

I'm guessing it's the "real returns with investment" that is painful here... bonds may not be losing (as) much but they're also not keeping pace with 10-15% annualized inflation either.

Due to the way energy prices (which are a massive component of everything else too) are factored out of CPI, even TIPS probably has negative real returns at this point compared to reality. Is there a non-CPI TIPS equivalent, lol?