Phrases like "the current environment" are invitations to market timing, no matter how they are phrased.
In the long term, one would continue to expect that core bond funds (intermediate-term) would have more risk and more return than money market funds. The risk/return relationship is unlikely to be as favorable as it was from, say, 1990-2020, but it should still hold. And it should continue to be the case that adding bonds to a stock portfolio will not add quite as much risk as you would expect from the risk of bonds by themselves--on their own--not a dramatic or terribly important effect, but it should still be there.
I suggest that you look carefully at the long-term past relationships, decide what you personally want to assume for the long-term future, choose a stock/bond/cash allocation, and then stick to it, ignoring the succession of short-term "environments."
Right now, of course, cashlike assets are doing really well, to the point where it is easy to ask why hold anything with a longer duration. The problem of course is detecting when that relationship has changed and when to change your portfolio. The obvious suggestion is not to have 100% stocks or 100% bonds in your non-stock holdings. Maybe go back to what used to be the default portfolio, stocks and bonds and cash within the retirement savings portfolio.
In the long term, one would continue to expect that core bond funds (intermediate-term) would have more risk and more return than money market funds. The risk/return relationship is unlikely to be as favorable as it was from, say, 1990-2020, but it should still hold. And it should continue to be the case that adding bonds to a stock portfolio will not add quite as much risk as you would expect from the risk of bonds by themselves--on their own--not a dramatic or terribly important effect, but it should still be there.
I suggest that you look carefully at the long-term past relationships, decide what you personally want to assume for the long-term future, choose a stock/bond/cash allocation, and then stick to it, ignoring the succession of short-term "environments."
Right now, of course, cashlike assets are doing really well, to the point where it is easy to ask why hold anything with a longer duration. The problem of course is detecting when that relationship has changed and when to change your portfolio. The obvious suggestion is not to have 100% stocks or 100% bonds in your non-stock holdings. Maybe go back to what used to be the default portfolio, stocks and bonds and cash within the retirement savings portfolio.
Statistics: Posted by nisiprius — Sat Jun 29, 2024 11:15 am