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Author: putnid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 18390  
Subject: Re: Fixed-income Value Investing Date: 12/4/2012 8:27 PM
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Both Charlie and kelbon make good points. There's a reason why the bond market is more than twice the size of the stock market. Bonds are great for those who already have money and opt to favor security over risk. I get that.

On the other hand, those of us who start out with nothing must necessarily take risks to build an estate. "Nothing ventured, nothing gained" and all that. Given that I started with nothing, I'm grateful for the financial freedom I was able to secure via equities investing.

Charlie and kelbon are also both correct regarding the appropriate strategies at different points in time. Yeppers, we would have ALL been better served had we sold all stocks in late 1999 and bought bonds instead. That was a smart move, a very smart move. Kinda wish I had done that, too. I didn't. But I survived the resulting bloodbath by swing-trading a bit and collecting dividends while I waited for the stock market to recover. In the end, it worked out OK.

Here I sit with a portfolio that funds my retirement. In another time, under different market conditions, I'd be tempted to allocate a goodly portion of my portfolio into bonds. I won't be doing that because this is the time when kelbon is right on target. Bonds have had a great run for almost two decades. That run is just about over (at least here in the US). I now receive far more in dividends from my stocks than I could by investing in treasuries. Globally, human enterprise is steadily growing, generating increasing wealth for those willing to invest in human enterprise. I realize the inherent risks. I recognize the opportunities. I'm opting to pass on bond yields that can't even keep up with inflation in favor of investments in growing companies.

It really does boil down to an individual's risk tolerance and investment objectives.
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