No. of Recommendations: 3
"Bonds only outperform stocks during a recession. It's purely downside protection. Since the great depression, our recessions typically last less than 3 years each. So instead of saying "bonds should be 30% of your portfolio" you SHOULD say "bonds should cover my expenses during a recessionary period"."

Actually, NO

The SWR studies were based upon you REBALANCING every year.

If you had a 90% drop in the stock market, after year 1, you would move a LOT of bond money into the stock market to get back to your allocation (50/50 or 70/30).

As your stocks rise, hopefully, you would once again move money back to bonds.

Now think about this.

Let's say you have $1,000,000.

Then 1929 hits with a 90% drop in the DOW in 3 years. You'd be moving oddles of money from bonds to buy really cheap stocks.......... then, as the market recovered, you'd move money back.. It turns out in 1929, it plummeted even more over 2 years to the low in 1932.....then slowly recovered taking till 1955 (inflation adjusted) to get back to the same level. Along the way, you would have been collecting bond interest and stock dividends.

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