Excellent charts, thanks!Austen Heller wrote: I have been taking the alternative 'bullet' approach of putting my bond+cash holdings together into a much larger position of shorter-term Treasury bonds. The 5-year bonds give you decent yield (1.5%) plus weak deflation protection. You also get potential capital gains from 'riding the yield curve', since the yield curve is steep here; this is something you don't get from the 30-year bond, since the yield curve is pretty much flat there. Of course, the yield curve is not static, so it's hard to make long-term investment decisions based on it's current shape.
I have done similar with my duration risk because I'm looking at it from a long-term risk vs reward perspective (and because trendfollowing didn't work during the bear market). But the problem with this approach is you lose the hedging potential. If I recall, T-Bonds were up about 22% last year even though equities didn't correct. If they had and you had a much lower duration, you would have taken on portfolio losses that the HBPP would have not. This is a source of concern to me because I have certain Prosperity exposures that are not immediately liquid to sell in terms of negative trendfollowing (which also has its own emotional pitfalls just as buy and hold does).
Of course, the answer just came to me... you definitely need to risk level the PP if you're going to lower the duration. Fortunately, volatility seems to correspond to duration very well.