Barbell and Bullet

[stuper1]

I see a lot of discussion on here about barbells versus bullets for cash/bonds.  I'm wondering whether there would be any benefit to having both.  Here's an idea:

25% stocks
24% gold
17% 30-year Treasuries
17% 5/7-year Treasuries
17% T-bills
Rebalance annually

What would be the pros/cons of this portfolio versus the standard PP?

Thanks!

[craigr]

Simpler works best. A barbell is simple. Every time you add a new asset, you introduce a new decision point to question each year and you also are adding new expenses in trading costs, etc.

If someone stated that they could replace the short/long barbell with a single intermediate term treasury bond fund I wouldn't have a strong argument why it's a bad idea. If the durations were around the same in the intermediate fund you could even say it simplifies things even more by going from four asset classes down to three.

However, I personally like having cash in my portfolio for rebalancing, buffering market volatility, emergencies, and living expenses (if retired). The barbell works well in that regard because I have this really stable component (cash) and this really volatile component (long bonds) isolated from each other.

[melveyr]

I feel similarly to Craig. It is really important to emphasize that the bullet vs. barbell is such a minor nuance without an unambiguously right answer. Just do whatever is simplest for your situation.

For example, in my IRA I find that the barbell is simpler for me to implement, and it is kind of nice to hold three volatile asset classes with equal weight and have them balance each other out (stocks, LTT, gold).

However, ones 401k is not likely to have a LTT option, and so you can use an intermediate fund with a higher weighting versus the other asset classes. In most 401k plans the bullet portfolio (probably using total bond market, even though its not ideal!) is the simpler course.

[Austen Heller]

The Barbell or The Bullet - wasn't that the name of a speech by Malcolm X?

"If we don't do something real soon, I think you'll have to agree that we're going to be forced either to use the barbell or the bullet. It's one or the other in 1964. It isn't that time is running out -- time has run out!"

Or was it a song by Van Halen:

"The barbell or the bullet
The choice is up to you
The barbell or the bullet
Tell me what you gonna do
The sword or the pen
Can be held by the same hand"