Gyroscopic Investing

I posted the following chart over on Bogleheads in response to a young investors question about why he should have any bonds in his portfolio instead of 100% stock. I got my figures from the peaktotrough website (http://www.peaktotrough.com/hbpp.cgi), so I hope they are accurate.

For the Golden Butterfly, I had to just go with 40% stock because it doesn't have an option for small cap value vs large blend.

The results are for starting capital of $10,000 starting in Jan 1, 2006 through today, so about 10.5 years. Rebalance Annually, Reinvest all Dividends.



I think I answered the question about why bonds. I wasn't trying to make a point about the PP as that never goes well over there but I included the Max-Drawdown figure just in case anyone was interested. That's basically why I use the PP instead of 60/40. I'm retiring next year and I don't want to see my retirement plans go up in smoke.

curlew wrote:I think I answered the question about why bonds. I wasn't trying to make a point about the PP as that never goes well over there but I included the Max-Drawdown figure just in case anyone was interested. That's basically why I use the PP instead of 60/40. I'm retiring next year and I don't want to see my retirement plans go up in smoke.

That's just leading the lambs to slaughter. Before the mid-90's, the bonds didn't did much to hedge a stock portfolio. Hence, you need gold.