Author Topic: Sell Bond ETF. Buy Equity Index?  (Read 1097 times)

Ottawa

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Sell Bond ETF. Buy Equity Index?
« on: October 01, 2015, 12:25:02 PM »
Jeremy (GCC) makes a good case for going 100% equity, 0% bond. 

He lays out the data here: http://www.gocurrycracker.com/path-100-equities/, and;
Reiterates in a different format here: http://www.gocurrycracker.com/financial-independence-how-long-will-it-take/

We're currently 10% bond etf and 90% equity etfs and are considering going 100% equity. 

Jeremy mentions that back in 2008: "I do remember 2008 though.  The market dropped 25% and I put half of my cash and bonds into a stock index fund.  The market dropped another 25% and I went all in." in this post: http://www.gocurrycracker.com/exposure-therapy/.

We're not desperate to go 100% equities, however, if the right opportunity arose, why not take advantage?  Presently, equities are down over 10% from their heights.  Our short bond etf is down about 1% for the same period, for a 9% plus arbitrage opportunity.

Discuss...not necessarily the market timing aspect of when to convert...but more the notion of 100% equities...

LAGuy

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Re: Sell Bond ETF. Buy Equity Index?
« Reply #1 on: October 01, 2015, 01:58:29 PM »
Think it really depends on your risk aversion. I'm 100% stocks, and pretty much always have been as my time horizon is long. Historically that's been the right call. Except, umm, pretty much over the time period I've been investing since the late 90's, lol. Maybe it's finally flipped back in favor of stocks nearly 20 years later.

For me, it's hard to imagine funding a long retirement with a large slug of bonds in my portfolio. My attitude is basically, get rich with stocks or die trying. That said, once I do have enough to fund that long retirement, I do plan to allocate 30% or so to bonds. Right now I think the call to not own bonds is really easy. They're just too expensive and the yields are terrible. Yeah, I understand the idea is to protect some of your assets in the case of a market downfall, but I'd rather take that risk then essentially have a large amount of my portfolio that's going nowhere and never will go anywhere. If the Fed manages to get the funds rate up to 2%, I'll start thinking about some bonds assuming I can see about a 5% yield.

Keep in mind, this is just my own strategy. I've got a huge risk tolerance - after all, I've already rode two stock market busts all the way to the bottom. All stocks is most certainly not for the faint of heart.