Q: Would you recommend anything different for our 60% in Vanguard? Seems lots of advice, including from Pimco, to get out of bonds. I’ve been following your diversified Vanguard portfolio at 60/40 for some years. Do you see the coming downturn as any more significant? Would you recommend anything different for our 60%?
A: I always assume the market is going to do something horrible. That is the nature of the market. Every 5 years, on average, the S&P 500 falls about 30%. My own portfolio is built to lose less than that because I am 50% in bond funds. Yours will lose more than mine because you are 60% in equities. But yours will probably make more than mine over time. You can either listen to others, and use that information to become a market timer or be a buy and holder, ready, at all times for a major market decline. Of course when people fear the market is about to tank, and they should get out and don’t, they vow not to let that happen again. It’s a trap! Maybe you should have more fixed income in your portfolio, not just for the present, but for the long term.