Awful CD rates these days...

I could live with this.

-HW "Skip" Weldon Columbia, SC

You are piggybacking onto a discussion of Scott Burns's couch potato portfolio, which proposes a large allocation to a bond fund. To be clear, the bond fund Burns means is investment grade; no junk. Online portfolio allocation tools also typically mean non-junk bonds.

snip

ISTM non-financials woes reflect the lower demand of this somewhat sunk economy. This is reasonable. I do not see the duplicity in non- financials and do not think it is fair to lump them with financials when it comes to pointing a finger at who was untrustworthy, dishonest or inept.

So I cannot buy their stock,

So where are you investing in the meantime? How will you know trust has returned?

Thanks, Doug

Mostly in cash, small GLD position.

When I see that the government has stopped giving taxpayer money and granting more power to people to who us into this mess. In other words, not any time soon.

Anoop

Maybe he will invest when prices of those assets become expensive again?

As Warren Buffett said, you pay a high price for a cheery consensus.

This was March of this year, when fear and doom was the prevalent emotion of the day.

Under those circumstances, I decided that junk bonds were finally priced sufficiently attractively. (yields and discounts, also looked good on paper).

That was the basis of my decision.

I would never accept any asset allocation advice or calculator, that would not have current asset prices as the cornerstone of making allocation decisions. Example of such advice that I would never accept, would be "stock allocation should be 100-your age percents". I feel perfectly fine not owning any stocks, if they are not priced at a level where earnings yield compensates the risk of owning them.

I thought that the S&P 500 was a flat liner index for the past decade ? which I guess you can use for comparisons, but certainly not a growth indicator..

VBINX is a 60/40 blend of a total stock market index (the MSCI US Broad Index which represents 99.5% of the total market capitalization of all the US common stocks regularly traded on the NYSE, AMEX and Nasdaq - ie. a much broader index than the S&P 500, and includes mid and small caps), and a total investment-grade bond index (the Lehman Agg, which includes treasuries, agencies and investment-grade corporates).

any difference between putting $ into the separate VBMFX & VTSMX vs just the single VBINX ?

or - I guess, the single VBINX vs the 3 or 6 "lazy portfolio" funds.

Ya - a couple of differences. Even if you go 60/40 same as the balanced fund, you can do something the balanced fund doesn't - rebalance with longer periods. That lets you capture a little more of the buy-high-sell-low. You can also manage your tax effects better - if it's a taxable account, for example, you could use muni bonds instead of the Agg.

However, by going with an index-fund based portfolio where you build it out of various single-asset-class funds, you can overweight or underweight certain asset classes, take advantage or putting some of them into IRAs and others in taxable accounts, and get broader exposure (ie. the global markets) if you like, too. Moreover, there may be reason to look at other kinds of fixed income besides just the Agg even in IRAs. A nice chunk of TIPS might be a very good thing, for example.

I've captured quite a bit of that recently.

-- Doug