Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

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boomer543
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Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by boomer543 »

I have Vanguard PAS with the Fixed Income Positions including Vanguard Total Bond ETF and Vanguard International Bond ETF. Combined their duration is over 7.5 years. After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by secondopinion »

boomer543 wrote: Sat May 14, 2022 9:12 pm I have Vanguard PAS with the Fixed Income Positions including Vanguard Total Bond ETF and Vanguard International Bond ETF. Combined their duration is over 7.5 years. After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
Either the bonds are for the investment timeframe or they are not; in the context of duration matching, this downturn should mean nothing to the selection. For those not doing so, then it is a different question. I keep a higher bond convexity rather than trying to cut/increase durations of my bonds by predictions. That way, I do not need to be guessing.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by afatcat »

I've been holding some short term index (BSV) with BND, which has helped some with the downturn. I intend to get back to all BND at some point. When to move back is a tough question.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by vineviz »

boomer543 wrote: Sat May 14, 2022 9:12 pm I have Vanguard PAS with the Fixed Income Positions including Vanguard Total Bond ETF and Vanguard International Bond ETF. Combined their duration is over 7.5 years. After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
Charlatans and gurus have been spouting market timing nonsense like this for as long as bonds have existed.

If you didn’t buy bitcoin because Jim Cramer suggested it, don’t tweak your bond allocation just because someone suggested it.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by feh »

boomer543 wrote: Sat May 14, 2022 9:12 pmScott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise.
Would've been good advice 6-9 months ago. Probably not so good today.

If you don't need the money for years, I suggest doing nothing.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by KlangFool »

OP,

No. I would let the "expert" do the market timing game. I know that I know nothing.

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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by nisiprius »

Short answer: no. No changes at all within the last twelve months.

I don't believe it would have been foolish to liquidate some Total Bond and buy some comparison-shopped five-year bank CDs or something like that, but I don't think it's sure-thing-superior... and it would add additional institutions and accounts to keep track of and I'm very averse to doing that.

But let me be punctiliously truthful. Over the past five years or so I've gradually exchanged Total Bond for VAIPX, the TIPS fund. In 2012 my marketable bond holdings were 47% TIPS, 53% Total Bond. Currently, 68% TIPS, 32% Total Bond.

But that's misleading, because I also have a significant holding in I bonds. A few years ago I foolishly ditched all our electronic I bonds because of various concerns with Treasury Direct; that amounted to about 20% of our I bond holdings. So to some extent the shift to TIPS was to make up for shedding I bonds.

In 2012, I held 61% TIPS-plus-I-bonds, 39% nominal. Currently, 73% TIPS-plus-I bonds, 27% nominal.

A gradual move, not sudden.
Last edited by nisiprius on Sun May 15, 2022 11:37 am, edited 2 times in total.
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boomer543
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by boomer543 »

Thank you for your reply. Fortunately, many moons ago my wife and I bought the max in I bonds for a number of years. Now they are the best performing part of our portfolio.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by boomer543 »

I appreciate so much all of your replies and thoughts. it helps me to hear other perspectives. Thank you all!
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by boomer543 »

I appreciate so much all of your replies and thoughts. it helps me to hear other perspectives. Thank you all!
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by nedsaid »

I did modest shifting within the bond portion of my portfolio, I went from 12% TIPS to 18% TIPS, but the shift was mostly from the Fidelity GNMA Fund. I didn't do any shifts from Total Bond Index funds or from so-called Core Bond Funds.

It is interesting that within my managed IRA account at American Century that they have reduced cash and bought shares of their Diversified Bond fund which is a Core Bond fund over the last two months. So they must think that it is a good time to be buying plain old nominal bonds, in other words they seem to believe that inflation has peaked.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by goingup »

It has been a bit unnerving to see intermediate term bond funds pullback so dramatically. We have 3 ST bond funds, in addition to IT funds. Also hold 2% of the portfolio in MM funds. We're retired and will be drawing down cash and bond funds for many years prior to SS. (9 years for me and at least 15 for spouse.)

I don't think it's unreasonable to hold either a ST bond fund and/or cash in addition to the Total Bond Fund. Some would say there is no need for the diversification, but I find it helpful. We have a 60/40 AA which can drift. It will likely get more equity heavy over time and that's OK.

Talk to your PAS about your concerns and see what he/she says. :beer
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by msj16 »

+1 to talking with your PAS. The Vanguard portfolio that was recommended to me years ago (when they did it for free) seemed to follow a cookie-cutter approach of total stock, total bond, international stock, international bond. I would explain your time horizon for needing the funds and ask whether the ship has sailed to move bond funds.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by secondopinion »

feh wrote: Sun May 15, 2022 6:44 am
boomer543 wrote: Sat May 14, 2022 9:12 pmScott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise.
Would've been good advice 6-9 months ago. Probably not so good today.

If you don't need the money for years, I suggest doing nothing.
It was more like 18-21 months ago. I sold all my bonds to either buy stocks or fund other fixed-income that I happened to secure a comparatively high rate with lower duration (yep, that 3% add-on CD I have mentioned over and over; oddly, it was meant as a hedge for my emergency fund against falling rates and not my investing portfolio). It was strategically very sound given the circumstances (earning a lot of the yield of even longer term bonds on a far shorter time span is too good to pass up; for shorter-term bonds, there was zero contest). Seeing that I have dodged a lot of grief, I am really not feeling the pain. As per my IPS have to return to my allocation once the CD matures (or break into it if yields skyrocket), but the one-off move apparently was double right and I was not meaning to do that; I was just securing my yield in a shorter timeframe.

Strange how life happens, and I never have listened to the "experts". My success is in my hands, and I have been pleased with the results time and time again. Being a speculator (not a market timer), I deviate when I press some advantage.

But yes, staying put is the best course of action otherwise.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by Chicagoprof »

I have a similar portfolio to yours (and am also enrolled with PAS). We are drawing some income from our investments now to make up for my wife's retirement and will increase the draw in around ~ 6-7 years when I am eyeing retirement. We are staying the course.
Last edited by Chicagoprof on Sun May 15, 2022 4:43 pm, edited 1 time in total.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by abuss368 »

I am staying the course and buying whatever is under target allocations. If that means Total Bond, I simply buy more.

Best.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by abuss368 »

boomer543 wrote: Sat May 14, 2022 9:12 pm I have Vanguard PAS with the Fixed Income Positions including Vanguard Total Bond ETF and Vanguard International Bond ETF. Combined their duration is over 7.5 years. After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
Vanguard has placed you in a simple a well diversified bond portfolio. I would stay the course.

Best.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by nisiprius »

The problem is that people have been saying to shorten up duration for over twenty years.

Interest rates only go up, why go intermediate in bonds?
Sun Jul 19, 2009 12:36 am

I see the total bond fund and intermediate treasuries recommended a lot on here. I know people don't like to market time but interest rates are currently zero and whether rates rise in 2010 or 2011 or 2015, eventually they will rise and intermediate term bonds will get hit.

So isn't it wise to go short in this environment where rates can only go up?
When people have been giving the same advice for twenty years, and when it is clear that acting on that advice in 2009 would have foregone quite a lot of return...


Source

Image

...the question comes, how do you time your market-timing? When is it time to stay the course and when is it time to time? When you have been getting the same advice for twenty years, how do you know when it is right and when it is wrong?

"Sure, the people saying to shorten duration have been wrong for twenty years, but they are right this time."
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by boomer543 »

msj16 wrote: Sun May 15, 2022 10:15 am +1 to talking with your PAS. The Vanguard portfolio that was recommended to me years ago (when they did it for free) seemed to follow a cookie-cutter approach of total stock, total bond, international stock, international bond. I would explain your time horizon for needing the funds and ask whether the ship has sailed to move bond funds.


Yes. The reason for my getting your and other Bogleheads's comments is that my PAS CFP has recommended some minor bond fund adjustments.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by boomer543 »

nisiprius wrote: Sun May 15, 2022 11:44 am The problem is that people have been saying to shorten up duration for over twenty years.

Interest rates only go up, why go intermediate in bonds?
Sun Jul 19, 2009 12:36 am

I see the total bond fund and intermediate treasuries recommended a lot on here. I know people don't like to market time but interest rates are currently zero and whether rates rise in 2010 or 2011 or 2015, eventually they will rise and intermediate term bonds will get hit.

So isn't it wise to go short in this environment where rates can only go up?
When people have been giving the same advice for twenty years, and when it is clear that acting on that advice in 2009 would have foregone quite a lot of return...


Source

Image

...the question comes, how do you time your market-timing? When is it time to stay the course and when is it time to time? When you have been getting the same advice for twenty years, how do you know when it is right and when it is wrong?

"Sure, the people saying to shorten duration have been wrong for twenty years, but they are right this time."
Wonderful advice and the perspective of "been there done that" history. Thank you!
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by 1moreyr »

I did some rebalancing,, moved total bond fund to total stock fund recently. I also bought bonds to replace the bond funds that exactly match my duration. I am recently retired now and making a bridge to SS.

I think it's more about a phase of my life... life timing vs market timing..... you can save /invest all you want when working. There is something (for me) about realizing all the money I have is all the money I have... When the marked tanked before I would say "im buying more shares!"

I am not panicking but must say......Now it feels different
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by DebiT »

1moreyr wrote: Sun May 15, 2022 7:13 pm I did some rebalancing,, moved total bond fund to total stock fund recently. I also bought bonds to replace the bond funds that exactly match my duration. I am recently retired now and making a bridge to SS.

I think it's more about a phase of my life... life timing vs market timing..... you can save /invest all you want when working. There is something (for me) about realizing all the money I have is all the money I have... When the marked tanked before I would say "im buying more shares!"

I am not panicking but must say......Now it feels different
It definitely feels different. I think we who just retired recently are getting to experience all the “things” — stocks down, bonds down, inflation, and oh, a plague! Very happy for the tools and discipline I have learned here. I started a thread asking more about this for my own purposes , and am coming to the the conclusion that I am just going to keep 2 years in cash, replenish it yearly, and call it good enough

If you’re interested in the feedback I’m getting, the thread is here.
viewtopic.php?t=377672
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by dboeger1 »

As far as I can tell, by the time I would think to change a bond position, it would already be too late. I didn't change a bond position per se, but I was looking to shift from roughly 100/0 to roughly 80/20 a few months back. I wasn't sure how to go about it, and my initial thought was to buy something like BND, but it just kind of worked out that I-bonds became really attractive around that time, and are one of the few investments that do lend themselves to a degree of timing because of their principal and backwards-looking inflation protection. I also like the simplicity of having 100% stocks in retirement accounts and letting them grow for many years to come. So I loaded up on I-bonds instead.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by BigJohn »

I use the IT Bond Index fund not Total Bond but close enough that I’ll give you my two cents. About 4-5 years ago I went 50/50 TIPS/nominal. While I’ve made no overt changes, there has been some “drift” for two reasons. First, the recent much higher returns of TIPS has increased their proportion. Second, as I’ve rebalance in the last few weeks from bonds to stocks, I did so by selling nominals not TIPS (a conscious decision on my part). Between the two effects, I know stand at 60/40. Going forward, I expect I’ll let this drift continue but with no intent/desire to purposefully rebalance to a different target.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by Parkinglotracer »

Yes. For the last few years I have been unwilling to accept the interest rate risk associated with the medium duration bond ETFs and bond funds. Interest rates were artificially low so worried how it would unwind. I likely gave up some yield during that time as interest rates continued to fall. During that time I owned some shorter duration bond funds, CDs, some tips, tsp g fund, some cash, I bonds from 2000 and 2021 and 2022.

Trying to figure out what risk I can live with so Now I own mainly a 1-3 year treasury securities ladder paying between 2-2.6% along with a few years of cash paying 1% on mm and I bonds and tsp g fund; I’ll hold treasury securities to maturity and reinvest at market rates as they mature.

No one knows whether rates will go up or down. As we have experienced, It’s good to think thru the risk your fixed income portfolio has if interest rates go up or down. Holding 6 or 7 year duration bonds funds / ETFs, ie funds/ ETFs that can go up or down 6 for or 7% with a change of 1% in interest rates don’t exactly serve the purpose I want my fixed income to serve. I want The 40% of my portfolio in fixed income (high 6 figures) to be low risk. I’ll take my risk on the total market fund equity side.

There is some element of market timing in my decision And some risk reward analysis. The fed has warped the market forces by buying so many bonds and keeping rates low to save the covid economy - not hard to link that with the resulting inflation - now for the fed to unwind all that to get inflation under control; I got no idea where interest rates will land. IF they land higher then they are now, I am not holding intermediate term bond funds / ETFs in the transition. If the fed executes a perfect unwind; slays inflation and interest rates stay where they are now or go down; I’ll have given up some yield. For me The risk of the rise in rates is not worth the yield the intermediate and longer term bond funds are now paying.

Of course different thoughts on the risk and reward are what makes a market. I’d like to isolate myself from the risk of rising rates.
Last edited by Parkinglotracer on Tue May 17, 2022 3:51 am, edited 1 time in total.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by Parkinglotracer »

Duplicate.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by whaleknives »

Like many I've wondered whether to change my fixed income fund from VG Total Bond to something less volatile. Take less risk without sacrificing too much return.

Image

Over 10 years the Short-Term Inflation Protected Securities has the shape I'd like, but lower returns than the others. That Intermediate-Term Corporate Bond ($50k minimum) has the highest returns, but is it behaving too much like a stock?

Image

Maybe not. Maybe I'll just wait and see.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by burritoLover »

boomer543 wrote: Sat May 14, 2022 9:12 pmare you making any adjustments after the bond downturn?
Sometimes part (or all) of your portfolio sees a downturn for a period of time. That is normal. You don't do anything different. The loss has already happened - you cannot mitigate future losses because that requires you predicting the future which everyone obviously sucks at otherwise they would have predicted the current bond losses and got out of bonds before that happened.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by CyclingDuo »

boomer543 wrote: Sat May 14, 2022 9:12 pmI have Vanguard PAS with the Fixed Income Positions including Vanguard Total Bond ETF and Vanguard International Bond ETF. Combined their duration is over 7.5 years. After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
Still contributing the same exact amount each month to Vanguard Total Bond Fund. We did add I Bonds last year (maxed out) and are maxing them out this year as well, but that did not change what goes into Vanguard's Total Bond Fund each and every paycheck into our employer plans. We own other bond funds as well (International Bonds, TIPs, Municipal Bonds, Treasuries, plus some CDs).

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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by keystone »

Nope. I'm staying the course and my total portfolio is roughly 35% in a combination of Total Bond/Total International Bond.

It seems like almost every time I have visited this site in the last few months I come across a thread by someone who mentions they recently shifted some things around in their bond portfolio. I ponder for a few seconds whether I should be making a similar move and then realize that a) I don't have any good ideas about what kind of move to make and b) I wouldn't know when it's a good time to move back to total bond. So I stay put.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by ruralavalon »

boomer543 wrote: Sat May 14, 2022 9:12 pm I have Vanguard PAS with the Fixed Income Positions including Vanguard Total Bond ETF and Vanguard International Bond ETF. Combined their duration is over 7.5 years. After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
No changes for us.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by Elysium »

boomer543 wrote: Sat May 14, 2022 9:12 pm After the recent bond market downturn, Scott Burns advised cutting duration to almost zero and "waiting it out". Allan Roth advised easing up on Vanguard Total Bond ETF and buying some 2 year Treasuries as a way to reduce duration if interest rates across the spectrum continue to rise. Right now the yield curve does not pay to have longer duration with the interest paid roughly equivalent from 2 to 10 years out. So for those of you invested in Vanguard Total Bond ETF as your primary Fixed Income exposure, are you making any adjustments after the bond downturn?
Gee, don't you wish these experts said this before the recent bond market downturn. :shock:

What's the point of cutting duration after you already enjoyed the drop in prices, only to lock in the loss by cutting duration and earning lower rates, which can't even compensate for the price drop in TBM. Stay with it and enjoy the new higher rates to off set the drop in value, in about 5-7 years. If you must do something, then buying TBM at this time may be a good idea, as there are chances rates will be lower in another 5-7 years than today.
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Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by secondopinion »

keystone wrote: Tue May 17, 2022 10:02 am Nope. I'm staying the course and my total portfolio is roughly 35% in a combination of Total Bond/Total International Bond.

It seems like almost every time I have visited this site in the last few months I come across a thread by someone who mentions they recently shifted some things around in their bond portfolio. I ponder for a few seconds whether I should be making a similar move and then realize that a) I don't have any good ideas about what kind of move to make and b) I wouldn't know when it's a good time to move back to total bond. So I stay put.
a) Right. If you have no idea, then do not deviate. I have some idea, so I do; that is, I know that I need to take risk when I need to and do not take as much risk when I do not. I do not play a guessing game; I just respect my objectives.

b) If I was going to market time between bonds and far shorter-term fixed-income, I would not bother with the comparatively slim pickings of total bond; I would go for much longer-term bonds.

I was respecting my objectives, and I unintentionally avoided the concurrent asset dips recently for the most part and bought into March 2020. Trust me, I was not trying to market time anything; it just ended up being favorable by following my IPS.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
zeep
Posts: 146
Joined: Sat Oct 04, 2008 3:03 pm

Re: Any you doing any Adjustments to your 100% Vanguard Total Bond ETF Position?

Post by zeep »

I'm thinking of shifting for Tax Loss Harvest purposes but not changing overall allocation much.
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