Bonds: What Are They Good For? Part I

[Note: The following is a guest post that I requested from one of my Gold Sponsors, Johanna Fox, CPA, CFP® of Fox & Company Wealth Management. She was one of the first people to see my Sponsorship proposal. I sent it to her not because I expected she might be interested in sponsoring the site, but because I know she is not afraid to speak her mind. If I was asking too much, she would tell it to me straight. On the WCI forum, she has expressed her opinion on bonds, and I thought it would be great to allow her to more fully explain her stance and rationale here on my site. Thank you, Johanna, for sharing your time and expertise.]


When PoF asked me to write a guest post on bonds, I agreed with gusto. You see, I hold the unconventional belief that bonds have no place in a long-term investment portfolio. Not only that, but I can’t understand why it is not obvious to the smart doctors on White Coat Investor. Not to say that we do not hold bonds for clients, just not for the purpose you might assume. Allow me to lay out my case for the FIRE readers and we’ll see where you stand. Let’s begin with a few contextual definitions for the purpose of this post.

  1. The short term is the next 5 years. The long term is anything beyond. Given the short-term volatility of investments, the only appropriate holding period is the long term. In fact, we don’t invest in the short term – we speculate, which is very risky.
  2. Investors are owners – of real estate, common stocks, partnership interests, etc. We invest with the intention of growing an income we cannot outlive and that will provide an ever-more valuable pool of capital to be left as a legacy for our heirs.
  3. Bondholders are loaners, not owners. We use bonds to provide for planned short-term liquidity needs at a higher returns than a money market account would yield.
  4. Stocks refer to the universe of stocks, not a personal market basket of favorite equities or your company’s ESOP (Employee Stock Ownership Plan).
  5. A dollar bill is currency, not money. Money represents purchasing power. Currency represents units of that purchasing power.
  6. Now, hold onto your hats: Volatility, of the nature we experience as equity investors, is not risk, although the financial pornography media industry would have us believe otherwise.

About Volatility


Volatility is scary, just like riding the famous roller coaster El Toro is scary. But riding El Toro is risky only if you do something stupid, like jumping off during the ride. Volatility is what produces the marvelous growth that equity markets give us.



el toro. looks scary.


Unlike a real roller coaster, where you always get off where you got on, the growth is permanent while the declines are temporary. It’s easy to lose your grip on that concept when your portfolio is clattering down the rails of El Toro by 15% or more, but you must hold on in order to reap the reward that true ownership has to offer the long-term investor.


Risk and Returns


So, if volatility isn’t the same as risk, what is risk? And here we have our final contextual definition:

  1. Risk is the possibility of permanent loss of purchasing power.

I believe the great financial risk we ignore when planning for retirement is not loss of principal, which is almost always the primary focus, but loss of purchasing power. It’s not how many units of currency we own that matters – it is how much that currency can purchase.

Following are some statistics (rounded to the nearest whole numbers) for the period beginning in 1926 (considered the earliest date from which we can retrieve meaningful, measurable market history) through 2014:

  • Average inflation has run about 3%
  • The average return for high-quality corporate bonds has been 6%
  • Large-cap stocks have averaged a 10% return (dividends reinvested)
  • Small-cap stocks have averaged a 12% return (dividends reinvested)

What really matters, though, is real returns (returns net of inflation), so let’s calculate them:

  • Bonds:                  6 – 3   =   3% real returns
  • LC stocks           10 – 3  =   7% real returns
  • SC stocks           12 – 3  = 9% real returns

When we look at real returns, we see that Large-Caps deliver double that of bonds while Small-Caps yield thrice the returns of bonds. Adjust for income taxes and you’ll realize that bonds have returned little better than nothing after inflation and taxes. So why do we so quickly harness our portfolio to the group-think that bonds are essential to our long-term financial security? I believe it is due to our fundamental misunderstanding of volatility.

Because we define volatility as risk, we also equate volatility to loss. But consider this: permanent loss in a diversified equity portfolio is always a human achievement – of which the markets are incapable. I firmly believe that behavior accounts for 90%+ of our investment results while diversification and rebalancing (management) account for the remainder. So how do we, as investors, avoid these very human behaviors in order to experience the upside of the equity market without the permanent loss we fear? Follow these steps and you can stop worrying about protecting principal and focus on building wealth and an income stream that you will never outlive:

  1. Do not ever invest without first creating a financial plan. If you don’t know when you will need funds, you are at the mercy of your emotions during periods of volatility. Your plan need not be elaborate, but you do need to reasonably articulate your 5-year needs and your long-term goals. Ignore this step and this article is worthless to you.
  2. Never invest any funds you will need in the short term. Again: we do not invest in the short term, we speculate. Liquidity and safety, not growing wealth, are priorities in the short term. Even though, odds are that your portfolio will grow in the short term, that’s just not good enough – you need certainty. Long-term goals will change over the next 10, 20, 30 years, and you’ll have more time to adapt. Short-term goals, by their very definition, are less flexible. Allocate short-term savings as follows:
  3. Funds for unpredictable spending belong in a basic interest-bearing account. This includes your monthly living costs, your emergency account, and so forth.
  4. Money for “planned needs” should be loaned using debt (CDs and bonds) timed to mature when you will need it. For example, if your plan dictates a car replacement for $40k in 4 years, buy a bond of equal value maturing in 4 years. You’ll earn a little interest along the way and your money will be there for you when you need it.
  5. The interest you earn in the short term is secondary in the context of your overall plan. Don’t waste time fretting over .9% versus 1%.
  6. Invest in a properly diversified and managed equity fund portfolio for the long term.
  7. Our goal of diversification is to capture the overall returns of the world market. As such, our portfolios are split fairly equally among: LC Value, LC Growth, SC Value, SC Growth and International with REITs for a possible 6th sector. Always funds, not shares of stock.
  8. Proper management mean rebalancing annually, adjusting as goals change, investing according to your long-term plan and, otherwise, leaving your account to grow.
  9. All things being equal, look for managers who follow the requirements laid out in the fund’s prospectus and also for funds with relatively low turnover. (Index funds work fine and we typically use them for doctor portfolios.)

Assuming we follow the above guidelines, what could possibly cause us to settle for less when we don’t have to?

I bet I know what you’re thinking: What about retirement? What about smoothing out volatility when the market crashes? We’ll address those and other questions in the second half of this series.

[PoF: Do you hold bonds in your portfolio? Why? Do you use a formula to determine your bond allocation? Let us know below, and stay tuned for Part II next week.]


  • The Green Swan

    Awesome post! I love where this is going and look forward to part 2. I recently did a post on how I invest to win and conclude that no bonds are necessary for long term investing at all and define long term as over five years as well. They have failed to provide any meaningful diversification in recent years/decades that they once did, so why settle for sub par returns? Thanks for the post!

    • Thanks for your comments. I must admit that I clicked on the comments link with great trepidation having a few battle scars from bond discussions on WCI 🙂 I neglected to give credit to Nick Murray for his excellent leadership in getting my head straight, not only about bonds, but about investing in general. He is on a very short list (one hand) of writers my partner and I spend any time reading. Our clients have been the beneficiaries of his tutelage and I will be forever grateful.

  • Nice post and it certainly seems reasonable for an aggressive portfolio to go 100% equities. I have about 10% in bonds now, just because I think I’m “supposed to.” I’m curious to see your next post on the topic!

    I will say that year to date my bond index fund has smoked my international equities…

    • Thank you for your kind words. Dangerous to follow the herd when investing since the herd is always wrong. (Baron Rothschild: “The time to buy is when there’s blood in the streets.”)

      fwiw, I try never to use “year to date” in the same sentence as anything investment-related 😉

      • That quote reminds me of Benjamin Graham’s (often attribute to Warren Buffett) quote:

        “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”

        Based on those two quotes, do you keep anything on the sidelines to deploy when markets are down? Or, are you “all in, all the time.” I suspect you’re the former since the latter hints at holding bonds (or maybe cash) and market timing.

        This one resonates:

        “I firmly believe that behavior accounts for 90%+ of our investment results while diversification and rebalancing (management) account for the remainder.”

        I remember how everyone lost their minds back when the Great Recession reared its ugly head. In the worst example, I clearly remember having this conversation with a co-worker who was about 30 years of age at the time:

        Co-worker: I just moved all of my investments to bonds.
        Me: Really? Why?
        Co-worker: I can’t stand to lose any more money.

        I’m afraid to ask, but I’m pretty sure he never moved back to stocks. The guy missed what was probably the greatest investment opportunity of his life.

        I admit to freaking out too, but I didn’t change up my strategy. Instead, I made a deal with myself not to look at my portfolio anymore. The next time I peeked was a couple years later and it had doubled.

        • Amazing willpower to stay away from your portfolio for 2 years. What few people realize is that market timers have to be right twice – when to get out and when to get back in. Being right even once is like being hit by lightning.

          • “What few people realize is that market timers have to be right twice…”

            Yes! Yes!! YES!! I tell people that exact thing all the time.

            Example: Someone bragged to me recently that they got out of the LA housing market right before it went to crap during the recession. Great! But, this person never got back in. Now, I look at Trulia and it tells me that real estate prices are about 10% higher than they were before the markets crapped out. Of course this person never jumped back in.

            When looking at S&P return charts in 2050, the Great Recession will look like a tiny hiccup. This is a fun tool to play with:

          • Oh, and my co-worker was wrong twice. He sold out of stocks at the bottom and never got back in. I have a feeling this is how it is for most who try to time.

  • It seems to me that a lot depends on whether you are in wealth accumulation phase or wealth preservation stage.

    As I am moving much closer to the latter, retiring at age 51 in two years, bonds make up about 25% of our portfolio. Equities ~65% ( heavier in LC than MC, SC) and the remainder split between cash and REITs. I buy into the concept of seeing enough international exposure from large cap US companies. Bogle has talked about this philosophy at length. The overall components of cash and bonds will increase when we pull the trigger. That allocation will be the first to access in an extended bear market.

    Finally. Kitces and Pfau have done a fine job discussing the critical nature of the first 5-10 years of any portfolio when someone hits FIRE. A significant bear market of 2-4 yrs during that period can do damage that may not be recoverable. Ask anyone who retired in late 2006 with an over heavy equities allocation and watched the subsequent few years of carnage unfold and a 50-60% reduction in their portfolio. Throw on top of that a lack of understanding of expenses and withdrawal rate and you have the perfect storm. Actually, a massive tsunami.

    Finally, irrespective of what your allocation is, it is the mindset or behavior that goes with it that is really critical. If you are heavy in equities and underweight in your behavior, then you are still very much toast.

    Very much look forward to reading part 2 !!

    • Hey Mr. PIE-

      The first 5-10 years is something I think about often. I’d be curious to hear your strategy. Here is what I think about it.

      Sure, a 2006 could (and will) happen again, but the chance of it happening within a year or so of retirement is unlikely. However, I still think about it. To make me sleep better at night, I’ll quit with at least 2 years of living expenses in cash. If the markets go to hell, I’ll live off that cash and consider going back to work. However, if markets keep flying, I’ll sell investments.

      The keys are to be flexible and frugal. Regarding the latter, if you can live off $40,000/year, it doesn’t take much to move the needle. Drive for Uber or rent a room out with Airbnb and you could easily take that 4% down to 3%.

      • Good afternoon Mr 1500.

        Our strategy is to hold 3 years of expenses in cash. We have another income stream in the form of a company pension (yeah, a rare thing these days) that will cover about 45% of our living expenses, kicking in at my age 55. So with that and our approach to having a sizeable amount in cash, we are comfortable with our plan. At least we think so. As I mentioned above, our bond allocation will increase over the next two years to closer to 55: 35 equities to bonds and the remainder cash. And over time we will adjust accordingly.

        At our FIRE date, we will have assets that amount to 33x our living expenses. Factor in the company pension income stream, taking those assets to a 62x multiple, and we should be OK.

        And that’s not even factoring in SS for my wife and I in whatever form it comes at the age we choose to take it. We have some time to strategize about that plan as well as the RMD situation that will unfold.

        Hoe this provides a picture of what we are thinking and where we are at.

    • I appreciate your comments even though I believe you are making a huge mistake to occupy such a large % of your portfolio so close to an early retirement. Of course, I know what the 2nd half of the article says! Thanks for reading!

    • Joe

      Hey, you’re talking about me! I left the workforce in 2007 and subsequently watched my net worth dive by 40%+. Luckily I had 100x living expenses stowed away, so survived. Painful though… Only just now making a recovery to previous levels (spent 9 years of living expenses in there also).

      • With 100 years in expenses, you’re in a postion to be quite aggressive if so inclined.

        Losing half might be scary, but you can afford to lose it. Some say “Why play the game if you’ve already won?” I say “Why stop playing a game that continues to favor the player?”


      • Just wondering…if you had an appropriately diversified portfolio and did nothing, why did it take you so long to recover? The market was back to even in January 2013. Or did you not have cash set aside for this specific reason? i.e. – were both your short-term AND your long-term needs invested 100% in equities? If so, expensive lesson and exhibit 1 for the efficacy of a financial plan.

  • TheGipper

    Nice article. I used to share most of your views. The writings of several (perhaps best summarized at over the last few years) has swayed me against 100% equities. While all of your points are valid, check out the analysis here, particularly the withdrawal rate ( and portfolio finder ( calculators that show that by adding non-equity components to a portfolio (REITs, gold, and yes BONDS), it will actually IMPROVE the safe and sustainable withdrawal rates of a portfolio, often without any decrease in real CAGR. While somewhat non-intuitive, by further diversifying from a total world equity portfolio (+/- REITs) during the withdrawal phase, one decreases the volatility which does actually have a measurable destructive impact on sustainable withdrawal rates. The analysis also shows that diversifying among less correlated higher risk equities (ie microcaps, international small, gold, REITs) provides further benefit over total stock market funds. Now a 100% equity portfolio may be just as effective during the early to mid accumulation phase, but as one approaches retirement, I think there is still a strong case for bonds, EVEN if you have no plans to access the funds for 5+ years. Interested on your thoughts.

    • Hey, Gipper! Thanks for weighing in!

      I really don’t work based upon “safe and sustainable withdrawal rates”, although picking a number can help to shortcut calculations.. Otherwise, I try to stay away from rules of thumb as our client planning process is ongoing and interactive. Unfortunately, very few people realize how true financial planning works and how beneficial it can be when the portfolio is not the plan, but a tool of the plan. The plan drives decisions and the portfolio is built to accommodate the plan.

      Unfortunately, at this point, we are conversing based upon only 1/2 of the article. Hopefully, the final installment will be revealing. Then we can have a more fruitful debate.

  • This is a great post. I always like people who challenge my assumptions. In investing, it usually pays to be contrarian. Now I can’t wait to see the part 2 of this post. Really very interesting concept, and I have to say, very sound analysis and arguments. Thank you Johanna.

  • Agree 100% with the pessimism about bonds. Well, in one account we trade options on futures and we hold muni bonds so the margin cash is at least earning some interest. Bonds are only unattractive due to their opportunity cost vis-a-via equities. If you can buy buy bonds on margin, hope that bonds maintain their negative correlation with equities and have a higher yield than cash, you can eliminate the opportunity cost from bond investments and still harvest the diversification potential:
    As mentioned above, what we actually do in our portfolio is slightly different from the post in that we buy the 100% equity exposure through Section 1256 contracts and keep the 80% bond exposure in physicals (Muni bond fund). It’s not for everybody but we have had great success with this for many years.

    • Actually, I am not pessimistic about bonds, I just believe in calling them what they are and using them for the appropriate purpose. As for your investing technique, I am glad that it works for you but your explanation made my eyes cross! I have no problem telling our clients that successful investing is not rocket science (or brain surgery, depending on the audience) and that anyone can do it. But that’s not what we are paid for. Our value is as financial planners with a heavy dose of behavior management mixed in. The portfolio is simply a tool to accomplish the goals, not the end goal. (No disrespect intended. Perhaps you really are a rocket scientist?)

      • “Perhaps you really are a rocket scientist?”
        Nicest compliment I’ve heard all week! I work in asset management and apply some of the principles from work in my own portfolio. PhD in econ by training, CFA charter as well.

  • Finally someone that doesn’t think bonds are the greatest thing since sliced bread! You and I agree there!

  • Jacq

    Ahhhhh the dreaded know what you want in 5 years, 10 years etc! My end goal is to retire early. Yet a coworker and I chatted today speculating if a larger company buys us out in say 2 years and we get rich off our stock options, how different life would be from our current stresses. At the same time I’ve had a company close on me, because the board of directors did the math, and my section of the company was (a) expensive and (b) expendable. That’s just work related uncertainty. I am a planner, but the Universe has a way of not following -my- plan, so I’ve learned to plan dinner for the week, but beyond that flexibility is the key. Even with dinner plans! If an out of town friend is near by and wants to meet, I try to not pass up the opportunity just because I was going to make chicken fingers.
    In 5 years I’ve seen friends: marry, divorce, start dating again, have 1 (or more) kids, change jobs, change states for said jobs (twice ), lose loved ones and pets. If someone had the magic formula for me to figure out that 5 year goal it sure would help. In the meantime the plan is to keep saving for whatever the future holds.

    • So you have no idea or premeditation as to when you plan to replace a vehicle, send a child to college, take a vacation, buy a house, retire, etc? Are you telling me you simply wake up and decide to get married, buy a piece of rental property, get a job, go back to school for a second degree, make a significant donation…all with no forethought? That’s a scary and reckless way to live, imho.

      There is a world of difference between saving all you can with no goals in mind, hoping to win the lottery versus financial planning. The essence of true planning is to give you clarity about your financial resources, goals, and current situation so that you can make purposeful decisions and prepare for the what if’s in life.

      A real financial planning engagement is continual, interactive, and has flexibility built in. Your planner will change the plan for life changes, not hand you a report and send you on your way.

      Don’t let the perfect be the enemy of the good. Thanks so much for your comments!

  • As noted in the forum discussion on this piece, I disagree with Johanna on this controversial area of investing. Here are the main reasons:

    1) Diversification – bonds are different from stocks and so perform differently in various market conditions

    2) Return – While bonds are generally lower risk/lower return vehicles, there are bonds with expected returns similar to those of stocks

    3) Decrease portfolio volatility – It turns out that very few investors (and their advisors) can tolerate a 100% equity portfolio in a severe downturn

    4) Decrease deep risk in important ways – Volatility is “shallow risk” that can be ignored by a long-term investor with a stomach of steel. Deep risks, which Bernstein defines as inflation, deflation, confiscation, and devastation, are much more significant. Bonds provide significant protection against some of these. Bottom line- it is possible (even if perhaps unlikely) your bonds will outperform your stocks for long periods of time, perhaps your entire investing career.

    Benjamin Graham recommended you maintain your stock:bond split between 75/25 and 25/75. I think there is great wisdom there. Moderation in all things.

    If you need the extra kick of having 100% stocks in your portfolio to reach your goals, perhaps you should save more, work longer, and/or spend less in retirement rather than making such a big bet on equities.

    • As I responded to WCI on WCI, >>The solution is interactive, collaborative financial planning. For people who choose not to engage in financial planning (which is far riskier than volatility, which does not equate to risk), then, yes, bonds are a (poor) substitute. So is a large sum of cash.<<

      The problem with comments by those who consider a portfolio a plan (even very smart folks, as was Mr. Graham) is that they totally discount the value of structuring a portfolio (a building material) upon the foundation of the plan. As such, the portfolio is doomed to failure or to depend upon patches in the architecture via bonds, over-allocations to cash, and pure guessing, a la poor Jaq above.

      I absolutely concur that the majority of the universe considers their portfolio (size, allocation, etc.) the only plan they can rely upon and are, thus, at the mercy of market volatility. In these situations, volatility does, indeed, create risk. I believe it is irrational to sacrifice the permanent return of equities by using bonds as a defense against temporary volatility – solely for want of a plan.

      • Corr: Jacq, not Jaq, my apologies!

      • I have about half my financial assets invested in bonds. The investment has served me very well. The returns are steady, predictable, and positive. My income and growth are more than adequate. I have minimal volatility. I am financially independent. I see nothing “irrational” about my choices. Personal finance is personal and not all fixed answers apply to all people.

    • So much truth here IMHO.

      The stomachs of steel for most investors can barely tolerate a large bowl of breakfast cereal.

      I believe in “moderation in everything, including moderation” Yet that tenet will not go as far as 100% equities.

      I hope the good folks who read this post keep an open mind and question each side of the argument. I know which side I firmly sit on.

  • I’m with WCI. Bonds allow me to not have to have a stomach of steel when the downturn comes. As to your roller coaster analogy, it isn’t just about whether or not you do something stupid, but also the people around you. So where as, 95% of the rides may go off with a hitch, and maybe 4.9% have a hitch, but no one gets hurt, there is the outlier that is catastrophic.

    In your own calculations you show that SC outperforms LC by a margin as well, but I don’t see you recommending being in 100% SC. If the lower volatility of a portfolio that holds bonds stops me from doing something stupid, then I have solved 90% of the problem as you indicate.

    I too, can’t wait for Part II.
    cd :O)

    • Hi, Chris, Thanks for chiming in!

      >>In your own calculations you show that SC outperforms LC by a margin as well, but I don’t see you recommending being in 100% SC. If the lower volatility of a portfolio that holds bonds stops me from doing something stupid, then I have solved 90% of the problem as you indicate.<<

      I realize it is kind of long, but I get the feeling some folks have not really read the whole article. See steps # 6 and #7 above.

      Permanent loss in a diversified equity portfolio is always a human achievement of which the market is incapable.


      • I did in fact read the entire article. Of course our own biases may cause certain things to pop out over others (fear of roller coasters). I don’t doubt with the correct time frame and diversification that one will not see a permanent loss. Otherwise, I wouldn’t hold any funds in the market. But, of course plenty of evidence does show that market downturns at the wrong time can cause loss. I do question as to what the level of diversification should be and just pointed out that your own article showed SC outperforming LC, but yet you don’t recommend being 100% diversified in SC.

        If holding a portion in bonds (or other fixed income) stops me from doing something stupid, as your own article states, I have avoided 90% of the problems most people create. If holding the bonds gives me an overall return of 5% vs 7% (just using numbers for example), but stops me from selling at the wrong time and actually providing myself a -7%, then that 2% difference is worth it, no?

        • >>But, of course plenty of evidence does show that market downturns at the wrong time can cause loss..<>I do question as to what the level of diversification should be and just pointed out that your own article showed SC outperforming LC, but yet you don’t recommend being 100% diversified in SC<<

          Of course not; the returns for SC stocks are an average over a 9-decade period. I addressed diversification throughout the article and detailed our diversified model in step 7.

  • Thank you Johanna for sharing your insights. I have been witness to several online debates in which you have stated your position on holding bonds for the long-term, and I felt you deserved a chance to more fully explain your rationale. You’ll probably find more agreement among the FIRE community than you will the Bogleheads.

    My asset allocation still calls for 10% in bonds / cash, but that is something that can and will be revisited as time goes on. I do believe that the more of a cushion you have (i.e. retiring with much more than 25x expenses and perhaps some passive income), the more easily you can afford to accept risk and have a lesser (or maybe zero?) bond allocation.

    Stay tuned for the conclusion in Part II to be published next Tuesday, August 16th.

    -PoFMy asset allocation

  • CaliCardio

    I have been going back and forth on this. I’m fairly convinced by William Bernstein showing that even a very small allocation to bonds significantly decreases volatility with virtually no difference in returns. Though I’ve invested through bear markets before, I see no reason to accept higher volatility when I can decrease it without sacrificing returns. Having said that I think the age in bonds or similar allocation is far too much. I’m currently 10% bonds.

  • zeejaythorne

    I love this definition of volatility! Will be fascinated to read what else you have to say on bonds.

  • CA doc

    Interesting post and in my opinion in theory everything Johanna states is correct. However in the real world she is dead wrong about not having bonds as part of a portfolio for several reasons:

    1. If bonds are part of your portfolio: When you re balance (allocation funds and roboadvisors re balance automatically) you end up buying stocks when prices are low and selling stocks when stock prices are high. You are essentially buying low and selling high. You miss out on this when you only own stocks.

    2. Bonds pay interest. So the money allocated to bonds is generating income.

    3. Less beta and volatility for about the same return:

    Please compare 10 year return on vtsax vs vbiax

    As you can see about the same returns, but with much less beta and volatility. vtsax had 51% drop in value from peak to trough during bear market in 2008-2009 compared to 32% drop in vbiax. 10 year ave return is 7.54% vs 6.92%. Not much difference in the overall average return with portfolio of 40% bonds!

    • 1. That’s quite a coincidence – we achieve the same when rebalancing our 100% equity portfolios! Please explain to me how I would miss out on this…buying low and selling high is one of my most persuasive arguments for this method and I do not wish to mislead our clients.
      2. And stocks pay dividends – more than you will receive from loaning money to a business. Let me ask – if someone wanted to own a part of your business or loan you the same amount money, whose money would you prefer to take?
      3. Sorry, I don’t need to deal with beta and volatility when I’m using a real financial plan.

      All I ask is for you to explain to me how my “theory” (we use the word ‘method’ because it is what we practice and it works 100% of the time) will NOT work (i.e. prove that I am “dead wrong”). You have done nothing of the sort and I have no desire to refute the multitude of other theories that abound on the internet when my method works astonishingly well. As in, I haven’t found a way to do better than 100% success. Just go through what I propose and tell me in what situation it will not work. I’m open to your suggestions.

Share your thoughts with the PoF community.