Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Losing Your Livelihood

August 28, 2017 By Jeremy Jones, CFA

This is an excerpt from Young Research’s Global Investment Strategy, where we help investors compound wealth with investment strategies that span the global investment landscape. We cover the global stock and bond markets as well as currencies and commodities. Young Research’s Global Investment Strategy is designed for the investor who does not want his investment success bound by the opportunities of a single market.

How would you react if your life savings, the source of your livelihood in retirement, was cut in half? Would you have the nerve to ride out the storm in hopes of making your money back in future years? Or would you cut your losses? This isn’t a hypothetical question. These were actual returns. And based on the bubble valuations in the stock market today, these returns could be seen again before the decade is out.

If you are retired or soon to be retired, a 50% loss is unacceptable. Your portfolio would have to gain 100% just to get back to even.  It took six years of zero percent interest rates, trillions in monetary bribery, and another bubble for the S&P 500 to recover its losses from the prior bear market. Investors nearing retirement or in retirement don’t have that kind of time, and they can’t count on monetary policy bailing them out again.

Including bonds in your portfolio can limit losses in down markets and provide you with the confidence and courage to ride out stock market volatility.

Vanguard Wellesley

For over 40 years, the Vanguard Wellesley Income fund has included a bond component in its portfolio. The Wellesley fund invests about 40% of its assets in blue-chip stocks and 60% in bonds. How has Wellesley weathered the financial market storms of recent years?

During the three-year dot-com bust when the S&P 500 fell by half, the Wellesley fund was up—yes, up—21%. During the last bear market, the S&P 500 lost 56%, but Wellesley’s losses were limited to a more manageable 21%.

On paper, it may be true that an all-stock portfolio offers the highest long-term returns. But in practice, investors who pursue an all-stock portfolio are more susceptible to making emotionally charged investment decisions that sabotage portfolio returns. The stability that a bond component offers helps investors stay on course and achieve investment success.

 

 

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • FOMO a Dangerous Investment Strategy
  • Steam Rolled
  • A 2019 Survival Guy Investment Strategy
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #10 in CNBC's 2019 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Jim Simons’s Renaissance Technologies vs. Internet Forum Traders - January 15, 2021
  • Biden Plans to Spend Trillions More on COVID-19 Stimulus - January 14, 2021
  • Overtaken By Nvidia, Intel Fires Bob Swan - January 13, 2021

Search Young Research

Most Popular

  • Do You Remember When NASDAQ Dropped by 82%?
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Gavekal Chairman: Renewables Bubble is "Stupidest" Ever
  • Don’t Be on Their Radar, Get Out of Debt Now
  • Democrats Eager to Get Back to Protecting the Rich by Ending SALT Deduction Cap
  • Stocks: Are You Sticking Your Neck Out Too Far?
  • There's Always a Way Forward for Americans Like YOU
  • Overtaken By Nvidia, Intel Fires Bob Swan
  • The Power of a Compound Interest Table
  • H2O, Skiing, Hiding A$$ET$, Bitcoin, Ammo & More

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Remembering Rev. Martin Luther King Jr.
  • Insurrection Was the Furthest Thing from Trump’s Mind
  • Who Are Those Urging Violence?
  • Are $2,000 Checks Going to Rebuild NYC?
  • An Alert for Warm Weather, Wine Loving Mavens.
  • Key West’s Number One Restaurant: The Thirsty Mermaid
  • VIDEO: Henry U.S. Survival AR-7
  • Cancel Culture, the Great Purge, Double Standards
  • How Are You Doing on a Local Level?
  • We Support Censure of Flake, McCain and Ducey

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Social Media

  • Facebook
  • Twitter
  • Youtube
  • Pinterest

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.