BusterStronghart@Gmail.com

On the Other Hand

Dear Friend X,

You have asked about the correct split between stocks and bonds for people in the late sixties.

I have never had bonds except after I sold my house when I owned some muni's for about a year. As usual I did the wrong thing by selling them instead of continuing to take the 4.5 or 5% nontaxable payment that came through the munifund I was invested in. I sold out of fear of higher interest rates depressing the price of fund. The operators of the fund were much smarter than me and kept it short and as far as I can tell have maintained the price of the fund.

A broker with whom I speak on the beach says at our age 25% bonds 75% stocks --

But I am uncomfortable with that many bonds --

except: Having bonds when stocks fall and bonds rise (assuming that the laws of conventional market theory continue to prevail) gives you access to cash with which to purchase the now lower priced stocks. (by selling the now higher priced bonds).

You buy Indexes because your assumption is that the market will rise in the long run. The exception I noted above makes the same assumption, as stocks are purchased at prices that someone determines to be temporarily low prices in the expectation that in the long run their prices will rise.

But you are not engaged in timing the market (smart boy!) and so this strategy does not apply to you.

I think that the standard for our age used to be 40% bonds, but that was the standard when people lived for a shorter time.

It is probably time to sell gold as I have started to purchase it again. You know that I sold it just before its recent rise. As long as I have played with gold I have never made significant money.

Wouldn't it be great if I had only one hand?

mek

BusterStronghart@Gmail.com

As we grow up, we learn that even the one person that wasn't supposed to ever let you down probably will.

You will have your heart broken probably more than once and it's harder every time. You'll break hearts too, so remember how it felt when yours was broken.

You'll fight with your best friend.

You'll blame a new love for things an old one did.

You'll cry because time is passing too fast, and you'll eventually lose someone you love. So take too many pictures, laugh too much, and love like you've never been hurt because every sixty seconds that you spend upset is a minute of happiness you'll never get back.