Vanguard suggesting a 70% Bond Allocation

How does something THAT asinine make it to the public. There’s so much basic political, monetary and mathematical illiteracy packed in to one proposal.

The fiscal situation requires significant currency debasement which leads to asset inflation. If they think bonds are where that capital will be allocated, I’ll gladly take the other side of that trade.

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The fiscal situation requires significant currency debasement which leads to asset inflation. If they think bonds are where that capital will be allocated, I’ll gladly take the other side of that trade.

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Maybe. Forward PE on this market does suggest very modest 5 year returns on SP500 from here, but 30/70 is about as conservative as anyone should EVER be.

That is idiotic for anyone 10+ years out from retiring

If you think stocks are overvalued and rates can only go down from here it’s not a terrible idea. 70% is a little deep though.

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Vanguard suggests

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What does this even mean? Is this like the company's official proclamation? When did they start doing that?

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Vanguard said to expect 3.5%-5.5% annualized returns on u.s. equities this decade when they published their Dec 2019 report for next decade, this all before covid even was a thing here.

S&P 500 has seen annualized returns of 14.3% from Jan 2020 to last month. I guess they saw a really, really really bad next 4 years though

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When they make these predictions, they should also publish every other prediction they've made for the last several decades and compare what they predicted to what really happened and explain what they got wrong.

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When they make these predictions, they should also publish every other prediction they've made for the last several decades and compare what they predicted to what really happened and explain what they got wrong.

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I think that would be pretty cool too, but it’s also important to remember these predictions are usually covering +/- one standard deviation from their actual prediction. In other words, firms are typically saying there is a 65% chance returns will fall in these ranges.

It’s also not remotely crazy to think returns will be more muted given the current valuations after this very strong cycle we’ve had since basically 2009.



That being said, valuations are a very poor predictor of short term performance, and 70% bonds is still very conservative.

Our business started a Simple IRA plan in the 2005/2006 range…the decade following that was horrible for growth in that vehicle…flat as hell.

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currency debasement

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Had to look this up. Now need to understand this vs deflation..

Currency debasement refers to the reduction in the value or quality of a currency, typically through actions taken by the government or central bank that increase the money supply or reduce the intrinsic value of the currency itself.
There are several ways currency debasement can occur:
Historical debasement involved literally reducing the precious metal content in coins while maintaining their face value. For example, ancient Roman emperors would mix cheaper metals with gold or silver coins, or make coins smaller while keeping the same denominations.
Modern debasement primarily happens through monetary policy:
• Quantitative easing - Central banks create new money electronically to purchase government bonds and other securities
• Lowering interest rates - Makes borrowing cheaper and increases money circulation
• Direct money printing - Though less common, governments sometimes print money to finance spending
Effects of debasement:
• Inflation - More money chasing the same goods typically drives up prices
• Reduced purchasing power - Each unit of currency buys less than before
• Wealth transfer - From savers and fixed-income earners to debtors and asset holders
• Loss of confidence - Can lead to capital flight or adoption of alternative stores of value
The term often carries negative connotations, as it can erode people’s savings and standard of living. However, central banks sometimes argue that controlled monetary expansion is necessary during economic downturns to stimulate growth and prevent deflation.
Currency debasement has been a recurring theme throughout monetary history, from the Roman Empire’s silver denarius to modern concerns about fiat currency policies.???????????????