re: Stock vs Bond allocation in portfolio?

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s bond yields are low, but the 100% stock crowd is suffering from recency bias IMO.

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But is it a recency bias or are recent trends more reflective of the realities of the assets and their returns now and in the future? In particular as it relates to bonds, not only are the returns much lower post-housing crash than in the distant past (e.g., total US bond market has had 3.54% annual returns over last 10 years compared to 6.87% over previous 23 years), it appears that this trend is going to continue, especially with low interest rates (negative in some cases) and low inflation.

So unless there are signs that bonds returns are going to revert back toward their historical levels, wouldn't we expect the allocation to stocks instead of bonds to continue? Specifically, there have been reports for large pension funds (e.g., CalSTRS) investing in stocks instead of bonds like they had previously because the yields are so low that they can't meet the gains necessary to maintain their viability.

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When you are going through a true market meltdown, those government bonds look like the only thing worth having.

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While true, that's why one's time horizon is so important. But whether an 80/20 or a 100/0 allocation, the drawdowns haven't been that significantly different (e.g., 5 to 10 percent worse for 100/0) despite bonds having better gains during those periods than now. Even then, when the drawdowns invariably end, the 100/0 funds then rebounds much quicker. So again, as long as one has a long enough time horizon, then what "looks good" when things are bad, is not that important if there is enough time to benefit off of what "looks good" when things are good.