AA for a retiree on SS. No one can give you 'the answer'. Here are some things to think about in developing your own answer:
1. At 76, presumably you are not trying to 'grow' your assets, and with your fixed costs covered, you re-invest the income, and presumably wish to conserve your assets. If that is the case, and you have 'won the game' -- meaning you have sufficient assets for your needs. Well, why keep playing the game, after the game is already won? If that assumption on my part is wrong, and you prefer to stay in the game, for whatever reason, then the answer is probably 'stay the course' -- so long as you will be copasetic with the results Mr. Market delivers.
2. If by 'bond bubble', you are implying the likelihood of a'popping' of the bubble, why stick around, at least in full-allocation mode? An investor can earn ~ 1% yield on near-cash or cash assets (e.g. "MINT", internet savings accts, etc.) Market-cap bond index products pay what now, something with a 2-handle in terms of yield? If the answer is you want the marginally higher income, that is a true answer. But consciously accept, stability of income may be at odds with stability of principal, especially when asset values are rich. You have to understand what is of primary importance to you, the income, or the value of your principal, then decide what to do.
3. If your 'bond bubble' diagnosis becomes reality and the bond market drops, expect stocks to fall in sympathy with bonds. Both asset classes benefitted from Q/E & ZIRP; IMO it would self-serving and delusional to expect that stocks will soar while/if bond prices drop. Often, stocks are more frenetic in their price moves than bonds. So reallocating principal from bonds to equities, probably won't DE-risk a portfolio. In fact, it may have the opposite effect.
4. Lastly, and I am sure you know this, a decision to buy, hold, or sell is never a 'final decision'. Circumstances may change tomorrow, and you can reverse your decision.
I'm about 25 years your junior. Still in accumulation mode, but expecting to retire early in 4 years. Except for the whole health-insurance issue, I could retire now, spend principal, and not have another worry. So, I've no intention of exposing all of my assets to the vississitudes of Mr. Market here --- which might risk delaying my retirement. Especially with most asset classes trading 'rich'. But that is me. You are in a different place. Your fixed costs are covered. The question is to what degree to you wish to expose your assets to Mr. Market -- and for what purpose? Does the marginal income/return you derive from holding rich assets adequately compensate for the risk of holding richly-priced assets? Ultimately, only you can answer that question. Nobody else can.
Asset Managers Bleed $50 Billion As Industry Crisis Deepens Get in line @ Blackstone ! From The Blackstone Group LP (BX) Q3 2016 Results - Earnings Call Transcript
In the past 12 months alone, our limited partners, we call them LPs, have entrusted us with nearly $70 billion in new capital which despite $38 billion in realizations brings us to another record for assets under management of $361 billion. We continue to see strong positive growth in every one of our businesses. Blackstone continues to be the solutions provider our limited investors need, perhaps now more than ever in a world of sluggish growth, record low interest rates, high public market valuations, the resulting very low returns for most asset classes.
These challenges seem likely to persist for some time which is causing real problems for LPs.Here is a pretty stunning fact. In the past 10 quarters, we have raised nearly $200 billion, more than the aggregate size of any of our domestic alternative peers. And given the secular forces driving capital into the alternatives, we continue to nicely grow combined with Blackstone's powerful and unique competitive position. I remain quite optimistic in our ability to keep growing with one of the largest, if not the largest, platforms in each vertical area, Private Equity, Real Estate, Hedge Funds and Credit. We are able to accept and responsibly deploy billions of dollars from individual LPs which is a critical capability that few, if any, other firms can offer
http://seekingalpha.com/article/4016086-blackstone-group-lp-bx-q3-2016-results-earnings-call-transcript?part=singleBloomberg Gadfly Take by Gillian Tan Oct 27, 2016 3:58 PM EDTStephen Schwarzman, the billionaire chairman, CEO and co-founder of Blackstone Group, is accustomed to having people pay attention to his point of view, whether it's in a meeting room at the firm's Park Avenue headquarters or in his capacity as a philanthropist. But he seems to have trouble getting his message across when it comes to Blackstone's shares.
Disconnect
Blackstone, like its peers, has struggled to win over investors.
As the firm's biggest shareholder with a stake of roughly 20 percent, Schwarzman has gone to lengths to persuade investors that Blackstone deserves a higher valuation -- even going so far as walking through the math of his argument -- but his words have fallen on deaf ears. On an earnings call Thursday, after the New York firm easily beat analysts' expectations thanks to sales of real estate assets, he resorted to sarcasm. "Who needs yield when you can invest at 1 percent in government bonds?" he dryly asked, after referring to the fact that Blackstone's dividend yield is markedly higher than that.
.....potential shareholders should remember that the yield isn't as airtight as, say, a U.S. Treasury bond. Blackstone's ability to pay dividends fluctuates every quarter and is driven in part by the firm's ability to profit from its activities across various arms, such as by selling off real estate or other investments as it has done in recent years. Still, there's little likelihood that the dividend will disappear completely, owing to the diversity of Blackstone's holdings
https://www.bloomberg.com/gadfly/articles/2016-10-27/blackstone-yield-appeal-is-schwarzman-s-latest-valuation-argument
Bond Tourists Expose Soft Underbelly Of America’s High-Yield Market Highlights of the Week:from Payden & Rygel
High Yield: Despite retail flows stalling in the last three weeks, the market remains well bid. A combination of foreign capital flows and separately managed
accounts are providing price support as the market grinds tighter. Coupling this tailwind with prudent credit selection will reward long-term investors.
Corporates: A recent stringent crackdown by anti-trust regulators has halted several mergers and acquisitions from being completed in the last year.
Despite this slowdown, companies seeking to merge have still been rolling merrily ahead with their intentions. In fact, October 2016 now ranks as
the month with the most corporate merger agreements ever, nearly breaking $2
50 billion. Whether or not they will be completed is another story
•
Municipals: While municipal yields have drifted near 7-month highs, the market has showed resilience in the face of over $16 billion in new supply
over the past two weeks. After the first week of fund outflows YTD last week, investors added $33
5 million to funds this week. Municipals remain
very attractive on a relative basis with 30-year municipals yielding in excess of 100% of Treasuries.
https://www.payden.com/weekly/wir102816.pdf
Why Performance-Chasing Investors Will Love The New 5-Year Rolling Averages HI JoJo26,
Apparently I misunderstood your position, at least in terms of emphasis. We are in substantial agreement.
In investing there is an issue of too much information; some tendency towards paralysis by analysis. There is a famous study of horse-race handicappers that demonstrated that debilitating characteristic.
The handicappers were given tons of horse performance data. Initially they were tasked to handicap a race using only 5 bits of data for each horse that they selected. The challenge was repeated with 10, 20, and 40 pieces of individually selected data. The handicappers winner accuracy score did not improve with increasing data, but their confidence levels falsely did.
Some decision making experts believe that we can not process too much info when forming a decision. I'm sure the number varies with each person and for differing circumstances, but these experts have concluded that an information overload takes control at about the 7 piece level. I suspect that finding is highly controversial. I find that observation uncomfortable since I am a member of the more is better cohort.
Thanks for your post and your patience.
Best Wishes.
Art Cashin II: "Critical If Market Closes Below 2,130" The S&P
500 made its first new high at 2130 on May 21, 201
5. It took 14 months and a pullback to 1829 (about 1
5% off its 2130 high) before the S&P
500 moved once again moved above 2130 in July of 2016. Today, a full 17 months later, it stands at 2126. This is
50 points below its must recent new high of 2187 (or about 2.
5% below its most recent new high).
Here the 2 yr chart:
Art Cashin II: "Critical If Market Closes Below 2,130"
Asset Managers Bleed $50 Billion As Industry Crisis Deepens @Ted Ha! just coming here to post this one, ya beat me by the proverbial nose.
In the second quarter, that group of seven saw $34 billion in outflows. The tally is further evidence that investors, frustrated with high fees and mediocre performance of actively managed funds, are increasingly casting them off for low-cost passive investments. In the 12 months ended Sept. 30, active funds had redemptions of $295 billion while passive took in $454 billion ...
12 months, almost $300B--- that's some serious coin.
