Conventional wisdom tells us to balance your portfolio with a combination of bonds and stocks in proportional to the risk tolerance, which for some is determined by their ages. I prefer the reward/risk ratio and only buy bonds when interest rate is expected to fall which usually occurs after the first six months of a market plunge. The government has stimulated the economy by lowering the interest rate in almost all recessions.
A bond at 30% yield may not be good if the company/country has more than 50% chance to default on their bonds.
However, when your loan is repaid with the USD that is losing buying power, it is about time to switch to other assets including gold or ask your loanee to repay in gold instead of the USD. When the goose becomes meatless, it is time to slaughter the goose and make soup. Hopefully the USA will most likely be saved by the shale energy.
My e-book Debunk the Myths of Investing could save you a lot of money in investing. The above is one chapter out of 105 and some important chapters will not be included in the blog.
Sample portfolio for the book.
(c) 2013 Tony Pow
Disclaimer. I'm not responsible for your actions in your investment. Treat this as educational information and past performance does not guarantee future performance.