Yesterday I was chatting with someone about market returns since 2000. He mentioned with a chuckle an analyst who had stayed in bonds most of the past 8 years out of an aversion to risk assets, "that guy missed the boat big time," he chuckled, "you can't just be in bonds."

Well maybe you can't. Or maybe you can. It really depends on one's personal preference and assessment of relative risk. It also ought to depend on relative price and one's chosen investment discipline.

At our firm we have not held only bonds for the past 8 years, so I am not here defending bonds only as "the best" strategy. At our firm, we (unlike 95% of investment advisors) are not passive, long always in our asset allocation. We actually make a constant effort to manage risk exposure for our clients. We don't believe in tossing capital in, going golfing, and hoping it all works out.   more »