Build A 'Whatever Happens' Portfolio... Now | Seeking Alpha

Build A 'Whatever Happens' Portfolio... Now | Seeking Alpha



Joseph Shaefer has written an outstanding article on how to be prepared for whatever happens.  I agree 100% with Joseph's outlook for stocks and portfolio protection procedures although we differ on asset selections.  He did not mention TLT, the long-term government bond ETF, as a defensive measure, and it is my largest holding. However, the author has other good bond selections such as PCY, the sovereign debt ETF.  The stock is up around 10% during the past year along with a 4.5% dividend.  I'll probably buy PCY myself for more bond diversification in my portfolio.



Joseph brought up some very good points on capital preservation. People bash holding cash because inflation erodes it, but -2% for cash is better than -50% for stocks in a major bear market.  It also takes years to get that loss back.  What if the crash happens right when you plan to retire, and you are unprepared for it?



People also don't like holding stable bonds which pay only 2% or 3%, but the interest offsets inflation, and you have more protection than with stocks.  BND, the Vanguard Total Bond ETF, is a very good choice.  It will drop a little when stocks enter a bear market, but it will recover a whole lot faster than stocks.  No matter which bond fund you choose, an investor always needs to have a significant allocation for bonds so that you will be prepared for whatever happens and so you won't lose half of your money at possibly a very bad time.