I know I will get some flak here, but John Bogle has 90% of his wealth in Bonds. If we are not going to be touching the Principal amount for the next 20 years, we get to accumulate more shares at lower dollar cost averaging price. Besdies if you continue to dollar cost average during the entire duration of your bond fund, you wll come out ahead and have nothing to fear about the rising rates and panic redemptions if you stay put. So if you plan to buy, reinvest dividends and hold it for the next 5 years (the duration of PTTRX bonds), you will be fine.
Its more of an issue for folks who are close to or are already retired. Losing Principal is not what they would like. I would say its almost impossible to time bonds. Rates can go to 3%, and then stay there for the entire 2014, as the economy might not be as strong as the Fed projects. Even if PTTRX goes down & economy is very strong, then the stock portion of your portfolio should do well.
As an aside, its strange to see stocks and bonds go down together. Generally, that tells that the markets are unstable. If that is the case, stocks can fall more, however I think Fed has promised liquidity for at least one more year, so stocks may not have a very deep corrrection. I'm not selling it. If China has a hard landing, treasuries will rally. Syria or Europe trouble also would mean treasuries will continue to find support. GLTA
You are correct in saying stocks will fall more than bonds and quicker. However, on the flip side stocks will also rise much quicker as well. It will be a very, very long time before bond holders recoup what has been lost in a matter of days. This fund will continue to drop to below $10.00 and will take years to recover.
Pretty sound reasoning IMO. Everyone has different timelines. Saving for retirement and building wealth is different than trading stocks and playing the market. Which is what I sense happens plenty here. Looking to buy pttrx low and selling high is not the proper way to use bond funds. On the other hand if you are a retiree it's quite a different dynamic. I personally did sell some pttrx recently but it was relatively minor in the context of my entire portfolio. Rebalancing vs playing the market.