| This month, the S&P 500 is down 3.5%. So far in the third quarter, the S&P Investment Grade Corporate Bond Index is up 0.8%. The S&P U.S. High Yield Corporate Bond Index has performed even better, returning 3.6% at the time of this writing. I've talked to a lot of people - particularly in the early part of the summer, before the stock market bounced - who flat-out refused to open their brokerage statements. That suggests they own too many stocks and were taking a beating. Bonds can smooth out those volatile returns and make it less painful to look at the numbers. Then, on the flip side, there are those who check their stocks or their balances all day every day - another warning sign that they're too heavily invested in stocks. Bond prices move too. But you own bonds for a very different reason than you own stocks. Even if you're a long-term investor, at some point you'll sell your stock, and you want that stock's price to be higher than it was when you bought it. When you buy a bond, sure, you could make a nice profit if the price goes higher. But you only have to sell at the maturity date, and you know exactly how much you'll receive for your bond (usually $1,000) at maturity. That means you really don't care where the bond is trading today because you know exactly what it will be worth the day it matures. This makes it a lot easier to not worry about that part of your portfolio. (I don't know many bond investors who check the prices of their bonds every day.) So if every stock market drop makes you feel like you're a small boat in rough seas, you have too much of your portfolio allocated to stocks and not enough - if any - to bonds. When I was 25 years old, I didn't own any bonds. I didn't need to. I had decades to make up any stock losses. My time horizon has shortened considerably since then. I still own stocks. I'm the dividend guy, after all. And I still speculate. But my long-term portfolio most definitely has bonds in it. That way I know that no matter what is going on in the stock market, a portion of my wealth is protected and is generating income. The older I get, the more I will allocate to bonds because I'll be moving from a growth mindset to a safety and income mindset. Unless you're 25, it's crazy not to own bonds - especially coming off a 12-year bull market. Good investing, Marc P.S. Bonds are not to be underestimated. In fact, some of the bonds that I recommend can more than DOUBLE your starting stake in less than five years. And that's legally guaranteed! If you want to leave market volatility behind and earn up to 110% in less than five years without touching stocks or options, you'll want to see THIS. | 
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