Are target date funds a good idea? In theory, yes. The deal is this — you have a 20-year investing horizon and so you begin the journey with 100% equities and over the years you add more and more bonds (and subtract equities) so that, at the end, you are 90-100% bonds.
The problem is that in 2008, everything was lousy. Well maybe not everything. Managed futures were okay. Some precious metals and some industrial commodities were good. See what I’m saying? Diversity is the key and — if you merge growthy things with bonds, but don’t add alternatives, commodities, flex funds and maybe even timber, you may not be okay. To me, diversity is always in fashion. And non-correlation is stylish, too.
Regarding non-correlation, did I mention 2X bear market ETFs and funds? The folks at FINRA and the SEC seem to be upset about these leveraged babies; hence, our broker-dealers are having their cages rattled. Me? I love 2X bear stuff. When the market goes up, they go down. When the market goes down, they go up. While they may not the 2X target, I’m happy with 1.6X, 1.8X or whatever I get. I’m looking for diversity and non-correlation.