Tuesday, September 29th, 2026
By Laura Kuntz, CPA/PFS, MBT, Chief Investment Officer
Bond Investing
While many type of stocks are positive, many types of bonds have recently fallen a bit in value. A broad measure of U.S. bonds, the Bloomberg U.S. Aggregate bond index is posting -2% year to date.1 Last year the index posted 7.3%, a more typical result for bonds.1
The decrease in bond values this year is caused by rising interest rates largely driven by three factors:
- The inflation produced by the Iran War and oil prices.
- The competition from bonds issued to fund AI.
- The competition from a growing federal debt, now $40.05 trillion, or $119,560 per person.
When interest rates rise, the value of bonds generally falls – much like a see saw. But that is not the end of the story. Over time, new money will come into bonds as investors are attracted to the higher interest rate. That will help balance out the see saw. Why own bonds? After all, stocks have “been on a tear” for 3.5 years, returning 18% last year and up 14% so far this year.3
- Bonds can help substantially in cushioning a correction or bear market.
- They can also be an important source of money during that downturn. The investor who needs money for living expenses, etc., can go to their bonds and not have to “sell low” as they would to access their stocks. Stocks sold low will never ride back up, a permanent cost.
- Lastly, bonds can also be used as “offense” in a downturn to buy stocks when they are at attractive values.
How much should you keep in bonds vs. stocks? The answer is different for every investor and depends on these key factors:
- How much cash will you need from your portfolio in a downturn? While an average bear market lasts about a year, stocks took five years to rebound after the Great Recession of 2008-2009. It is important to plan ahead for your recurring and unexpected cash needs over a multi-year period
- How much of a downturn do you want to have to stomach? In the Grea Recession of 2008-2009, stocks dropped about -58%.2 It is good to as yourself how you would feel if your portfolio got cut in half. If the answer is, “not too good” then consider some bonds.
- Do you want to have the opportunity to buy at attractive values in a downturn? You’ll need a source of funds for this. At Laurel Wealth Planning, we allocate (as suitable) 10% to 15% of the portfolio to bonds and bond alternatives for this purpose.
We can model out your cash needs over time and provide you a recommendation for stocks vs. bonds – based on all of the above factors. For our clients, we generally assess this annually. If you are not yet a client, this work could offer you important input in determining this key part of your investment strategy.
AI Risks
Is AI going to end humanity as we know it? Jason Coxon, a former researcher at Anthropic and Open AI voiced this on Sept 9, sparking a global discussion. AI stock prices briefly backed off, but now those stocks have largely rebounded, telling us that investors are not immediately concerned. I personally feel that AI regulation is important, but I do think that it will take time to develop.
Please let us know your questions and comments. If you are not an LWP client, please let us know if you’d like to discuss your situation on a complimentary basis.
FOOTNOTES:
1 Per Tamarac of Envestnet as of September 25, 2026.
2 Federal Reserve History @ https://www.federalreservehistory.org/essays/great-
recession-of-200709
3S&P 500, 500 largest stocks in the U.S. per Envestment Tamarac as of Sept 25, 2026.
This index is subject to substantial price fluctuation
Prepared with the assistance of Copilot AI, along with research, ideation, and editing
by Laura Kuntz.
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The foregoing content reflects the opinions of Laurel Wealth Planning LLC and is subject to change at any time without notice. Content provided herein has been obtained from sources considered reliable, but we do not guarantee the accuracy, or the completeness of any description of securities, markets, or developments mentioned. The content is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. LWP is a wealth management firm and does not practice law or accountancy.
Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful. As a precautionary measure, we cannot rely on e-mail requests to authorize, direct, or affect the purchase or sale of any security, wire transfer, or to affect any other transactions. Such requests, orders, or other instructions sent via email should be confirmed verbally, or by written instructions faxed to 952-854-6250 prior to their anticipated execution. We are unable to ensure that email sent to you from us, or sent from you to us, will be received. Please contact us at 952-854-6250 if there is any change in your financial situation, needs, goals, or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend that you compare any account reports from Laurel Wealth Planning LLC with the account statements from your custodian. Please notify us if you do not receive statements from your custodian on at least a quarterly basis. Our current disclosure brochures, From ADV Part 2 and Form ADV Part 3, are available upon request and on our website, www.laurelwealthplanning.com. This disclosure brochure, or a summary of material changes made, is also provided to our clients on an annual basis.
