When I first read about Bond-Stock allocation, I thought it was a nifty concept..... it looks simple enough, a simple rule to help us average out the risk thro' market bulls and bears...
But, when it comes to practice, for a small timer investor, I realised there're not too many choices for Bonds. Corporate bonds are mostly in tranches of $250k and those which are available in smaller $1k or $10k lots, are usually very illiquid... The alternative is SGS Bonds, but being "risk-free", the coupon rate is lower. In the past, it was a lot more troublesome as we have to buy / sell through the banks, altho' nowadays, I think it's a lot easier eg. bid for new issues via ATM, buy/sell via brokerage (like POEMS).
Anyway, I did start to practise, after learning fm forum (WS, grandfather of VB) on how to go about doing it...
It requires a lot of self discipline.... It seems like a lot of trouble to get vested in SGS Bonds and for such low coupon rates... When stock market is very bullish and money seem so easy to be made, the temptation is always very high to liquidate the Bonds to switch over.... This of course runs counter to the original purpose of Bond - Stock allocation...
However, if you're able to maintain this self-discipline to increase the Bond allocation during bullish stock markets (stocks valuation becomes rich), the benefit becomes very obvious when there's a major correction... In such times, you'll be glad to have this "extra" sum of money (if you sell the bonds) to now switch some back to stocks, at cheaper valuations...
To be honest, I wasn't very self disciplined... Perhaps my asset base was too small or I was too impatient / greedy, I never allocated more than 10% to bonds.... Still, I was always glad to have that "extra" 10% in bonds to liquidate when the crash / correction comes along. As it was troublesome to sell the SGS Bonds, I was "encouraged" to delay my actions to sell until the stock market got lower and I run out of free cash or stocks to sell (to switch)...
The above changed when I read Peter Lynch books and he showed examples on why it may not be necessary to have any Bonds - Stocks allocation... which I happily adopted... till today. But, that's another story...
I guess the lesson I have learnt is not Bond - Stocks allocation but a bigger lesson in Assets Allocation. Even amongst stocks, we can have different categories of stocks (again learnt from Peter Lynch books), which can help to mitigate the impact of market corrections.
In my own words and my own interpretation (from Peter Lynch books), a 100% allocation to stocks means, if stocks are well selected, we're trying to maximise our returns during bullish times, such that when averaged out with the -ve impact of the bearish times, we're still better off vs a Bond-Stock approach.
Lastly, I don't believe there's a one-size-fits-all approach. Each of us would do well to try and experiment to fine-tune till they find a "customised" approach that suits them best and this may even change thro' time as they age and their financial circumstances changes...
Happy Learning!