Personally I’d go for 60% diversified equity, 20% gold and 20% cash. If we see long term real bond yields positive again, allocate back to bonds then.
Pretty similar to my actual intent
I'm in the not so conservative camp, more like a third each FT250, US stock, gold. I benchmark that to Terry's HYP and its pretty much broadly compared in total returns for actual years and when backtested to 1987. TJH HYP however has much higher volatility. I've been tempted to use that benchmark comparison as a rotation strategy choice i.e. when TJH relatively zags down a lot then rotate some/all of gold into FT250 and when its zigged higher scale back stock exposure. Should perhaps have started that in April 2020, but didn't
With a 10 year ladder not marked to market its a time shift type characteristic. As yields decline so older Gilts continue to add/pay relatively more, you still get the lagged benefit of older higher yields. More recently for instance the ladder has just started to be below 2%. Similarly when interest rates are rising so the Gilts bought at current low levels will act as a lag factor, assuming you do roll maturing gilts into 10 year replacement holdings as/when each matures. One option however is to shorten that down i.e. instead of rolling a maturing Gilt bought 10 years ago into another 10 year Gilt, roll it into a shorter term, perhaps 1 year cash deposit or whatever. In effect transitions a 10 year ladder into a 1 year type 'cash' holding.
Oddly, whilst I agree that former high to low interest rates has broadly added 2% to 3% type higher rewards to stocks and bonds and that forward time would seem to have bonds acting as a lag factor, whilst I've not been a bond holder I see forward time being more likely to be like a Japan 1980, UK 1965 type start date (high valuations/lower forward time benefits) situation - when having some bonds in the portfolio served well, but where my choice would be cash deposits, perhaps a three year ladder of High Street fixed income holdings (diversified up to protected levels). Cash earning -1% real that even drops to perhaps -5% real (as cash interest continues to remain low whilst inflation spikes) may very well see other assets (long dated Gilts/stocks) drop perhaps 30% or more in real terms (-25% price drop, 5% inflation), such that in stock purchase power terms cash gains +35% (0.95 cash, 0.7 stock and 0.95 / 0.7 = 1.36). Under such situation likely gold would also so (very) well and combined 25% cash, 25% gold doing OK when 50% combined UK/US stock did poorly, tends to counter balance and more (up overall).
As such, more recently after some pretty good gains, I have liquidated some of portfolio value into cash, presently hard cash i.e. its sitting idle within ISA earning nothing at present along with further additions of this years ISA allowances.
When Buffett, whose normally a 10% cash man has cash reserves up at around a third I suspect its reasonable to follow that lead.
To supplement the charts I posted earlier, here's some of the notes I recorded
Primarily however my recent interest/efforts has been looking at 1965 onward UK, 1980 onward Japan type data series and the relative differences of just leaving SWR as-is (uplifted by inflation only) versus uplifting it by inflation or to 3% (or whatever) of the ongoing portfolio value whichever is higher (rising income in real terms). When you look at how deeply/hard stock heavy portfolios got hit when drawing income as well over those post 1965 UK/1980 Japan periods then I am a little fearful that recent valuations/circumstances are perhaps more closer to some form of repeat of those eras than we are distant from such.
When printing/spending trillions that so far has induced relatively little inflation does start to see inflationary effect, then once that train is running historically its been very difficult to slow/stop it and can lead to runaway. All just guesswork but I suspect interest rates will continue to remain suppressed by printing to buy bonds (maintaining high prices/low yields). I even suspect that the price of gold might be manipulated, whilst high inflation when it does hit will be left to erode massive government debts substantially/rapidly. Same old cycle really, where states do periodically default, but claim never having officially defaulted (but having cheated massive amounts of wealth out of investors pockets), Physical in-hand gold is important IMO. Yes there may be rule changes to dissuade that (tax/legality/whatever). Paper gold, even ETF's that claim to be backed by physical may be seen to blow up, maybe via claims of ownership due to having been lent/whatever. Similar to VIX type ETF's that ran until they blew up and left holders with near total losses. When there are multiple more paper gold amount floating around than there is physical gold in the world then in 'normal' times that might be fine, but when the crunch comes paper based gold might be massively chasing physical gold.