If you're investing for retirement that is still more than 20 years away and you do not have inclination to sell when stocks take a dive, is there any advantage to owning bonds at all? Or are bonds only for scaredy cats who will sell their stocks during a market plunge? -- Tom McCarthy, Wilmington, Delaware

It's easy for long-term investors like you to think bonds are nothing more than a drag on returns and undeserving of a place in your portfolio.

After all, if you check out "Ibbotson Associates' Classic Yearbook," a compendium of stock, bond and Treasury bill returns since 1926, you'll find that stocks have not only outperformed bonds over the past 86 years -- earning an annualized return of 9.8% vs. 5.4% -- they've also beaten bonds much more often than not over rolling periods of five, 10 and 20 or more years within that span.

But I wouldn't say that there's no advantage to owning bonds. Nor would I recommend that an investor, even one in it for the long term, invest only in stocks. While history shows what happened before, it doesn't predict how things will play out in the future.

True, stocks have beaten the pants off bonds in the past. And I fully expect stocks to continue to do so over long periods in the future. But I'm not convinced enough to make an all-or-nothing bet on stocks. When dealing with uncertainty (and your retirement money), it's prudent to hedge your bets.

There's another compelling reason for long-term investors to own bonds. As impressive as stocks' gains have been, they've come with quite a bit of drama.

From March 2000 to October 2002, the Standard & Poor's 500 index dropped almost 50%. It no sooner recovered when it fell again, this time by nearly 60% from October 2007 to March 2009. Over the 10-year stretch from 1999 through the end of 2008, stocks posted a negative 1.4% annualized return.

I mention these figures for two reasons. One is to prevent you from committing what Stanford professor Sam Savage calls the "flaw of averages" or the fallacy of using single numbers to represent uncertain outcomes. By focusing on stocks' long-term annualized gains, you may overlook how far they have fallen and how long they've remained depressed en route to those gains.

The other reason is that even though you think you're in for the long-haul now -- when the Dow has been on a roll -- it's been my experience that most investors feel differently when things fall apart.

People get very upset when they see the value of their retirement savings drop by half -- or more, as investors in the technology-heavy Nasdaq stock index discovered when it plummeted almost 75% from the beginning of 2000 through mid-2002. (To this day, Nasdaq is still 35% or so below its peak nearly 10 years ago.)

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Bond investing for retirement