My personal opinion is that the long term investor holding both stocks and bonds can invest in any reasonable choice of a low cost intermediate term bond fund and spend their time better thinking about other things unless they just enjoy the past time of posting here.
In a tax-advantaged account, you should re-invest dividends. You can then rebalance or take withdrawals from the account as needed.
For taxable investments, sweep dividends to a cash account.Then, use them to rebalance or keep the distributions for yourself.
The real puzzle, why would anyone watch CNBC?
I don't disagree with most of your post, but what about 2011? Peak-to-trough was -19% in TSM, -17.5% S&P 500.