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bond portfolio question

johnNjohnN
edited August 2011 in Off-Topic
good morning MFO

what would you folks do with your bond portfolio if we are heading toward another recessions lasting say for 6 to 18 months? would you consider keeping everything diversified, or would you have more cash in portfolio, versus just keep everything the way it is and unconditionally ride out the storm?

just my opinion, I may keep a diversified bond portfolio, watch the NAV go down slowly, buy sluggishly, and probably keep most of my powder dried. I may buy more if there are attractive values out there [i.e. if johnson&johnson or at&t have a bond yielding 7% - 10% for few years]. The alternative is keep most of everything in cash but cash only give you 1s% in yield....

thanks for any suggestions
- johnN

Comments

  • catch22catch22
    edited August 2011
    Hi johnN,
    The big question, eh?
    We all have our different views of this.
    You have access to different fund types via your TSP, than do I/we.
    You also prefer individual issues, vs funds for your taxable accounts.
    Our account holdings are not subject to any current taxation (retirement accts).
    Your house's investment considerations are so very much different from ours.
    As we don't know the directions of market sectors, one may only presume a balance and/or diversified mix of holdings may offer any support of keeping a portfolio at least EVEN in returns and/or FLAT.
    IF you feel the equity market is going in the tank for 6-18 months, then you should sell your equity holdings and be in very good multi sector bond funds, OR gov't issues OR high quality corp bonds.
    I sure don't have the answer and continue to attempt to look forward and adjust our holdings as needed.
    We are all going to have some winners and losers; and much of this is beyond our knowledge and skill sets today. Much of the time we are at the mercy of all the machinations that affect the markets.
    You are aware that even the HY funds and/or individual issues are subject to having their NAV/prices crushed to the point where the yield does not matter because of the loss incurred at the price level. If you choose to hold such individual issues to the full end of their life, then one may hope and/or realize the full value.
    You note the alternative is keep monies in cash and that you can attain a yield of 1%. IF you think the market is going into the crapper for awhile, 1% to the positive is better than holding funds that may go very negative.
    WE are playing in a global money challenge. You may be the next one to find that the "ball" has been fumbled by another team, and it is now in you hands and you are running to score a touchdown for your home team. But, you must also remember that there will then be a given number of folks who now seek to tackle you to prrevent that touchdown.
    I sure didn't offer any suggestions as to where to "park/place" your money. Only a few thoughts.
    You may review this link from yesterday, if you did not read it...............
    http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/1035/catchs-favorite-quote-of-the-day........../p1
    Take care,
    Catch
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