The recent thread on Marketfield made me think. If you are neutral adjust your asset allocation . If you are bearish buy
a bearish leap.I am not sure there is much evidence that Market timers in charge of funds are much better than you are so save the fees. I am aware of Market Neutral funds but don't understand how they help since I don't think they outperform short term or intermediate bond funds over a market cycle..
Comments
For alternatives, I look at long-short funds and fixed income of multi asset variety. With rates on bonds so low investors want to get something during a downturn.
You noted: "For alternatives, I look at long-short funds and fixed income of multi asset variety. With rates on bonds so low investors want to get something during a downturn."
>>>I suggest that during a downturn, bond rates may move lower; thus the capital appreciation of the bond pricing. I would "want" to have this during a downturn. We don't treat bonds any different from another asset class; we want the capital appreciation from pricing, not unlike equity investments. The yields/dividends are bonus money, even if; of little consequence to overall performance.
Take care,
Catch
With that said, do we know how bonds will react with the current situation they are in now? As others have mentioned in the past, they look at them more as a ballast. The days of getting a good return on GNMAs as I did in the past might not be around this time.
You noted: "With that said, do we know how bonds will react with the current situation they are in now? As others have mentioned in the past, they look at them more as a ballast."
>>>I suppose for both of us; the "length" of a downturn is the key word. For the recent blips, I would agree/suggest these would be for the traders who can get this correct; both to the bond and equity sides. I agree that most bond sectors have the odds against them going forward; versus the return patterns from early 2009. My best guess as of today, is that a sustained equity downturn of 10% that perhaps continues to move sideways, would benefit investment grade bonds.
These scenarios can be part of an argument of holding an active managed fund with a decent return record in the "balanced fund" family. 'Course these folks don't always get things correct either. A prime example is VILLX for this year. A stellar longer term record; but a fund that currently is, "I've fallen and can't get up." We don't hold this fund, and do not follow the management; but wonder what the heck happened.
Causes me to refer to this note by me, from Nov.13:
"Perhaps travel this path going forward; the other alternative investing.
So, this mix comes down to the K.I.S.S. portfolio, eh? Below are combined returns for VTI and BND (or equivalent holdings):
---2009, + 16%
---2010, + 11.8%
---2011, + 4% (equity took a hit in July of this year)
---2012, + 10.2%
---2013, + 15.7%
---2014, + 8% (YTD)
No, these combined investments didn't gather the big numbers from SPY or such in 2013; nor did they get hit hard on the head in 2011. The above numbers also have a compound growth factor from 2009 that is not factored. The simple average yearly return = 11% , more or less. I don't know anyone who would poo-poo 11% a year."
Regards,
Catch
@Catch- you do too. A real short name, begins with a "T"...
Well, in the most pure form of our fine English language/grammar; the key portion of my statement would be: "I don't know anyone". 'Spose I could rework this to, " I don't personally know anyone...."
Alas, I do get your drift.
Good night.
Catch
OJ