Howdy,
Sold the remainder of TEGBX with these monies going to PLDDX.
Sold down about 50% of HY/HI funds with those monies going to a mix of FTBFX, FINPX and PTTRX.
Sold all of FDLSX, FDVLX, FLPSX, FSLVX and RNCOX.
More would have been moved, but the last two days found me without a secure pc connection until near the market close.
There may be another QE both here and in Europe to the 29th degree; but I still don't find much of a good smell in the air. If there is a sustained equity market rally and bonds crash; our house will be on the poor side of the returns for a few months.
Regards,
Catch
Comments
You noted: "Are you reacting to what has happened in the last month, or are you anticipating something that will happen?
>>>I have noted (past few days posts) a few areas I have been watching in particular.Aside from all of the crazy news that travels around each day, I do try to pick apart some areas to help make decisions. The first piece I watched was the pull back in metals and commodity related equities in early March. We sold 1/2 of the metal equities (FSAGX) then, as well as all of FFGCX.
In early April, some technical indicators looked a little shakey; but there have been numerous flips and flops, so we didn't take any action then (should have, when looking in the rearview mirror, eh?). Since early May there has been weakness in some areas of the U.S. equity and appeared to be a normal pull back from the run since last fall. Next (last week) was too much weakness in both the emerging markets equity and bond area. This didn't look good from my viewpoint. Next came a few other points that I did not like: The Austrian equity market was showing larger losses than other northern Euro area neighbors. Austria was reported a year or two ago to have one of the largest bond exposures to Euro area bonds of poor quality. Monday of this week found the Australian dollar losing strength against the U.S. dollar, which to me indicated a softness perhaps being projected towards the Asia area. One other Aussie event (I can't find the link) is that their 10 year gov't bond and their central bank rate (Feds fund type of rate) converged to have near the same yield. This is also a sign of weakness and/or fear and could also indicate more buying into this area/time frame of bonds. Also the $Euro moved and stayed below the $1.30 exchange rate and continues down. The last trip point was finding the 1% daily drops in the junk bond area. This is not a normal pattern by any means. For the monitoring I do, in a most general manner; if the U.S. equity market moves down 1%, I expect to find managed junk bond funds to perhaps move down about .33%. I appears from the link in the post just in front of this post, that there was some behind the scenes business taking place in this sector. One other area and a fund we have held for some time is FDLSX, that provided other clues as this fund began to sell off and reflects selling in McD's, Yum brands, Starbucks and many other food industry areas.
Actually I don't have any issue with what you've decided to do with your junk bond funds (ya I still use that name). I've never understood why you were so heavy into junk. Well I know a lot of people are reaching for yield, without fully appreciating the additional risk added to their portfolios.
>>>We have held our junk bond funds for just about 3 years. Yes, these bonds are issued by companies and others that are having problems. But, if an economy is moving along, even slowly; as has been the U.S. the default risk is not great. I have noted before, that I view the HY area as bonds with the potential for capital appreciation if the demand is there, in addition to the yield; and are not unlike those who choose to buy equity funds with the potential for capital appreciation, but also are high dividend payers. With the market actions this week, the high paying dividend equities will find not mercy either.
But your move out of equities leaves me scratching my head.
>>>In addition to what I noted above, I am not optimistic about any fixes in the near future and expect continued downward pressure in many market areas at least through the early fall. Past this time period I remain concerned post-elections, too. I fully expect more bump and run from the big traders and will not be surprised with the recent sells and likely coming sells that there may be some sharp upward moves in the equity sectors here and other global areas. The most difficult part of this is to determine if any upward moves in the markets are anything more than the big kids playing for a few % points down and up; and down and up. They will may good money if they trade things properly.
If I missed something; or created more questions, give me a shout.
We'll attempt to hide out for awhile among some bond funds and watch. Lastly, I anticipate further reductions of more of our holdings on Friday. Asia markets tonight are not happy, finding Australia down -2% at this write.
Take care,
Catch