My bond strategy has always had a position in TLT until last week.� TLT, composed of long Treasuries. is a hedge against deflation, and has made money for my clients.

I changed last week because of significant disagreements at the Fed regarding the duration of QE, and also the selloff in the long end breaking my price drop limits.� Also, it is worthy of note that each Fed intervention is leading to smaller results.� In the process, I made more money from my credit-sensitive investments than I lost from TLT.

With stocks, I am not a technician or an active trader.� With bonds, I am both.� Why?

Bonds are more determinate than stocks and the tradeoffs are clearer.� Bonds are promises to pay under certain conditions.� Those conditions can be analyzed more readily than the open-ended conditions of stocks.

At this point in time, I am taking limited domestic credit risks, and taking larger risks in the emerging markets, where economic policy is more orthodox then it is here.

But beyond that, I have pulled in my horns, and have reduced interest rate risk.� If I see opportunities, I will act on them, but I am taking far less risk than previously.

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