11-30-2018, 08:35 AM
I'm about 80% invested -- 50/50 equities and short term corporate bonds. I've been putting more cash to work in short term bonds and fire sale stocks with strong balance sheets and pay attractive dividends -- mainly those that have been crushed but have a good 5 year outlook (big oil/gas/services/pipelines, industrial, materials). My aim is to gradually move more into investment grade corporate bonds since I am nearing retirement age.
As for short bonds, my take is that a quarter point move by the Fed, whether it arrives this year or early '16, is already baked into short term bond prices (1 to 5 year maturities) -- I'm in the camp that the Fed will move gradually during the next few years. I'm only buying investment grade bonds via ETFs with target maturities that behave like individual bonds that I will hold to maturity, and not bond funds that respond to Fed moves (real or anticipated). Plenty of investors use short term bond ETFs like cash, so equity margin squeezes and fear a more aggressive Fed will lead to liquidations, as prices come down, I'm buying at discounts as they occur.
As for short bonds, my take is that a quarter point move by the Fed, whether it arrives this year or early '16, is already baked into short term bond prices (1 to 5 year maturities) -- I'm in the camp that the Fed will move gradually during the next few years. I'm only buying investment grade bonds via ETFs with target maturities that behave like individual bonds that I will hold to maturity, and not bond funds that respond to Fed moves (real or anticipated). Plenty of investors use short term bond ETFs like cash, so equity margin squeezes and fear a more aggressive Fed will lead to liquidations, as prices come down, I'm buying at discounts as they occur.